What did I say? I must be crazy to say that hard money is cheap. Most private money costs 5 points, or more up front, 15% interest during the life of the loan, and heaven help you if you miss one payment. How is that cheap?
Well, compare those costs on your next project to the cost of taking on a partner to buy that great investment property that just came on the market. You know, the one that needs only paint and carpet, can be purchased to produce a cap rate of 15% and is in an appreciating area, but your bank is requiring 20% cash into the deal. Oops, no cash, no bank loan, no great property. Wait, I will get a partner with the financial strength to make this deal work.
Ok, partner wants 70% of the deal, after all he is the one with the cash into the deal. Yeah, but I found it. True, that is why you are getting 30% of the deal. You want this building for a long-term hold but he wants to stabilize it, show good income and sell. Wait, but I found the deal. Yes, but who put the cash into the deal and who is taking the risk if it goes sideways? Oh yeah, the financially strong investor.
So, hard money at 5 points, 15% interest, and I control the deal? Sounds cheap to me.
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