Keisha is a an investor in the Turnagain Arm area of Indian, AK. She purchases a run-down townhouse for a rehab project and takes out a hard money bridge loan from ABC Funding with the following terms:
a) A $350,000 sales price, b) a 70% loan to value (LTV), c) a 6 month term, d) a 10% interest rate, and e) a 2% origination fee.
If Keisha accomplishes her goal of a $437,500 sales price, the final numbers of the deal will be as follows:
$437,500 sales price
- $245,000 loan principle (70% LTV)
- $105,000 cash paid at closing (30% on 70% LTV)
- $4,900 origination fee (2% of the $245,000 principle amount)
- $12,250 interest payments (6 months x 10% interest)
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= $70,350 total profit (doesn't include taxes or rehab costs)