Newbie and Hard Money

Hello Everyone,

I am completely new to REI and have been trying to research this and other forums for info on the hard/private money lending questions I have, to no avail.


If I am looking for 25K to assist with down payments on properties I will place mortgages on that generate good cash flow…

Would I be able to get 10% for ten years?

If so, how would that actually work, meaning what would monthly and end payments look like in these types of scenarios? I know this might come across as clueless so apologies in advance for that! :slight_smile:


Hard money or private money is in lieu of the conventional mortgage, FHA OR VA mortgage. 

Your local bank may loan you $25k if you have great credit and qualify.

Hard money or private money are lenders who provide 65, 70 or maybe 80 percent as a mortgage,
you still will need to provide a down payment for virtually every case.

Expect to pay between 12 and 18 percent with 0 to 6 points for hard money or expect to pay between
8 and 12 percent with 0 to 5 points for private money. In most all cases private money is loaned on
properties requiring no work and currently rented providing income.

Good luck to you as a new investor and don’t get discouraged however in most cases you will need “Skin”
in the game to get any loan.


Thanks. I was thinking it would be possible to get 25K from private money on a cash-flowing property purchase AS the down payment and then repay that at higher interest in addition to the mortgage.

in my mind 10% interest is too high of an interest to pay long term… hard money is usually done when you know you’ll be able to repay quickly… 6/12 months… Use hard moeny to finance the entire purchase… then if you have income, refinance and repay quickly… Does that make sense?

The interest rate (10 – 18%) and closing costs (7 – 10% of the loan) on hard money loans are extremely high and will have an effect on the investors return. These loans are also very short (3 to 12 months). I have not heard of a hard money loan with an amortization of 10 years.

I would look into an 80/10/10 loan. 80% First mortgage, 10% second and 10% down. Or you could do owner financing on the down payment. If it is possible to get bank financing rather than hard money, your ROI will be much better.

However, most hard money lenders primarily qualify a loan amount based on the value of the real estate being collateralized. Typically, the biggest loan one can expect would be between 65% and 70% of the property value. That is, if the property is worth $100,000, the lender would advance $65,000 - $70,000 against it.


Today, high interest rates are the mark of hard money loans as a way to compensate lenders for the considerable risk that they undertake. You can set your installments to custom by holding your lender.