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#460597 - 02/07/18 11:37 PM How do real estate hard money lenders get compensated?
Investingforlife Offline
Junior Member

Registered: 02/07/18
Posts: 2
Loc: California
Do they usually get a base plus commission or just a straight commission? Is it like loan officers , 3%?

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#460599 - 02/08/18 05:25 AM Re: How do real estate hard money lenders get compensated? [Re: Investingforlife]
Vermont Offline
Major Contributor

Registered: 04/12/08
Posts: 7792
Loc: Vermont's North-East Kingdom
Because they're usually taking serious risks by loaning their own money, they are compensated with handsome interest rates on the sub-prime loans they make, and many protective clauses in the mortgages they write.

Then, if the margins are sufficient, they can also gain some profit by selling the Note in an aftermarket, and start over again with the same capital.
_________________________
Dale C. Hittle of GOLDEN RULE PROPERTIES in Glover, Vermont
Where We're Always Striving To Put Together "THE FAIR DEAL"

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#460600 - 02/08/18 06:34 AM Re: How do real estate hard money lenders get compensated? [Re: Investingforlife]
Long Walk Offline
Member

Registered: 06/27/08
Posts: 243
Loc: New Hampshire
Are you looking to borrow or are you looking to lend?

The hard money I borrowed for our rehabs, or the sales I brokered where my buyer used hard money had the same basic terms: 10-15% interest rate, non-amortizing loan, 50-70% LTV of the repaired value, and 6-10 discount points charged at loan origination.

Most hard money lenders that I encountered were loaning their own money out of a 401K or some other investment. I also met a fellow, but never got to do business with him, who was a loan officer in a firm that did hard money across the Southeast.

You can tell from the loan terms what the compensation would be if the lender were loaning their own money. I have no idea what they might earn working for a lending firm.

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