Turning Terms into Returns — Part 6: The Fees Many Investors Overlook

Rate, points, and LTV caps get all the attention when evaluating hard money lenders. The fees covered in this post rarely come up in lender conversations — but they affect your bottom line on every deal, and they're fully predictable before you sign anything.

Doc Prep Fees

A fixed fee to prepare loan documents, typically ranging from $995 to $1,995. It doesn't scale with loan size — which makes it disproportionately expensive on smaller deals.

On a $300,000 loan, a $1,500 doc prep fee represents 0.5% of the loan. On a $75,000 loan, that same fee represents 2% — before a single point is paid. A lender advertising 2 points on a smaller deal can easily become a 4-point deal once doc prep is factored in.

Always calculate doc prep as a percentage of your total loan, not as a flat dollar amount.

Draw Fees and the Draw Process

Rehab funds are disbursed in draws as work is completed. Each draw typically costs $150–$300, with $250 being common.

But the fee is only part of the story. The draw process itself varies significantly across lenders. Some have technology-based systems with fast approvals and same-day wire transfers. Others require paperwork, inspections that take days to schedule, and manual processing that can delay your contractor by a week or more.

A slow draw process costs more than the fee itself. When your contractor is waiting on funds, your project timeline extends — and every extra week is another week of interest, carrying costs, and delayed sale proceeds.

Before signing with any lender, ask how long draws typically take and whether they have a technology-based approval process.

Appraisal Required

Typically $600–$800 and can add a week or more to your closing timeline. On a deal with multiple competing offers, that extra week can cost you the property entirely.

Not all lenders require an appraisal. When evaluating lenders, ask upfront — and factor closing timeline into your comparison alongside rate and fees.

Why These Fees Matter

These costs are fixed and fully predictable before you commit to a lender. That makes them easy to model — and easy to overlook when you're focused on rate and points. On smaller deals especially, doc prep and draw fees can represent a meaningful percentage of total financing cost.

RE Data Metrix includes doc prep fees, draw fees, and appraisal costs in every lender comparison so the complete cost picture is visible before you make a decision.

Analyze your next deal with RE Data Metrix →

Next in the series — Part 7: Putting it all together. One deal, two lenders, every variable modeled side by side.