How much do you pay your hard money lender ? - Posted by JohnG

Posted by Eric C on April 07, 2000 at 01:16:34:

Hi Scott -

A kill fee is just a clause that limits my liability on a particular deal to a previously agreed upon amount. Simple.

There are other ways to accomplish the same thing; I might use an option. That way I could lock in the opportunity to complete a deal, but not the obligation to do so. Using an option in this manner, my liability would be limited only to the option consideration (under most circumstances).

No matter how you accomplish it, limiting your downside risk is always a smart thing to do.

People spend a lot of time trying to improve their “batting average” when the time might have been better spent learning to limit their risks – that way, they can “play” more often. After all, you can only “win” if you’re actually “in” the game.

So, learn to limit your liability. Put a financial safety net under your deals. That way you’ll have the confidence to make more offers and close more transactions. And you’ll sleep better too - I guarantee it.


Eric C

How much do you pay your hard money lender ? - Posted by JohnG

Posted by JohnG on April 05, 2000 at 20:41:20:

I am curious as to how much you pay for your hard money.

I have a private lender who will give me 97% of my purchase price for a 1% fee and 18% interest only payments. So, on a $100,000 purchase, he will lend me 97,000 and I pay an upfront fee of 970.00 and my interest payments are not due until I sell the property. This works well on 2-4 month flips.

How about any other experiences ?

Relationships are the key. - Posted by PBoone

Posted by PBoone on April 06, 2000 at 09:21:38:

We have found the relationship with the lender is where costs decrease. Learn to build the relationship and all ends well. If you are working with a jerk (and there are many out there) run an add looking for funds.
We, are now able to borrow 100% this includes purchase, rehab, and holding costs. Points, interest (holding cost) and rehab are all calculated in our purchase price.

Re: How much do you pay your hard money lender ? - Posted by DanM(OR)

Posted by DanM(OR) on April 06, 2000 at 08:08:12:


Here in Oregon the law states that a private = Hard Money lender can loan at rates as high as 25% and have up to 10 points in there. Typical instituitional hard money lenders around here will loan up to 70% LTV and charge 5 points with 15% interest only payments.

Best of luck to you!

Dan Matejsek

Re: How much do you pay your hard money lender ? - Posted by TRandle

Posted by TRandle on April 05, 2000 at 23:45:10:

We’re just now doing our first hard money deal and we are not pleased. Here’s the details:

  1. 65% max LTV
  2. 1% up front point plus $100
  3. $375 for appraisal
  4. 1.25% exit points plus $100
  5. personal liability
  6. we screwed up and overestimated repairs to be conservative and now must bring cash to closing so we can escrow our own repair money, then we have to pay $100 draw fees to get our money back after we pay for repairs out of our other pocket
  7. just discovered they requested lien searches on Kelly (my wife who’s doing the deal)
  8. lender also filed liens on all appliances (give me a break! 65% LTV and they’re worried about the appliances?)
  9. 12.5% interest only, 6 month term

Needless to say, we were not informed up front about all these requirements, but we were in a hurry and the deal should be fine. However, the only reason we found out about #7 and #8 was because Kelly works at the title company where it’s closing.

I don’t think this lender reports to the credit bureaus. At least I hope they don’t.

Anyone in Texas have a better hard money lender than this? Preferably someone who loans on the property, not on our signatures? Someone who doesn’t report these loans on our credit (credit’s fine and we don’t want these showing up)? Thanks…

Re: How much do you pay your hard money lender ? - Posted by JD

Posted by JD on April 05, 2000 at 23:09:37:

3 points, 12.5% interest only, due in 4-6 months. My LTVs are always under 65%, so that is not an issue that I can comment on. If any lenders in Colorado can beat that please let me know.

Re: Relationships are the key. - Posted by GIO

Posted by GIO on April 08, 2000 at 16:04:11:

HI, when you run ads looking for funds, where are the best places to advertise, what do you say in your ad, what do you actually offer them, how successful have your ads been,
please provide any other beneficial info since my rates are currently 16%, 6 pts, 65-70% LTV, in NY so its either that or go with a partner who is alittle too conservative - THANKS

This is not a hard money loan… - Posted by Ben(NJ)

Posted by Ben(NJ) on April 06, 2000 at 08:49:19:

by definition hard money is equity based lending, there should be no discussion of personal liability, borrower background etc. This is why they can command higher rates. Although the terms are not bad for hard money, this is more of a hybrid, in fact I would argue that with all this extra lender security, you should probably negotiate a better rate.

Re: The mythical non recourse loan - Posted by JD

Posted by JD on April 06, 2000 at 24:14:58:

they seem like reasonable terms to me. I’ve never seen a non-recourse loan, and doubt that they exist to any measurable extent excepting some government backed loans such as HUD232Bs. Of course the lender is going to do a lien search on the Borrower, it would be irresponsible not to.

Re: How much do you pay your hard money lender ? - Posted by Tom-Pa

Posted by Tom-Pa on April 08, 2000 at 09:52:27:

If this lender has alot of money, and wants to lend in Pa. I could get them 10 to 20 deals per month. My e-mail address is Thanks .

You Got That Right! Hard Money, My Assets! Here’s Round 2 - Posted by TRandle

Posted by TRandle on April 06, 2000 at 12:53:39:

So, the sellers showed up today for the closing which took place this morning. Sellers were up until the wee, wee hours clearing out since there was a contractual agreement that no funding would take place until the house was vacant. They then went to a family members to crash while waiting for their check.

Statewide (lender) now refuses to fund because they have not received the “background” (bankruptcies, tax liens, criminal-probably, etc.) check on Kelly, my wife. We will put the sellers up in a corporate apartment or whatever it takes to make it right since they need the funds to get into their new place.

The title company at which Kelly works closes hundreds of transactions each month and has been in business for years, translating to thousands of closed transactions. The company with which the title company has contracted to provide this type of information prohibits the sharing of the results with anyone. The title company has NEVER had to do this for any lender. Statewide will not fund without it.

So, now, the title company owners, plant, and numerous others are involved and upset. Needless to say, Kelly’s not getting much work done today. Since the title company cannot provide the information, Kelly’s running around from courthouse to courthouse gathering this information to send to Statewide so that maybe they can fund tomorrow. It’s absolutely ridiculous that a 65% LTV loan has more stringent requirements than a typical lender. My opinion is to avoid Statewide like the plague. And for those of you using them, this information has probably been provided about you by your closing agent.

So, I ask again. Does anyone have a REAL hard money lender in Texas that they would recommend? Thanks…

Re: The mythical non recourse loan - Posted by TRandle

Posted by TRandle on April 06, 2000 at 07:57:09:

I agree the terms are not unreasonable - that was mainly for John G’s benefit. Per Kelly’s title company, they NEVER do any lien searches other than Federal tax liens for any lenders. Apparently, the extent of search requested was extensive and extreme. So, if traditional lenders with high LTV loans don’t do this, why would a hard money lender?

So, are you saying that these non-recourse low LTV loans don’t exist, or just that you haven’t found one yet? I certainly don’t know, but everything I’ve read and heard led me to believe that was standard for hard money. In fact, the lender we used said he was only able to offer the “better” terms because he required personal liability.

I should have been more specific in my original post. The items that bothered us were the requested “background” check on my wife, the mechanics of repair escrow, and the appliance lien. We knew the rest going in. Thanks…

Dialing for Dollars - Posted by Eric C

Posted by Eric C on April 06, 2000 at 15:10:19:

Hi -

I have to agree with Ben. What you got was no hard money loan.

I know nothing about Statewide, but if I was getting the runaround that you are, I would be running , not walking to another lender immediately.

Reason 1: They may never fund the deal. In my experience, deals that begin this way often never make it to the actual closing table. The requirements seem to be so stringent as to preclude their funding much business. Maybe they’re out of money?

Reason 2: You can do better than this. I can do better than this at a local bank (in my area, of course)and I’ll bet you can too.

A few points, although they may be too late to do you much good now –

  1. Call Ed Garcia
  2. Write a kill fee clause into your agreements. Although it’s much more common in the world of commerical RE, it never hurts to limit your liability (real or imagined). Actually, you may have already covered this base, if so, I apologize.
  3. If you can’t reach Ed, then call around to your local RE investors group. Somebody, somewhere will put you on to someone that can help.
  4. You’ve got an in with the title folks, right? Have you thought of looking through some of the records to find individuals loaning money on RE in your area?

Most likely it’ll work out. You don’t sound panicky at this point, just angry – that’s good. You’ll remember what to differently next time.

Good luck,

Eric C

Re: You Got That Right! Hard Money, My Assets! Here’s Round 2 - Posted by Dmerc

Posted by Dmerc on April 06, 2000 at 14:18:05:

Try Ready Mortgage, located in Richardson TX

Re: Dialing for Dollars - Posted by ScottE

Posted by ScottE on April 06, 2000 at 23:39:56:


Pardon my ignorance, but what is a “kill fee clause”?