How much percentage does it make sense to take out a loan for interest?
How much percentage does it make sense to take out a loan for interest?
5% interest to the lender - is this reasonable or very low?
I'm not looking for answers of: If the lender agrees then it's excellent, but really understand if it makes sense.
For example if I offer the lender 3% interest it is clear that it is low and not even reliable.
How about 5%?
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- 5 percent is the interest that an American with excellent credit, good income and excellent history currently receives in the United States.
- Not worth it…
Not because of the risk ... not because of the alternatives ... in terms of offers from other investors and in terms of types of investment - Balloon Loan for a Short Period Decrease Manny's annual percentage. Only the interest is returned each month. Thirty-year mortgage to foreigners about 10 6 percent.
- If you are raising in the country then 5% is excellent, there are a lot of people who are not interested in trading stocks or real estate alternatives of elevators banks, so giving the lender interest on money that does nothing is great…
Although there are alternatives to other borrowers who are willing to pay more there are also borrowers who pay less .. - Interest is a function of chance, versus risk, versus alternative use.
I have $ 1. What can I do to make a profit?
I can put it in a savings account. This will give me an interest rate of between 0.5% and 1.5% without risk.
I can put it in a Certificate of Deposit (CD) for one to 5 years - it will give me a return of up to 4% - again, without risk.
I can invest in stocks, bonds, or mutual funds - here I start taking risks, but the return can reach up to 14% or more on a long-term average. In the short term, I can invest relatively solidly in the S&P 500 and get about 7%. Now Liat Michalovitch comes and offers me instead, to lend * her * my dollar, for some interest, and risk that her investment will fail, that she will stop paying me, I'll have to foreclose on the property, and get stuck with it until I can sell it - hoping to get at least my dollar back - maybe with some profit. I know that if Liat could, she would have taken her conventional mortgage from a mortgage bank, with an interest rate of 5% -6% for thirty sleep. But she probably can not. Maybe it's an asset of 5+ units? Maybe it's a commercial property? Maybe she still does not have a credit rating, and all the bureaucracy just does not suit her? Now she comes to me…What can lower the risk for me, so that I will give it a lower interest rate?
Loans can range from 6 months to 30 years. Short-term loans of 6 months to 9 years are considered bridging or hard money loans - usually will be in the range of 15% -2% interest, with 5-XNUMX points. They are particularly suitable for flips, deals that need to be closed quickly (before foreclosure for example), and properties that require a serious upgrade.
Longer term loans can fall from 5% to 9% today, and are suitable for long-term rental assets.You can try to get a lower interest rate if you agree:
* Pay off points in advance
* Shorten the life of the loan and repay the "balloon" in 3, 5, or 10 years (or refinance the loan on terms that will be available then)
* Make payments of principal and interest, instead of interest only
* Taking a loan at a percentage lower than the value
* Add investors with more experience and possibly with a better credit rating
* Make the lender an investor and give him Equity
* Pledge another property under the same loan
* and so'If you get an offer at a certain interest rate, you need to calculate the cash flow, and the other risks involved (can we get a new loan at the end of the period? What if the interest rates go up by then?) - if the numbers do not work, you can try to change parameters and find another loan Is to find another property, where the numbers will work.
** I am a licensed Residential Lending Agent for 1-4 residential units, and also a commercial loan broker for other types of properties, and I have lenders and business partners who can offer creative solutions in most US states - I would love to answer more questions on the subject!
- 5% in this country is good interest for the investor in the current situation.
Assuming that this is a short-term loan and up to 50 percent of the value of the property it is also safe for the lender.
The current alternatives in the banks are less than one percent for a period of several years, and similar loans in companies such as Triya and similar companies give similar interest rates.
I took a loan from someone for half a year and gave him 5% plus another per month, but it was mine and it was right for me to offer it.
As you said, if he is ready and it is better than his alternatives today then it is excellent for him and for you - Professional explanation
- It will be difficult for you to raise large sums with such interest rates. It matters very much whether he accepts any collateral from you
- 5% with short term collateral is a nice yield.
- Thanks Eyal for an instructive explanation
Thanks Eyal for an instructive explanation
5% with short term collateral is a nice yield.
It will be difficult for you to raise large sums with such interest rates. It matters very much whether he accepts any collateral from you
Professional explanation
5% in this country is good interest for the investor in the current situation.
Assuming that this is a short-term loan and up to 50 percent of the value of the property it is also safe for the lender.
The current alternatives in the banks are less than one percent for a period of several years, and similar loans in companies such as Triya and similar companies give similar interest rates.
I took a loan from someone for half a year and gave him 5% plus another per month, but it was mine and it was right for me to offer it.
As you said, if he is ready and it is better than his alternatives today then it is excellent for him and for you
Interest is a function of chance, versus risk, versus alternative use.
I have $ 1. What can I do to make a profit?
I can put it in a savings account. This will give me an interest rate of between 0.5% and 1.5% without risk.
I can put it in a Certificate of Deposit (CD) for one to 5 years - it will give me a return of up to 4% - again, without risk.
I can invest in stocks, bonds, or mutual funds - here I start taking risks, but the return can reach up to 14% or more on a long-term average. In the short term, I can invest relatively solidly in the S&P 500 and get about 7%.
Now Liat Michalovitch comes and offers me instead, to lend * her * my dollar, for some interest, and risk that her investment will fail, that she will stop paying me, I will have to foreclose on the property, and get stuck with it until I can sell it - hoping I get at least my dollar Back - maybe with some space.
I know that if Liat could, she would take a conventional mortgage from a mortgage bank, with an interest rate of 5% -6% for thirty years. But she probably can't. Maybe it's a property of 5 + units? Maybe it's a commercial property? Maybe she no longer has a credit rating, and the whole bureaucracy just doesn't fit her?
Now she's coming to me…
What can lower the risk for me, so that I will give it a lower interest rate?
Loans can range from 6 months to 30 years. Short-term loans of 6 months to 9 years are considered bridging or hard money loans - usually will be in the range of 15% -2% interest, with 5-XNUMX points. They are particularly suitable for flips, deals that need to be closed quickly (before foreclosure for example), and properties that require a serious upgrade.
Longer term loans can fall from 5% to 9% today, and are suitable for long-term rental assets.
You can try to get a lower interest rate if you agree:
* Pay off points in advance
* Shorten the life of the loan and repay the "balloon" in 3, 5, or 10 years (or refinance the loan on terms that will be available then)
* Make payments of principal and interest, instead of interest only
* Taking a loan at a percentage lower than the value
* Add investors with more experience and possibly with a better credit rating
* Make the lender an investor and give him Equity
* Pledge another property under the same loan
* and so'
If you get an offer at a certain interest rate, you need to calculate the cash flow, and the other risks involved (can we get a new loan at the end of the period? What if the interest rates go up by then?) - if the numbers do not work, you can try to change parameters and find another loan Is to find another property, where the numbers will work.
** I am a licensed Residential Lending Agent for 1-4 residential units, and also a commercial loan broker for other types of properties, and I have lenders and business partners who can offer creative solutions in most US states - I would love to answer more questions on the subject!
If you are raising in the country then 5% is excellent, there are a lot of people who are not interested in trading stocks or real estate alternatives of elevators banks, so giving the lender interest on money that does nothing is great…
Although there are alternatives to other borrowers who are willing to pay more there are also borrowers who pay less ..
A balloon loan for a short period, discount 10 percent annually. Only the interest is paid back every month. Thirty-year mortgage for foreigners about 6 7 percent.
Not worth it…
Not because of the risk ... not because of the alternatives ... in terms of offers from other investors and in terms of types of investment
5 percent is the interest that an American with excellent credit, good income and excellent history currently receives in the United States.