Private Money Lender Cost
Private money: 8-15% rate, 2-4 pts upfront, 6-12 month term. Fast funding (1-2 weeks). For fix-and-flip, BRRRR, bridging.
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Private money lenders provide fast capital (1-2 weeks) at 8-15% rates with 2-4 origination points. Used by real estate investors for fix-and-flip, bridge financing, and time-sensitive opportunities where banks can't move fast.
When Private Money Wins
Time-sensitive deal closing in 1-2 weeks. Property doesn't qualify for conventional. Distressed property needing rehab before financing. Bridge between sale and purchase. Fix-and-flip with quick exit strategy.
Cost vs Speed Trade-Off
Bank loan: 4-7% rate, 30-60 day close, full underwriting. Private money: 8-15% rate, 1-2 week close, asset-based. Higher cost worth it if deal generates 25%+ ROI in same period.
Exit Strategy Critical
Always have exit before borrowing. Fix-and-flip: sell within 6-12 months. BRRRR: refi to conventional after rehab. Bridge: close on sale of existing property. Without exit, you face balloon payment + extension fees.
Last updated May 2026. Sources: BiggerPockets Private Money.