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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%?

#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: 7950
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"

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

Registered: 06/27/08
Posts: 381
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.

#464265 - 04/13/19 11:37 AM Re: How do real estate hard money lenders get compensated? [Re: Investingforlife]
TimWin23 Offline

Registered: 05/07/18
Posts: 43
Loc: Chicagoland
They make money on interest. The ones I worked with charged X points up front and than X points per month until it was paid back. They made crazy amounts of cash on interest.

#465846 - 09/11/19 11:39 AM Re: How do real estate hard money lenders get compensated? [Re: Investingforlife]
Chris Goerge Offline

Registered: 09/03/19
Posts: 10
Loc: Canada
A hard money lender is a private investor who offers rapid loans with property used as collateral. In other words, a hard money lender does not finance loans with money from deposits, like banks and other financial institutions do.


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