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The ORIGINAL LENDER of NOT requiring any of the below: NO Application, tax returns, credit check, appraisals, pre-inspection, prepay penalty, upfront fees, survey, bank statements or employment!
Southlake, TX has 50 private money lenders operating in the city. The average note amount in this city is $339,091. The average rate for loans in Southlake is 11.4%. 29 months is the average term for loans issued in the city. The average origination for the loans is 3.2 percent. Lenders offer on average a 72% LTV on hard money loans in Southlake.
Cynthia finds a house in Southlake, TX to remodel and re-sell. Since she does not have enough cash on-hand to buy the $300,000 property outright, she decides to take out a hard money loan from East Shore Lending Company. The terms of the deal include a 65% loan-to-value (LTV), so she must bring 35% of the price as cash to closing, making the principle loan amount $195,000. The interest rate on the loan is 14% for a length of 6 months and the lender requires a three point origination fee at the close. The interest is to be paid monthly and the principle amount will be returned after the sale of the property.
The borrower will have to bring a total of $32,400 up front to cover the $105,000 down payment plus the $5,850 origination fee. Once the deal closes, she will have to pay East Shore Lending Company $2,275 in monthly interest fees, or 14% times $195,000 divided by 12 months in the year. If Cynthia sells the project for $435,000 after 6 months, she would realize a gross profit of $115,500 after subtracting the principle amount of $195,000, the funds paid at the close of $105,000, the origination points of $5,850, and the aggregate interest payments of $13,650. This profit does not account for building costs.
Hilda locates a house in Southlake, TX to renovate and re-sell. Since she does not have enough cash to buy the property outright, she takes a hard money loan from South Star Funding Group with the following parameters:
$190,000 sales price
65% loan to value (LTV)
6 month term
13% interest rate
1% origination fee
Based on a $285,000 sales price after the 6 month term, the numbers for the deal would look like the following:
$285,000 sales price
- $123,500 note principle (65% LTV)
- $66,500 down payment (35% on 65% LTV)
- $1,235 origination points (1% of the $123,500 principle amount)
- $8,028 total interest paid (6 months x 13% interest)
-----------------------
= $85,738 total profit (does not include taxes or rehab costs)
The ORIGINAL LENDER of NOT requiring any of the below: NO Application, tax returns, credit check, appraisals, pre-inspection, prepay penalty, upfront fees, survey, bank statements or employment!
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