Monday, January 6, 2014


I received some criticism on my last blog for using 36% annual interest rate in the title as if 36% was the normal rate of return so I owe my readers an apology. While 36% is attainable, it is not the norm. The "routine" or "normal" rate of return is anywhere from 8% to 18% annualized interest rate for the typical hard money loan. A number of factors come into play when determining what the borrower will be offered.

One other point of clarification: you have often heard it mentioned that hard money lenders are not concerned with a borrower's credit rating, that hard money loans are asset based. This is generally correct. The lender, however, may very well pull  the credit history of the borrower to see what experience the person has with the type of loan that they are requesting.

A lot of very experienced, trustworthy, and knowledgeable people and companies were eaten up by the last recession. Some had to declare bankruptcy. The bottom line here is that experience is more important than credit rating when the borrower is applying for a loan on a hard asset such as real estate.

Hope that helps to clarify these issues.


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