Anyone dealt with private lenders that don't charge a committment fee?

[Mamaof3]

..........and are reasonable to deal with??

We have one that we have been using for a few years but would like more options for our next project....

The majority seem to charge this ridiculous committment fee just to look at the deal with no gaurantees that they'll even offer anything. Happy to pay for valuations obviously.

Suggestions please

 

[Ausprop]

I think most of them are scams. I paid $15k to a guy to look at a deal and then surprise surprise couldn't do it

 

[Aaron_C]

Everyone will charge a mandate fee at a minimum. The reason for this is that many commercial deals tend to be time-wasters so lenders like to ensure you are serious before applying.

 

[Aaron_C]

I think most of them are scams. I paid $15k to a guy to look at a deal and then surprise surprise couldn't do it

Yeah it has to be reasonable, I agree a lot of them are scams.

 

[Mamaof3]

Yep, agree most of them grab their committment fee and then take their time to assess the deal and surprise surprise aren't happy to even offer anything.

We've been dealing with a really honest private lender who doesn't charge a committment fee and are fairly good to deal with but there must be more around?

 

[Aaron_C]

We've been dealing with a really honest private lender who doesn't charge a committment fee and are fairly good to deal with but there must be more around?

No because private lenders tend to be lenders of last resort so they dictate the rules. I don't like dealing with them for that reason.

 

[Ace in the Hole]

What kind on money and type of deals are these private lenders being used for?
What are the interest rates like?

 

[Aaron_C]

What kind on money and type of deals are these private lenders being used for?
What are the interest rates like?

Usually commercial stuff like development finance. Upward of 9%.

 

[Ace in the Hole]

Are these private lenders set up as businesses specifically lending to those who can't get traditional finance?

 

[Aaron_C]

Are these private lenders set up as businesses specifically lending to those who can't get traditional finance?

Yeah they are usually sourced from private individuals who want a better return on their money. Their niche is for those people who can't get finance from your mainstream lenders - so they tend to get the trickier deals hence they charge a lot more.

 

[Mamaof3]

We put stuff through private lenders that banks typically banks don't like or drag out 6mths assessing...private lenders are much quicker (well the ones we've dealt with) and yes, we're paying a premium for it but we allow that in our costings so doesn't really matter for us. At the end of the day, if they're willing to provide the finance for our project and won't make us jump through hoops to get it then we're happy

Oh in terms of rates, we pay 10-11% but it all depends on the deal itself and what you're willing to offer up, what LVR you're after etc. Lots of factors which could increase/decrease the rates and a little.

 

[Ace in the Hole]

We put stuff through private lenders that banks typically banks don't like or drag out 6mths assessing...private lenders are much quicker (well the ones we've dealt with) and yes, we're paying a premium for it but we allow that in our costings so doesn't really matter for us. At the end of the day, if they're willing to provide the finance for our project and won't make us jump through hoops to get it then we're happy

Oh in terms of rates, we pay 10-11% but it all depends on the deal itself and what you're willing to offer up, what LVR you're after etc. Lots of factors which could increase/decrease the rates and a little.

I know what you mean about the private lenders being easy and quick.

We just borrowed 350k yesterday to finish off a development.
Cost us 20% interest and just over 10k in fees for a 3 month loan.
Real cost is 30k to borrow 320k, as interests and costs are up front.
But got the money easy and quick.

Banks wouldn't do it even though it's a super low LVR.

 

[Mamaof3]

I know what you mean about the private lenders being easy and quick.

We just borrowed 350k yesterday to finish off a development.
Cost us 20% interest and just over 10k in fees for a 3 month loan.
Real cost is 30k to borrow 320k, as interests and costs are up front.
But got the money easy and quick.

Banks wouldn't do it even though it's a super low LVR.

Exactly Ace in the Hole but sometimes thats the cost of doing business and to get the job done. Obviously private lending is kinda a last resort but with our last project, it wasn't really a last resort, we chose to go down the less painful path of getting the funds and it really was hassle free and minimal paperwork in comparison to what the banks demand.

 

[Ace in the Hole]

Exactly Ace in the Hole but sometimes thats the cost of doing business and to get the job done. Obviously private lending is kinda a last resort but with our last project, it wasn't really a last resort, we chose to go down the less painful path of getting the funds and it really was hassle free and minimal paperwork in comparison to what the banks demand.

The paperwork is a nightmare with the banks, especially when there are company trusts, guarantors, etc required, it's crazy.
Then there's the commercial valuatons, quantity surveyors, so many costs involved and so much paperwork.

I'm going to pay cash for everything from now on !!!