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San Diego House Flipping Tips: How Much To Pay A Private Lender?


San Diego house flipping has made a huge comeback. Investors in the region have made large profits in a relatively short period of time. However, how much should real estate investors be willing to pay private or hard money lenders and simultaneously maximize profits?

San Diego house flipping tips are readily available through a variety of sources. There are endless suggestions on which home improvements to make (or not), how to find motivated sellers, how to market homes for sale and even alternative lending sources. But how much should you be willing to pay some of these alternative sources of working capital?

What private or hard money lenders ask for in terms of interest and fees can vary immensely, as can their lending criteria and processes. So what can investors expect, what should they be looking for and when are they just being taken advantage of?

One of the biggest debates is whether or not these rates should be above conventional borrowing standards. Some private individuals may loan at very competitive rates because they simply desire the diversity, security and better rates than they are getting elsewhere. True hard money lenders, especially those brokering other people’s money, traditionally charge between 9-14% interest and a few points. Yet, there are no hard and fast rules for San Diego house flipping.

Keep in mind that your personal real estate investment strategy takes precedent. More importantly, however, look at the terms and features of the loan to make sure they fit your needs.

For example:

  • How easy is it to qualify?
  • Loan to value?
  • How long will it take to close?
  • Are there pre-payment penalties?
  • What is the true APR?
  • Can the loan be extended if needed?
  • Are there any special benefits of this source such as no interest payments or full discretion over using funds?

Some online debates in forums regarding San Diego house flipping tips question how ethical it is for some of these lenders to charge excessive points and interest rates. They should definitely remain within the law in terms of usury. However, shouldn’t it be down to the individual to determine how much their peace of mind is worth in exchange for the risk of lending their nest egg? There are different options for everyone, just shop and find the best fit.

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