Hard Money: It CAN Get Ugly, But Sometimes Necessary

If you are at the point where hard money is the only option, you'll want to do your research to factor in the hard money costs. 

Interest Rates range from 13% to 17% from lender to lender. However, it is more the norm to be somewhere in the middle of that range.

Points are a killer at 7, 8, 9 and more. For every million you borrow, don't be surprised to see the amount of the loan includes the points being charged. Every point (%) equals $10,000, so if you have a hard money lender willing to lend, for every $1 Million, you could see the loan balance grow to by $70,000 to $90,000.

It is our belief that the use of hard money may be for projects that will have a short turnaround period. If you have a 30-90 day project which you believe will sell within that time frame to an exit buyer, and you have no other assets or bankable funds, this is a lender of last resort. You will feel terribly angry about having to do this, but remember-- somehow you got to this point, and the deal is good enough to leave you profits after all the hard money expenses, But don't expect to find someone who will make a deal with you on your terms. Be flexible and make sure your numbers work against the costs of this money.


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