Like I wrote last week, my boss (I work as an acquisitions analyst for a small REPE firm) is starting a bridge lending/hard money lending platform soon which I'm very excited about. He is a very reasonable guy and we have not yet discussed how I would get paid on origination.
What do you think is reasonable for me to get paid on a deal if I originate?
Ex: I originate 5 million in bridge loans, what should I expect to be paid?
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Let me calculate how much your boss is making first
Our customers usually finance 80% for their bridge loan business at LIBOR+50 plus fee and lend out the money at around LIBOR+220
So for a $5M loan, your boss is making $4M* ~150bps + $1M* (LIBOR+220) = ~$100K per year
Now if he is expecting a 10% return on his $1M Capital, then there is literally nothing left to pay any bonus....if he’s expecting 8% return on his capital, then there is a net 20k per year to pay out, but remember I haven’t account for your firm’s overhead yet
I dont see them lending at Libor+220. Thats bank money or just a little above bank money imo. This appears to be a typical small private lender. When I was a broker, I used to speak with these shops every day. Most of the shops lend at 8-10% for a short term bridge loan. 8-10% would have to be charged in order to make a decent return.
What are your points to the house? thhddd I believe your analyzing a bank bridge loan. This is more private/hard money where there will probably be 1.5-2pts to the house.
On average we pay 0.51% for avg loan size of $20M+
I’ve only seen 1.5pts+ in small balance loans
I dont believe this to be either of those scenarios. I could be wrong but this looks like old school private money.
8 - 9% 1-2pts to the lender 1-2yr term
I somewhat standard private money.
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