Posted by JoeKaiser on February 18, 2001 at 14:01:47:
Couple things . . .
At 12% (or 1% per month), the payment is $1,072.50. At 14%, it’s a little higher (but not that much higher). Your calculation doesn’t take “time” into account. It’s 14% per annum (year), not per six months.
Hard money almost always means “points,” also known as loan fees. “Ten points” is not uncommon, so while you may borrow $107,250, the note will probably be $118,000 or more. Those points get paid when the loan is refinanced, so you’ll need more dough than you think down the stretch.
Finally, every transaction costs money. Every new purchase, sale, refinance requires a brand new title policy, appraisal, closing costs, etc. It’s usually a good idea to keep the number of transactions with one property to a minimum.