Hey Everyone-
I haven’t ever used a hard money lender to buy Real Estate with before, but I have found someone that is willing to lend me $ to buy quick profit properties. Here’s the details:
We are meeting this week to negotiate terms such as how much of a % or return he wants on the money he loans me. I don’t know how this typically works, ideally I would want to use the money to purchase a rehab or pre-forclosure or anything else I could use cash for as an advantage, and if I could have a 60-90 day period where I didn’t pay him anything, that way I could do any work I needed to the property and sell it. I would then give hime a % of the profit. My problem is the profit would actually split 4-ways.(including myself) What kind of options can anyone suggest in this situation or is 4 people too many to split a profit with? Thanks
Hi, I am wondering why the 4 way split?
To put simple, I have a partner that I have talked about this with and it just so happened that his brother-in-law knows the guy that is willing to lend the money. This sucks for me because I can see myself doing most of the work as far as locating the properties and getting the work done on them. I want to eventually eliminate the middle man( brother-in-law) if he doesn’t do anything. I don’t feel his cut of the profits should be as big if he doesn’t contribute, but he did find the guy with the money.
The way I see it your brother in law should be paid seperately by the lender, as a finders fee. He should not receive any profits unless you just want to give it to him.The profits should be divided by you, your partner, and the lender. Thats the way I would have handled it.
J,
There is a list of hard money lenders left of this post under the heading Investor Resources. You need to call one of them or look around on this board. Most likely your friends brother in law is getting a referral fee from the HML as well as a cut of your profit. There is no reason you need a partner or partners to do the type of deal you are looking at. ANYONE could have found you a HML. I can refer you to someone for a cut of your profits…kidding. Seriously though; don’t let them fool you into believing that you need them to get your project off the ground. Spend a bit of time on this site and you will all the help you need.
I don’t see why he’s getting a split of the profits if you’re going to be paying him a high interest rate. Shop around and I guess there’s one other thread that seems to say that HML need to be licensed in the state they’re doing business. Shouldn’t be too hard to search the internet to see if they’re licensed.
You should be able to get short-term financing with 2-4 payments rolled into the loan. And instead of offering a cut of the profits, just pay points up front (they get rolled into the loan). This way you keep all the profits of your deal and you have negotiated terms that fit your liking. And don’t share the proceeds with someone just because he found you a lender. Like christopher said, anyone can find a lender for you. If you want someone to refer you to a lender for no cost to you I would be happy to help you. 
What are typical rates for loaning from a HML? Say if I borrowed 250-300K for 90-days, what should I expect to pay the HML? Another question, This guy that is loaning me the $ is not licensed, he is just a guy that has a a lot of $ and wants a better return on it than what the bank could offer him.
Whatever you do get all of those hands out of your cookie jar. Most people have a hard enough time finding deals that provide enough profit for them…nevermind trying to make enough profit for yourself and 3 other people. 
:-\ 
If you went with an HML you would be looking at interest rates between 12-16% depending on the situation. You would expect to pay 3-5 points up front and most likely have a closing fee on the backend as well.
Lets assume this scenario…
250k loan at 14% interest with 3 points upfront and 1%penalty on back
10k in total fees and 3 months of payments rolled in (3x2,962) equals total cost of $18,886.
The less the risk the better the loan, more risk means less desirable figures. Every scenario is different. It’s basically one step down from subprime lending. Hope this helps.