Hard Money Loans in Houston, Texas
Houston, TX has 50 private money lenders operating within the city. The mean note issued to borrowers is around $292,988. Rates for hard money loans average around 12.5%. The typical note issued in the city is for 43 months. A typical hard money loan offered in the city carries a 3.7 point origination fee. Lenders in Houston average a 73% loan to value on their deals.
Loan Example 1
Arlene finds a duplex in the Spring Branch Central subdivision of Houston, TX to renovate and re-sell. Since she doesn't have enough cash available to purchase the $350,000 project outright, she takes out a hard money loan from North Side Investment Company . The terms of the loan include a 55% loan-to-value (LTV), so she must bring 45% of the price as cash at closing, making the principle note amount $192,500. The deal also includes these features: 1) a 12 month term, 2) a 8% interest-only note, and 3) a one percent origination fee.
Therefore, Arlene will have to make a $157,500 down payment in addition to paying a $1,925 origination fee. she must then pay $1,283 monthly to the lender. If Arlene accomplishes her goal of a $507,500 sales price when the loan term expires, she would pocket a total profit of $140,175 after re-paying the principle on the note and subtracting the cash she brought to closing, the origination fee, and the total monthly interest payments.
Loan Example 2
Big Lake Finance Corporation issues a hard money loan to Clyde for a remodeling project in the Neartown - Montrose neighborhood of Houston, TX. The deal dictates the following:
a) A $360,000 sales price, b) a 85% loan-to-value (LTV), c) a 18 month term, d) a 14% interest rate, and e) a 2% origination fee.
If Clyde accomplishes his goal of a $468,000 sales price, the numbers of the project will be as follows:
$468,000 sales price
- $306,000 note principle (85% LTV)
- $54,000 down payment (15% on 85% LTV)
- $6,120 origination fee (2% of the $306,000 principle)
- $64,260 interest payments (18 months x 14% interest)
= $37,620 total profit (does not include taxes or rehab costs)