4 comments

  1. Really love the videos! I like the fact that you go over numbers also. Just a thought, what if you included typical hard money fees as part of your “teachable moments”? This deal worked great for you guys, but could easily have gone sideways for a newbie using hard money.
    Typical HML fees are typically 1-2% origination, plus 0.5-2% monthly interest payments.
    So total cost for newbie investor: (calculated on a $75,000 loan cause that’s usually the lowest amount a HML will loan on)
    1.5% origination fee: $1125
    1% monthly interest payment: $750 x 8 = $6,000
    Total HML fees are $7125.
    So total profit for the newbie would be $23,325. And that’s assuming the newbie can put together a crew to get the work done and that they don’t make any newbie mistakes. 🙂

    Love the videos!

    -Richard

    1. Great idea Richard. I love your example. Thank you for putting that out here.

      We intentionally left the cost of money off because rates and terms vary quit a bit. For instance, I’m not paying an origination fee, points or even monthly payments with my current lenders. And I am sure I am paying a lower rate than a newbie probably will. ( It is much less than when we first started) Some lenders offer 100% financing, while other will only loan the purchase and not the rehab. Some will loan some for the rehab, but only a percentage.

      With all that invariability we were afraid we could not give the viewers an accurate expectation. I wish we could, though, because it would be solid info like the example you posted.

      Thank you again for the post and the feedback.

      1. I get what you’re saying about all the variables that go into loan costs. My concern, having done one flip so my experience is very limited, is that without some caveat newbies (such as myself) may forget to take HML costs into account. I lost a significant amount on the one flip I did, and the HML made an even more significant amount. lol
        I don’t think you should state what it cost you; both because it wouldn’t be relative to a newbie and because it’s not really public info that your private investors want broadcast.
        My thought was more along the lines of “Hard money fee’s vary a great deal, but here’s a rough estimate of what that could look like. HML’s typically charge between 1 and 2% origination, and 1% a month interest payments. If we had used hard money, which we didn’t, it would have looked something like this…”.

        Again, it’s just a thought from my unique perspective. 🙂

        Have a great rest of your week and happy investing!

        -Richard

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