Reality Corporation goes to the bank and borrows $5,000,000 at 8%
with no loan origination fees because it has steady cash flow does
not need the money for several months.
2.) The Orange
Property Management Corp. does not have a steady income stream but
has real estate equity that it can use as collateral to obtain a
$5,000,000 hard money loan against it's real estate equity for 10.5%
interest plus a 5 point loan origination fee. Alpha Property
Management Corp. it's money in 10 days.
Loans come in all types shapes and sizes, and Sunkist Reality wouldn't
hear of paying 10.5% with their flawless credit, while Orange Property
Management Corp. must pay 10.5% and 5 points to obtain his hard money
loan because it needs the money immediately