Rates

I have recently found this excellent site and forum.

Have been talking to banks re: investment borrowing but as new to USA (18 months) from UK, I am starting on the back foot from a credit point of view. In the UK I have excellent credit but here I start all over again.

I have been offered up to 400K with a 70/30 split in my favour but the paperwork and info needed are incredible, baring in mind that I have (free) assets in the USA of substantially more than I need to borrow, can prove income etc.

I understand the lending criteria for HML but can anyone give me an idea of current % rates, lifespan of loans, type of loans etc.

Many thanks

Porvera

It can vary widely but let’s say 3-5 points, 12-15%, up to a year term, often no payments at all or interest only. Usually will lend up to 65% or maybe 70% LTV. Some use ARV, some use FMV. Some lend rehab funds, some don’t.

Some will improve rates and fees after a couple of successful loans.

Eric

Eric was kind…The scenarios he listed are very good…Follow up with him because personally I wouldn’t come close to his LTV…points…or terms…or rates…I also escrow the terms payments upfront off the top…Like he said depends on who u deal with but I can say without a doubt his terms are far better than what’s out there…

Yes, I agree my terms may be on the lenient side. But I restrict the location of loans very much. They must be local to me. Which means when I have trouble with them, they are easier to deal with. I am small and try to develop ongoing relationships with a handful of active borrowers.

Rookie, what would you say the standard is? I really don’t know. I hear people say HML’s are only loaning 50% and charging 6 points and things like that. I have to say that if I raised rates and fees alot and increased dp requirements, I feel like I would make my loans so unaffordable that no one would borrow.

I fund pretty basic fix and flips and I don’t see that much spread in those deals for the investor that they could afford to pay much more.

I do know that some HML’s jack things up in hopes that they get the property. I don’t want to do business like that and I don’t think you do either.

So, what terms do you actually get…that borrowers can actually afford to pay? How low am I???

Thanks

eric.
…We are in hard times and that calls for higher rates…I dont put a gun to anyones head to take these loans…I was taught the HML business by a friend in CA…He said 3 words to me…fees…fees…fees…And I lend my own capital (private money) so I have the power to close decently quickly after and exhaustive due diligence is done by my attorneys (no I dont use title co’s to close)…Being that I lend my own capital I’m not under the gun to pay anyone back (banks or investors) so Im free to make my own decisions…Helps tremendously…

WOW!! I am thinking I should be having you handle my money!! I don’t think I could even keep a straight face asking for 10 points. More power to you!!

Maybe I need to work on my marketing. Are you placing these through brokers?

Thanks
Eric

Eric
.Ive heard horror stories of hard money firms charging more and getting upfront fees etc…And I have repeat business…Because I will lend if the collateral is there…I started lending in Florida after the RE meltdown occurred…My thinking was I’d rather lend %40- %50 LTV of a deflated price than an inflated price like NY…Dont get me wrong when a very strong deal comes up I lower it slightly.

Thanks Rookie & Eric for the input.

How about this scenario

Property purchase price (SF) 200,000
Refurb costs 25,000
After refurb value 275,000
Gain of 50,000

I borrow 146,250 (put in 78,750 + costs) and the deal takes 6 months until completion to 3rd party. What would the loan actually cost me?

As I am new to this concept of HML in the USA, can you point me in the right direction for more info on this subject.

Thanks

Porvera

You just have to do the math. Estimate the points, fees and interest rates on $146K.

In the neighborhood of $20K for 6 months.

Thanks Eric, I was thinking that the loan would cost around €17K - €18K, so not too far out.