This is part of Denver Home Financing Guide → [Denver Home Financing Guide] & Private Money → [Private Money]

Written by: Chad Cabalka

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Points, interest, and carry costs represent the true price tag of private money loans in Denver—often catching first-time borrowers off guard when excitement over fast closings fades into monthly reality. These three elements work together like compound interest on steroids, turning a $500,000 Congress Park duplex deal into $45,000+ in financing expenses over six months if not planned carefully. Understanding their mechanics upfront lets you calculate real profitability in our 2026 market, where private money runs 9-12% versus banks’ 6-7% long-term rates, ensuring your equity survives the bridge to conventional financing.[history]​

Points: The Upfront Entry Fee

Points function as origination fees—essentially prepaid interest charged as a percentage of your loan amount, typically 2-4 points (2-4%) in Denver’s private lending market. On a $400,000 loan at 3 points, you pay $12,000 at closing, rolled into the loan or wired separately, compensating lenders for quick capital deployment without bank-style underwriting. This one-time hit feels painful but buys speed—7-10 day closings that win Sunnyside multiple-offer battles where banks need 45 days.

Lenders price points by risk: clean-title Virginia Village flips get 2 points at 65% LTV; riskier Globeville rehabs with foundation work hit 4 points at 70% LTV. In 2026’s balanced inventory (3.8 months supply), experienced borrowers negotiate down to 1.5-2 points by proving track records—I’ve seen repeat investors save $8,000 per deal this way. The key comfort? Points don’t compound monthly like interest; pay once, move forward.

Interest: The Monthly Carrying Charge

Interest accrues daily at 9-12% annually on private loans, often interest-only payments that defer principal to the balloon date (6-24 months out). A $450,000 RiNo loan at 10.5% costs $3,938 monthly, totaling $23,625 over six months—compare that to a bank mortgage’s $2,400 principal-and-interest at 6.75%. Denver lenders favor interest-only structures during rehabs, preserving cash flow when rental income or sales haven’t kicked in yet.

Rates tier by property strength: Park Hill rentals with leases secure 9-10%; raw land or incomplete Lakewood flips push 11-13% reflecting execution risk. Post-2025 Fed cuts, top-tier deals dip toward 8.75%, but averages hold 10.25% per recent lender data. Your long-term peace hinges on short holding periods—interest compounds painfully if timelines stretch from contractor delays or soft sales like 2023’s brief dip.

Carry Costs: The Silent Profit Eater

Carry costs encompass everything beyond points/interest: property taxes ($4,200 yearly on $550K assessed value), insurance ($2,100 annually), utilities ($450/month vacant), HOA dues ($150/month in Highlands Ranch), and misc (HOA estoppics $350, permits $1,200). A 90-day Aurora flip carries $8,500 beyond loan payments; six months balloons to $22,000, slashing 20% off projected ROI. These expenses run regardless of tenant status or rehab progress, hitting hardest when ARVs underperform comps.

Denver specifics amplify this: 2026 property tax rates average 0.78% metro-wide, but Douglas County (Highlands Ranch) hits 0.92% while Denver proper stays 0.71%. Winter utility spikes add $200/month to vacant flips; permit delays in historic Congress Park tack $3,000+ in holding. Savvy borrowers budget 1.5% monthly of purchase price for carries, building buffers that turn tight deals profitable.

Breaking Down Total Cost Structure

Cost Type	Example: $450K Loan @ 70% LTV	6-Month Total	Denver Impact Example
Points (3%)	$13,500 upfront	$13,500	Funds RiNo close in 8 days
Interest (10.5%)	$3,938/month x 6	$23,625	Eats $4K/mo during rehab
Property Taxes	$1,575/6 months	$1,575	Highlands Ranch Q2 bill
Insurance/Util	$1,200 + $2,700	$3,900	Vacant Wheat Ridge winter
Total Carry	$42,600 (9.5% of loan)	$42,600	20% ROI → 12% actual

This table reveals why 65% LTV deals (lower loans) save $7,000+ versus 75%—smaller principal shrinks all components proportionally.

Layered Impact on Denver Deals

Stack these costs against timelines: a $525,000 Park Hill duplex purchase with $75,000 rehab pencils at $800,000 ARV (22% spread). At 3 points ($15,750), 10% interest ($26,250/6mo), and $9,500 carries, total financing hits $51,500—dropping ROI from 22% to 13.5% after reserves. Conservative planners build 25% gross margins to absorb this; optimists celebrating “18% spread” wake to thin profits.

Neighborhood math varies wildly: RiNo condos carry higher HOAs ($300/month) but faster flips (45 days); Lakewood single-families tax heavier but rent immediately at $3,200/month. 2026’s 4-6% appreciation cushions some pain, but balanced supply means 10-15% price corrections in overbuilt pockets like outer I-25 corridor. Master this math pre-offer—your financial stability depends on it.

Strategies to Minimize Total Burden

Shorten timelines ruthlessly: 90-day flips cut interest/carries 50% versus 180 days, preserving $18,000 on average deals. Negotiate interest-only with draws tied to inspections, starving cash during cosmetic phases. Bring 35% down (under 65% LTV) to slash loan size 15%, dropping all costs proportionally—$450K becomes $385K, saving $9,500 total.

Build lender relationships for 1-2 point deals; track record trumps rate-shopping. Pre-arrange refi partners for day-90 cash-out at 6.75%, turning expensive bridges into wealth ramps. Families bridging Centennial-to-Edgewater find deferred interest (no payments til sale) preserves liquidity during transitions—critical when carrying two mortgages.

Long-Term Financial Peace Formula

These costs test discipline most: borrowers treating private money like long-term debt drown in 11% payments while banks offer 30-year amortization at half the rate. The proven path flips fast (under 120 days), refis winners, repeats selectively—compounding equity through Denver’s steady growth. I’ve guided families who cut carries 30% through neighborhood selection alone, turning $50K flips into $150K portfolios over five years.

Emotional toll matters too: predictable math eliminates midnight sweats over tax bills or rate resets. Sustainable investors sleep knowing spreads exceed costs by 8% minimum, building generational stability.

When Costs Signal Walk-Away

If total carry exceeds 12% of loan annually without 25%+ gross spread, reconsider—$60K financing on $500K deals leaves no error room for 2026’s permit delays or buyer pickiness. Compare against hard money (10-14%) or portfolio lines (8-9%) for repeaters. Denver rewards matching tools to timelines, not forcing expensive fits.

Your Path to Cost Clarity

Ready to run precise numbers for your next Denver deal—from Five Points multi-family to Highlands Ranch bridge? Reach out for that practical conversation where we map points, interest, and carries against your specific property and timeline. With 25+ years decoding metro lending costs, I deliver the straightforward math that turns opportunities into sustainable wins—no hype, just the reliable guidance your family or portfolio deserves. Let’s connect and eliminate the guesswork today.

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