When someone quotes 14 percent like it's a normal number, the rate is describing the risk, not the reward
It happens more often than people expect: someone mentions casually that they're raising for a bridge position on a small mixed use building and can pay 14 percent, said the way you'd mention a good taco place. The right first move is never a yes on the spot, it's asking for the paperwork. A full package usually reveals what the number is actually describing. Say the 14 percent sits in a second position behind a bank loan at a much lower rate, and the exit is a refinance into permanent financing after the sponsor stabilizes a retail space, currently one vacant storefront with one tenant on a lease with fourteen months left. If that submarket already shows two or three other empty storefronts on the same block, the whole return depends on leasing a space in a market that is visibly not leasing easily. The 14 percent in a case like that isn't generosity. It's the number it takes to get someone to stand behind a bank loan and wait on a storefront lease that may or may not happen. Once that's clear, the rate stops looking like a reward and starts looking like a description of the risk being carried. The useful discipline is passing on anything where the answer to what has to be true for repayment can't be stated in one sentence, and being comfortable that a sponsor who takes a no well is usually worth staying in touch with for the next deal.
