Hard Money Question

Financing, Hard Money Lenders, Private Money
1

Hello,
I am looking to purchase a single family as an investment property using hard money. The assessed value is $240K. The property needs approx. $25K of rehab work.
That being said, I would like to offer 70% of the property value ($170K) minus ($25K), or a total of $150K.
The private lending deal I have is I would pay closing costs and 14% interest on the loan for 1 year. If I am doing my math right, that would be $21K.
My question is, do I also factor the hard money interest into my offer? Meaning taking away another $21K from the $150K, and making a final offer of $130K?

Basically, since this is my first hard money deal, I am not sure if I should factor in the hard money interest into my offer.

2

There are two ways to look at the offer: from the eyes of the buyer and through the eyes of a seller. You as the buyer will want to make the most money off the deal and so I could see why you would like to take out the interest paid on the loan (though I haven’t heard of investors doing this often).

From the eyes of the seller, however, it may take a low ball offer into the dirt. You need to know not only what the market can bear but also the motivation of the seller to know how low is low.

Of course, you could always try the lowest offer - just don’t hold your breath.