Rehab Private Funding -- how would you set it up? - Posted by Kim (FL)

Posted by Jim Kennedy - Houston, TX on March 01, 2002 at 23:17:00:


The terms you describe are more in line with “hard money” rather than “private money”.

To understand the difference between the two, check out a post I did at

Since I originally posted that, I’ve now found one private investor who is happy with 8% interest, no points.

Hope this helps.

Best of Success!!

Jim Kennedy,
Houston, TX

Rehab Private Funding – how would you set it up? - Posted by Kim (FL)

Posted by Kim (FL) on February 28, 2002 at 14:39:02:

Hi! I’m about to do my second rehab – if I can work this issue out. I have a contract for a home that is being foreclosed in a week. I don’t have time to acquire a mortgage. We wrote the contract this morning. We have someone who has told us that they want to get into REI and they have cash. We want to ask them to get into REI in the form of a private lender to us. What would you guys say the normal terms would be. We want to make this appealing to them but not give money away! Here is our scenario:

Purchase Price: 90,000
Closing costs: 1,000
Rehab costs: 14,000

So we need 105,000.

I’ve heard of the following as a common practice for private lenders:

Loan amount: 105,000 (yes we need to do this with no cash out of our pockets)
Funding Fee: 3,000 (rolled into the loan amount)
Interest Rate: 18%
No payments but a 6 month balloon for the above.

Does that sound competitive, too competitive or not good enough?? We’re thrilled to pay a higher rate to avoid holding costs and money out of our pockets initially. ANY OTHER WAYS TO PRESENT THIS?

For those who like lots of details: :slight_smile: The last house we did, we obtained a 90% Fannie Mae Investor loan and went the traditional route. We put the rehab (14k) on a credit card. Then we had holding costs of 850 a month. That STRESSED us out. So we’re trying to get creative this time!! Yes – we made some money and yes we paid of the credit card!! :slight_smile:


Kim (FL)