Interest Rates for 100% Financing Fix and Flip Program

Learn about the typical interest rates for Rehab Financial Group’s 100% Financing Program for residential property fix and flip projects in 30+ states. Private Lender Link’s CEO, Rocky Butani visited the company’s office in January 2023 to interview RFG’s President, John Santilli. Watch the video or read the transcript below.

ROCKY BUTANI:
What are the typical interest rates for your loans?

JOHN SANTILLI:
Our interest rates range from about 10.50% up to 12.50% at this point in time (early 2023).

ROCKY BUTANI:
Over the last few years, from 2017 to 2022, most other lenders in the private lending space have been around 8% to 10% interest. What do you say to investors that are looking at your interest rates as being higher? Why does that make sense?

JOHN SANTILLI:
I’m going to answer this in a couple different ways. Number one is that our cost of money structure is different. A lot of our competition get their money from third-party sources, whether that be Wall Street, insurance companies, or something different, and their cost of money is different. Because I offer the 100% loans, I cannot sell my loans to Wall Street. Nobody wants my loans. We keep them all on our balance sheet. So we have private investors that are willing to take on that risk, and they afford a different pay scale back to them, as well. So the fact is that what I say to a typical investor that is comparing me to an 8% to 9% interest rate, is that a lot of those customers are paying a minimum of 10% down in the past, now they’re paying 20% down, but that 10% down that they’re paying, the fact is that they cannot make that up based on an interest rate difference in 12 months period of time of 1% or 2%. My rates during that period of time will be between, again, 10.5% to 12% versus a 9% loan, and the reality is the monthly payment. What would you rather pay? Would you rather pay an $800 per month loan or a $1,200 per month loan but save $20,000 at the closing table? The math is pretty simple. That $400 over 12 months difference doesn’t make up the difference. So it’s better for a customer, in our opinion, to have more cash in your pocket upfront and not have to turn around and put out all of that cash out of your pocket. And the interest rate is really just the function of the investment.

ROCKY BUTANI:
So by having more cash on hand, that means I could do more projects?

JOHN SANTILLI:
A hundred percent. Most of our customers, especially for those that are experienced, will take that extra cash and invest in multiple projects at once.