What Hard Money Really Costs, Line by Line

More than a bank loan, and more than the rate alone suggests. The full cost includes interest, points, lender fees, third-party closing costs and the carrying costs of holding the property. The longer the hold, the more it all adds up.

Interest

Private loans carry higher rates than bank mortgages because they're shorter, faster and often fund properties banks won't. Where your rate lands typically depends on leverage, property condition, your experience and the term.

Most are interest-only, so you pay interest monthly and repay the full balance when you sell or refinance.

At RSC Private Lending, Fix & Flip rates start from 8.000%, and experience moves the number. For a 760+ FICO borrower on a light rehab at up to 80% of purchase and 70% of ARV, the rate is 11.250% with no completed projects and 8.000% with 12 or more. Final pricing depends on experience, credit, leverage and location.

Points and lender fees

A point is 1% of the loan amount, paid at closing. On a $300,000 loan, each point is $3,000. Some lenders also charge separate processing, underwriting, document or draw fees. Ask whether a quote's points include everything the lender charges or whether more line items follow.

Third-party closing costs

These apply to almost any real estate loan:

• Title search and lender's title insurance
• Escrow or settlement fees
• Recording fees
• Appraisal or other valuation
• Property insurance premium

They vary by state and deal size. At RSC, an appraisal or due-diligence fee may be due upfront, and most other costs are paid at closing.

Carrying costs while you hold

Every month you own the property costs money: interest, property taxes, insurance, utilities, HOA dues if any, and basic upkeep. These aren't loan fees, but financing decides how long you can afford to carry them.

Comparing two offers

Example: On a $300,000 loan held eight months, compare two illustrative quotes:

• Offer A: 10% rate, 3 points. Interest about $20,000, points $9,000. Total: about $29,000.
• Offer B: 11% rate, 1.5 points. Interest about $22,000, points $4,500. Total: about $26,500.

The lower rate costs more over this hold. If the hold stretched past 18 months, the math would flip. Always compare on your expected timeline.

Also check extension terms, late fees and any prepayment rules. A cheap loan that's expensive to extend can wipe out the savings if your project runs long.

What this means for you

Build a one-page cost sheet for every deal: total interest over a realistic hold, all points and fees, third-party costs and monthly carrying costs. Then add a few months of cushion. That's your real cost of capital.

Want a clear cost breakdown on your next flip? Send RSC Private Lending your scenario for a term sheet in 24 hours. Subject to underwriting.