What is a reasonable interest rate to pay on a hard money loan?
Dave,
The interest rate you’ll have to pay on a hard money loan is going to depend upon a variety of factors, but you may have to pay 12-13% or more.
Your personal financial situation is going to play a role in the interest rate you’ll pay because if your credit is pretty shoddy you may find it pretty tough to get financing right now. You can find some institutional hard money lenders that might be willing to lend money, but if you can’t you can look for a private money source. A lot of times they’ll take the chance if you dangle a big enough carrot in front of them.
If you check your local REIA you could find somebody willing to invest because sometimes these meetings will have business people or others with cash burning a hole in their pocket you could talk to about your deal.
Hard money is called hard money for a reason. Be careful going in to carefully examine the deal and make sure it’s still a good deal for you. Make sure you’ll still have positive cash flow. Otherwise, your good deal could turn into a real Money Pit.
Good luck!
Peter Vekselman