Need advice on making a rehab loan - Posted by Bob
Posted by Bob on June 30, 2002 at 10:27:22:
I may have an opportunity to make a rehab loan to a friend, and I’d appreciate advice on some of
the practical details of this type of transaction. I have a pretty good idea of the general outlines of
a HM loan from looking at the applications of places like Brookview Financial, but I have a few
nitty-gritty type questions:
1> Do I need a business license?
2> I am in CT, whereas the borrowers and property are in NY. Any problem with lending across state lines?
3> The property is about 2 hours from me, so I could go over for a lookaround if needed. Is this still too far?
4> Is there a rule of thumb for the size of the loan as a % of one’s available funds?
5> What’s the rationale for charging points in addition to the interest? I’m thinking of charging 14% interest
plus costs for appraisals, etc., but should I tack on a few points just too make sure I make something from
the deal? I mean, if they pay off in a few months the actual return to me from the interest may not be enough
to make it worth the trouble of doing the loan.
If this question has been answered in the past I’d appreciate a link. I did some searching, but all I could
find were questions on finding HM lenders, not on being one.
Many thanks in advance.