A hard money loan is a loan acquired through a private lender instead of through a traditional bank. Hard money loans are typically asset-based, which means our primary focus when determining a loan amount is based mostly on the value of the collateral itself. It is mainly based on the real estate value and the equity you possess, rather than personal factors like employment or income requirements

That is up to you;

A Hard Money Loan can be a valuable tool for real estate investors when purchasing investment properties.

Speed and Efficiency: Hard Money Loans are known for our swift approval and funding times. Lenders like us can close as fast as 14 business days Unlike traditional loans, which can be a lengthy process. We focus more on the property's value than the borrower's credit history. This speed and efficiency can give investors like yourself a competitive edge in a continuously fast-paced real estate market.

Flexibility: Hard money loans are versatile and can be used for various real estate investments, including buying properties, and making the necessary repairs to force appreciation. They are especially beneficial for short-term (12 to 24 Months) investments like property flipping.

Access to Capital: Hard money loans may be easier to secure than traditional financing options, making them suitable for investors who may not meet the stringent requirements like (Debt to Income Ratios, etc) of conventional lenders. This accessibility allows investors to seize opportunities quickly without worrying about the traditional bank requirement to qualify for a loan to buy and Investment property.

Higher Loan Amounts: Hard money lenders typically base loan amounts on the property's appraised value, and the Investor's experience, rather than the borrower's financial situation. This can enable investors to access larger amounts of capital for their projects.

Greater Profit Potential: While hard money loans often come with higher interest rates and most with no prepayment penalties, investors can offset this by completing their projects quickly. The quicker turnaround time could result in faster, and bigger profits, potentially outweighing the higher interest rates and borrowing costs.

Cash Out-Refinance: Investors can turn their Bridge, Fix & Flip Loan, and Refinance as quickly as 90 days. You can talk to us and we will provide terms for you to decide if you selling, or Keeping the property as a rental. The more properties you keep the bigger your portfolio becomes. Cashing Out provides investors the ability to continue to buy properties and repeat the cycle.

In conclusion: As a lender, Hard Money Capital Group can be a valuable resource for investors like when buying investment properties. We offer, reliability, speed, flexibility, and access to capital.

*If you have a loan scenario that you would like us to provide terms, have any questions, or would like to discuss this topic in more detail please feel free to reach out to us.

* We are not offering any financial advice. Hard money loans If used judiciously, can contribute significantly to the success of your real estate investment goals.

*You must evaluate all pros, and cons when choosing the type of property,  and a lender to fund your deal.

investors use hard money primarily for flexibility, speed, and higher leverage.

The Short Answer is 48 Hours

Depending on

1- Title

2- INsurance

3- Appraisal

48 hours after everyone has delivered everything that we need to close and that Includes all the Documents that we request our borrowers to provide.

*The typical close takes 21 Business days for everyone to bring us everything we need. 

The downpayment is determined based on your credit and Experience.

The more experience ,and Higher credit  score the highr leverage you will receive.

Yes. 

Every property we lend on is required to carry title and hazard insurance.

Terms are always based on 3 things

1- The real estate Investors Experience

2- Their Credit Score

3- The real estate asset and the market that's located

*Interest rates range from 8.9%-10.9%, 2-3 points, and the document fees.

The borrower is always responsible for all 3rd Party Fees.

Title

Insurance

Appraisal

Commissions 

Etc

NO, Hard Money Capital Group, LLC does not charge any upfront fees.

*Do you charge a lender’s fee?

Yes, After terms are approved by the borrower, the borrower will pay the lender origination points costs and the processing fee that will cover the doc prep fees, etc. 

A list of all the costs and fees will be provided with the term sheet.

*Are there any other fees?

Yes, the borrower is responsible for all third-party fees such as appraisals, HUD, Title, Lawyers fees, or project feasibility studies, and broker points if any.

TERMS are ALWAYS based on YOUR Credit and Experience. Our loan Matrix is designed to calculates TERMS based on your Credit and Experience. NO exceptions

How is he Down payment determined.  The downpayment is determined based on your credit and Experience.

The more experience and better credit the highr leverage you will receive.

MIn Credit to apply is 660+

We can work with 620+ Credit Scores, but Leverage is drastically reduced.

Credit score is determined by your track record. After you have approve terms we will send an authorization form to pull credit for the 3 credit bureaus.  

(Equifax, Experian and TransUnion) are the three main consumer credit bureaus. They collect and store information about you that they use to generate your credit reports, which are used as the basis of your credit scores.

• When the three scores are returned, the median FICO score will be utilized as the Qualified Score for the proposed transaction.

• If two scores are returned, the lower of the two scores will be utilized as the Qualified Score for the proposed transaction.

Note:

No  lender can pull credit without you authorizing them and signing an authorization for to do it, and they have to keep that form in a safe secure area. 

We base our approvals on the real estate asset, the experience of the borrower, and their credit score to see the overall likelihood that the project will be successful. 

While we do require a 660+  Min Fico and review the credit history of the investor, it is not the primary component of our decisions, and many borrowers with damaged credit are able to be approved.

We can make exceptions with 620-+ Credit Scores, but leverage will be drastically reduced

• If three scores are returned, the median FICO score will be utilized as the Qualified Score for the 

proposed transaction 

• If two scores are returned, the lower of the two scores will be utilized as the Qualified Score for the proposed transaction  

Here are 12 Benefits of using Bridge Loans from Private/Hard Money Lenders to buy real estate:

Quick access to funds, the typical close is 14 business days.

 Flexible lending criteria that are based on the property value and more lenient repayment terms, such as interest-only payments.

 Ability to finance non-conventional properties that may not qualify for traditional bank loans.

 Fix and flip loans come in Dutch and Non-Dutch Loans?

 Dutch or Non-Dutch? A Dutch construction loan accrues interest on the entire loan balance regardless of what portion of the construction funds have been advanced by the lender, while a Non-Dutch Loan ONLY accrues interest on the portion of the funds advanced to date and Not the complete renovation budget held back.

 Fix and flip loans are short-term loans that are specifically designed to help real estate investors purchase and renovate properties for resale.

 Fix and flip loans can be used to finance the purchase of a property, as well as the cost of renovations and repairs.

The loan amount is typically based on the after-repair value (ARV) of the property, which is an estimate of the future property's value forcing appreciation by renovating the property.

Fix and flip loans can be obtained from Institutions, Direct Lenders, Private lenders, Hard money lenders, or specialized lenders that focus on real estate investing.

The terms of fix and flip loans vary depending on the lender but typically they don't have a prepayment penalty, and range from 6 months to 24 months.

Terms are always based on the Investor's Experience and Credit Score. The more experience and Higher credit Score the more Leverage the Investor can be approved for.

Fix and flip loans are a great tool for real estate investors who have a solid plan for renovating and selling the property quickly and for a profit.

Do you have a loan scenario that you

would like us to run numbers on?

Contact us Today!

info@hardmoneycapitalgroup.com

10 things you didn’t know about DSCR loans

*DSCR stands for Debt Service Coverage Ratio, which is a measure of a property's ability to generate enough cash flow to cover its debt obligations. They focus on the property's cash flow rather than the borrower's proof of income.

*DSCR  is used to determine whether a property has enough net operating income to pay back the loans.

* The DSCR formula is: 

DSCR = Net Operating Income / Total Debt Service.

* If you have negative cash flow. You don’t have enough rental income to service the debt (New PITI payment)

* You have exactly enough rental coming in to service the debt (New PITI payment), but you don’t have an additional cash cushion.

* You have positive cash flow. 

The higher your DSCR, the more income you have to service the debt (New PITI payment)

 * The DRCS ratio is especially important because the result gives some indication to the lender of whether you’ll be able to pay back the loan with interest. 

What is a good DCRS Ratio?

A good DSCR ratio over 1 is good, and anything over 1.2 or more is best.

* Lenders use the DSCR ratio to determine how much debt a property can support. A higher DSCR ratio indicates a lower risk of default.

* DSCR loans may have longer repayment terms than other types of commercial real estate loans, up to 30 years in some cases.

* DSCR loans may have prepayment penalties if the borrower pays off the loan before the end of the term.

What is a Dutch loan?

Some private lenders use a method of interest accrual known as “Dutch interest” for a hard money construction loan which calculates payments based upon the entire loan amount rather than payments on partial advancements in a construction loan.

To put it simply, Dutch Interest is when a lender begins charging interest for a loan before the full amount of committed funds before they have been disbursed.

What is a Non Dutch interest Loan

It simply means that you pay interest only for the amount that has been disbursed and as you continue to make draws you continue to make payment on the amounts that are disbursed and so on.

A 1031 exchange is a swap of one real estate investment property for another that allows capital gains taxes to be deferred. 

The term—which gets its name from Section 1031 of the Internal Revenue Code (IRC)—is bandied about by real estate agents, title companies, investors, and more. Some people even insist on making it into a verb, as in, “Let’s 1031 that building for another.”

IRC Section 1031 has many moving parts that real estate investors must understand before attempting its use. An exchange can only be made with like-kind properties, and Internal Revenue Service (IRS) rules limit its use with vacation properties. There are also tax implications and time frames that may be problematic.

What Is Section 1031?

Section 1031 is a provision of the Internal Revenue Code (IRC) that allows a business or the owners of investment property to defer federal taxes on some exchanges of real estate. 

The provision is used by investors who are selling one property and reinvesting the proceeds in one or more other properties. It is not available to buyers or sellers of personal homes for their own use.

Qualifying Section 1031 exchanges are called 1031 exchanges, like-kind exchanges, or Starker exchanges. Section 1031 is sometimes known as the Starker Loophole.

What are the rules for 1031 exchanges?

The main requirements for a 1031 exchange are: (1) must purchase another “like-kind” investment property; (2) replacement property must be of equal or greater value; (3) must invest all of the proceeds from the sale (cannot receive any “boot”); (4) must be the same title holder and taxpayer; (5) must identify new 

What Is a Like-Kind Property?

The term like-kind property refers to two real estate assets of a similar nature regardless of grade or quality that can be exchanged without incurring any tax liability. The Internal Revenue Code (IRC) defines a like-kind property as any held for investment, trade, or business purposes under Section 1031, making them a 1031 exchange.1 This means both properties involved in the exchange must be for business or investment purposes. Personal residences, therefore, do not qualify as like-kind properties

Timing of the Exchange:

Section 1031 gives a taxpayer who sells business or investment real estate 45 calendar days from the closing to identify up to three (and under certain circumstances four or more) like-kind replacement real estate properties.

The Exchangor has 45 DAYS to nominate (identify) potential replacement properties and 180 days to acquire the replacement property.

The replacement must be acquired and the 1031 exchange completed by the earlier of 180 calendar days or the due date (with extensions) of the taxpayer’s return.

Can You Do a 1031 Exchange on a Second Home?

1031 exchanges apply to real property held for investment purposes. Therefore, a regular vacation home won't qualify for 1031 treatment unless it is rented out and generates an income.

Reporting a 1031 Exchange:

Even though the tax is deferred and no gain or loss is recognized, the 1031 exchange must be reported on Form 8824, Like-Kind Exchanges.6 The form's instructions explain how to report the details of the 1031 exchange.

The gain recognized from the boot is reported on Form 8949, Schedule D (Form 1040), or Form 4797, as applicable. If depreciation must be recaptured, then this recognized gain may have to be reported as ordinary income.7

There is a high level of complexity involved in the 1031 exchange process, and mistakes can result in significant costs. With that in mind, there are advantages to working with a reputable, full-service 1031 exchange company. In general, these companies cost less than attorneys who charge by the hour, and contracting a firm that has an established track record with these transactions can ensure that your like-kind exchange fulfills the requirements of the tax code.

The capital gains tax is the levy on the profit that an investor makes when an investment is sold. It is owed for the tax year during which the investment is sold.

The long-term capital gains tax rates for the 2022 and 2023 tax years are 0%, 15%, or 20% of the profit, depending on the income of the filer.

 The income brackets are adjusted annually. (See tables below.)

An investor will owe long-term capital gains tax on the profits of any investment owned for at least one year. If the investor owns the investment for one year or less, short-term capital gains tax applies. The short-term rate is determined by the taxpayer's ordinary income bracket. For all but the highest-paid taxpayers, that is a higher tax rate than the capital gains rate

The GAP is a percentage of the Purchase Price (10% – 20%- 30%), which the borrower YOU provides at the time of purchasing the property.

Meaning that the Institution that lends you the money to buy the real estate asset will  only give you for example 85% LTC.

You have to pay the difference between the 85% and the 100% of the loan. 

You will have to bring to the closing table the 15% that the Institution didn't provide PLUS the closing costs.

Why?

When a lender makes a secured loan for a fix and flip project, they typically lend up to the value of the security/collateral. Up to the value of the collateral, MINUS two very important pieces.

1. The cost of foreclosing on, and liquidating, the collateral to recover the funds loaned out.

2. Enough “skin in the game” from the borrower, to make sure that they don’t abandon the project if the going gets tough.

Recourse loans are loans that allow the lender to seize many of the borrower's assets if the borrower fails to repay their loan—even assets that were not included in the loan agreement as collateral. With a non recourse loan, the lender may only seize those assets specified in the original loan agreement as collateral.

Non-recourse debt is a type of loan secured by collateral, which is usually property. If the borrower defaults, the issuer can seize the collateral but cannot seek out the borrower for any further compensation, even if the collateral does not cover the full value of the defaulted amount.

A portfolio loan is a type of mortgage loan that is originated and held by the lender as an investment in their own portfolio, rather than being sold to a government-sponsored entity (GSE) like Fannie Mae or Freddie Mac, or to other investors in the secondary mortgage market. This means that the lender retains the loan and collects the interest and principal payments directly from the borrower.

Portfolio loans are often used for various reasons, including:

Non-Conforming Borrowers: Borrowers who do not meet the strict eligibility criteria of conventional loans (those eligible for purchase by Fannie Mae or Freddie Mac) may seek portfolio loans. This can include individuals with unique financial situations or credit histories.

Non-Conforming Properties: Properties that do not meet the criteria for conventional loans, such as certain types of investment properties, non-standard construction homes, or properties with significant repair needs, may require a portfolio loan.

Flexible Terms: Portfolio lenders may offer more flexibility in terms of loan terms, interest rates, and underwriting criteria compared to standardized loans.

Localized Lending: Some smaller community banks and credit unions prefer to originate and keep loans in their local communities. These lenders often offer portfolio loans to support their local housing markets.

Jumbo Loans: Loans that exceed the conforming loan limits set by Fannie Mae and Freddie Mac are known as jumbo loans. These loans are typically held in a lender's portfolio because they do not conform to standard guidelines.

Unique Situations: Borrowers with unique financial circumstances or self-employed individuals who may not fit into the traditional mortgage lending mold may find portfolio loans more accommodating.

Because portfolio loans are held by the lender and not sold on the secondary market, the lender has more control over the underwriting and approval process. This means they can make lending decisions based on their own criteria rather than conforming to standardized guidelines.

However, portfolio loans may come with higher interest rates and stricter terms because they carry more risk for the lender, as they are not backed by government agencies. Borrowers should carefully consider the terms and conditions of portfolio loans and compare them with other available mortgage options to determine what best suits their needs.

Min fico of 660+

*We can fund deals for investors that have Lower scores but Leverage will be affected/Lowered becasue of the investors low credit.

Foreign Nationals and Residents are  OK. Max LTV is 60% to 65%

No Felonies for Applicants

No Foreclosures & Bankruptcies must be 2 years old for any applicants to apply

No judgments/liens

No derogatory accounts

Have the ability to show funds, liquidity for the down payment, 3 to 12 months interest payments, and closing costs depending on credit and experience.

Expanding square footage is OK. We always fund 100% of the rehab budget but there's a cap based on your credit and experience.

We are able to close in an LLC or personal name depending on the State

No Primary Residences or owner occupied properties are allowed.

No Modular or Manufactured Houses are allowed.

• U.S. Citizen(s) (as verified with U.S. SSN, Driver’s License and/or U.S. issued Passport) 

• U.S. Legal Permanent Residents (as verified with an active, valid Green Card) 

• Guarantor(s) must of at least 21 years of age 

• Non-U.S. Residents / Foreign Nationals without a U.S. credit report, subject to provide identification to confirm they are able to enter the U.S. by either: 

o Valid and unexpired passport from their country of residence/citizenship or a Valid U.S. issued Visa that is indicative of temporary residency (not subject to Visa Waiver Program)

Evidence of Liquidity Lender/Capital Partners must document borrower liquidity through a combination of the following sources for the borrower and/or guarantor(s) (must be dated within 45 days of the loan origination date): 

• Bank, money market, 401K closing escrow, or securities account statement (2 months required, using the most recent balance) (Lender/Capital Partners reserves the right to request multiple statements if needed) 

• 50% of the value of 401(k) or IRA plans (1 month required, using the most recent balance) 

• Trust/business assets (if borrower/guarantor has the right to access; 1 month required, using the most recent balance) For purposes of verifying liquidity, any bank, brokerage, retirement, or other statement used must include the following: 

• Name of the institution 

• Validation of account ownership or Borrower(s)/Guarantor(s) name and business name, when applicable 

• Account number to include at least three digits of the account number 

• Visible and legible dates 

• Statements with ALL pages evidencing at least two months of consecutive activity or Electronic submission such as scans, photos, and faxes are acceptable so long as they are legible and include all of the above criteria 

Validation Documents for Borrowing Entities include the following: 

• Personal Identification for any member with 20% or more ownership within the entity Must be a VALID US Govenment ID (Driver’s License, Passport, Green Card, or other government issued photo identification acceptable) 

• Valid Certificates of Formation 

• (Articles of Organization / Incorporation) 

• Valid Operating Agreement / Partnership Agreement / Bylaws 

• Valid Certificate of Good Standing 

• W9

• EIN 

• Purchase contract & Any Addendums (Signed)

•  HUD/ ALTA (36 Mo. Prior Closing Statements)

These are the states that we are currently lending directly.

 Alabama

 Alaska

 Arizona*

 Arkansas

 California*

 Colorado

 Connecticut

 Delaware

 Florida

 Georgia

 Hawaii

 Idaho

 Illinois

 Indiana

 Iowa

 Kansas

 Kentucky

 Louisiana

 Maine

 Maryland

 Massachusetts

 Michigan

 Minnesota*

 Mississippi

 Missouri

 Montana

 Nebraska

 Nevada*

 New Hampshire

 New Jersey*

 New Mexico

 New York

 North Carolina*

 Ohio

 Oklahoma

 Oregon

 Pennsylvania

 Rhode Island

 South Carolina

 Tennessee

 Texas

 Utah

 Vermont

 Virginia

 Washington

 West Virginia

A Scope of Work (SOW) is a detailed outline of all planned construction and renovations of a project. A detailed SOW is essential for nearly every real estate investment strategy and requirement for funding with most lenders. ]

A Scope of Work (SOW) is a detailed outline of all planned construction and renovations of a project. A detailed SOW is essential for nearly every real estate investment strategy and requirement for funding with most lenders. ]

Why is an SOW so important in fix and flip projects?

A professional SOW often comes in spreadsheet form, with different sections dedicated to the various portions of your rehab or construction plan, with the ultimate costs to flip a house being summed together. If done correctly, the SOW will outline every single detail of an upcoming project and the materials to be used. Your SOW has many purposes:

It helps you and your lender accurately estimate the After Repair Value (ARV) of the property

It supports expectation alignment with your lender or any co-investors

It's a guide for your contractors to help keep the project on time and on budget

It helps you manage and document the various steps of your construction project

A professional SOW holds your contractors and subcontractors accountable throughout each project. If they see you as an organized and detailed project manager, they are more likely to also remain organized and on task. A detailed SOW also allows you to stay efficient, thus improving the likelihood that the project will be completed on time and within your set budget.

Having an accurate SOW is critical in determining if your target ARV is achievable or simply a dream – a clear acumen of the property's post-rehab condition is necessary for deciding its post-rehab value. Not only does an SOW help you better estimate your ARV – it allows your lender to estimate value too.

The importance of an SOW in financing

We've illustrated some important benefits of creating a detailed SOW for your real estate investment projects, but SOWs have another critical role to play for your lending partners. The SOW provides your lender the confidence in your vision and your ability to execute it. Most importantly, it allows your lender to complete their financial underwriting.

After closing, the SOW is critical in forming the basis for future capital infusions through draws. Lenders like US fund rehab costs using a draw process in which the loan is broken up into pieces referred to as "draws," which are released to you, the borrower, as reimbursements after the work (Each Phase) is completed and passes inspection. 

The first draw is released for the purchase of the property. Additional construction draws are released as the lender confirms work is completed according to the SOW, allowing you to fund subsequent portions of the project.

Without creating a thoughtful SOW upfront, investors can become confused when a lender does not approve a draw for work not part of the original approved plan. If the lender is unwilling to approve a related change order, it can create a problematic working-capital shortfall risk that could have been avoided.

Components of a scope of work

Your SOW should be very specific and thorough and also have a contingency or at least 15%. Broadly, it should include what work is being done, who will be doing the work, the timeline for completion, and the associated estimated costs for each phase, materials, etc. The following components should all be included in a scope of work:

Project overview: A detailed description of the construction project's goals, the work that will be done, and deliverables. It should also include insight into the quality of materials to be used, room or square footage additions, room conversions, redesigns, and any other future work on the fix and flip. 

Most investors split the SOW into interior  and exterior. They then split the interior into (Teardown, rough electrical and plumbing, insulation, drywall, kitchen, appliances and bathrooms, paint, carpet and floors, etc; and the exterior into landscaping, siding, Windows, roof, paint, etc.

Management team: List who will be managing the project and their contact information. This will typically be the general contractor and/or contractor team. For contractors, list their licenses and license numbers.

Budget & Costs: Detailed breakdown of how much you plan to spend for each project step. Be thorough and specific — go room by room and detail what you plan to work on and how much it will cost. The more information you put in, the easier it is to stick with your house flipping financing. Project Schedule: Explain the order in which different tasks of the construction project will be undertaken and how long each task will take. Remember, rehab projects typically take longer than expected, and things may not go 100% according to plan, so give yourself some wiggle room. Acceptance: Clearly outline all inspection requirements, testing and validation processes, permits to be obtained, approval process, and borrower sign-offs.

What Is a Hard Money Loan? 

A hard money loan is a type of loan that is secured by real property. 

Hard money loans are Long term or short-term bridge loans. 

These loans are primarily used in real estate transactions, with the lender generally being individuals or companies and not banks.

Every HML/PML has its own set of criteria, and so long as the terms and conditions are acceptable to both parties a loan is funded to secure the purchase of a real estate asset.

Construction Budget Draws: 

In order to fund construction draws, Lender/ Capital Partner must engage a property inspector to ensure that the budgeted construction work has been completed on any phase prior to releasing funds. 

The inspector will go through your punch list and verify that all items are performed correctly and pass inspection.

Drwas can take up to 36 Hours. 

A construction punch list is a document that outlines the remaining work that needs to be completed before a phase in a project can be considered finished. 

It is typically created towards the end of a construction Phase project and serves as a checklist for the contractor to ensure that all work is completed to the client's satisfaction and it passes an inspection by an Inspector.

 The punch list may include items such as touch-up painting, fixing a loose doorknob, or adjusting a misaligned cabinet door, electrical, plumbing, insulation, etc.

All work must be UP TO CODE.

A typical loan can be funded in 10-21 Business days.

A HARD MONEY LENDER is someone who is in the business of Lending money to Investors by brokering loans for Private Money Lenders and getting paid in Points. The loan is secured by the Real Estate Asset. 

A Private Money lender is someone or a group of individuals that use their money to lend to investors to buy real estate assets.

The loans are secured by the real estate asset.

100% funding?

No, not really

If a “lender” Says that “they lend 100%”, ask them to put it in writing and ask them what ARV they are “lending 100%” on,  and to explain what that looks like.

Ask them what ARV are they basing the 100%.

Ask them what the down payment will be.

Ask them what your out-of-pocket will be at closing.

Also, ask them if they are a direct lender or a broker. What are the closing costs, fees, junk fees, and interest rate, and how many points they will charge on top of the direct lender points you will definitely have to pay all of that at closing and there is no way around any of that.

Also ask them if the loan is Recourse or Nonrecourse, Big Different 

Recourse loans are loans that allow the lender to seize many of the borrower's assets if the borrower fails to repay their loan—even assets that were not included in the loan agreement as collateral. With a nonrecourse loan, the lender may only seize those assets specified in the original loan agreement as collateral.

Non-recourse debt is a type of loan secured by collateral, which is usually property. If the borrower defaults, the issuer can seize the collateral but cannot seek out the borrower for any further compensation, even if the collateral does not cover the full value of the defaulted amount.

Ask them if the loan is a Dutch or Non-Dutch payment, even bigger difference.

What is a Dutch loan?

Some private lenders use a method of interest accrual known as “Dutch interest” for a hard money construction loan which calculates payments based on the entire loan amount rather than payments on partial advancements in a construction loan.

To put it simply, Dutch Interest is when a lender begins charging interest for a loan before the full amount of committed funds before they have been disbursed.

What is a Non-Dutch Interest Loan?

It simply means that you pay interest only for the amount that has been disbursed and as you continue to make draws you continue to make payments on the amounts that are disbursed and so on.

We don’t believe in Unicorns but occasionally there is one.

What?

It depends on how you have structured the deal. If you buy a property at 65% of the market value and you have also included the repairs in that 65% then potentially yes a lender could provide 100% financing.

But take into consideration that you still have to pay:

Points

Legal fees

Doc Fees

Perp Fees

Junk Fees

Third-party fees

Closing costs

So no, it’s not really 100% funding

Investors usually use the MAO Formula 70% to 75% rule.

You take the ARV and you subtract 70% to 75% from the purchase price.

Not really because that would mean that you are buying the property at 75% LTV and for the deal to be 100% funded you would have to buy it at 65%.

Let’s break the numbers

The “perfect” deal would be buying at 65%

PP $100,000 ARV – 65% = $65,000 

Since the lender offers 100% of the renovation budget… Your deal is “100% funded” 

Right?

A lender could potentially offer 100% financing but you still have to pay…

Points

Legal fees

Doc Fees

Prep Fees

Junk Fees

Third-party fees

Lawyer Fees

Title company Fees

Any other Fess

Closing costs

Not 100% financing either

Word of caution:

Make a point to ask for references, and vet them before you decide if they are legit. There are many stories and they all sound the same.

PS

Never send any money upfront to anyone. A REAL lender never asks for a deposit or money upfront

This is NOT FINANCIAL ADVISE, OR LEGAL ADVISE. 

They Depend on the type of loan

-Loan Doc Fees:  $750 -$1,995

-Legal Fee $550 - If applicable

-Background Check: $90

-Credit Check Fee: $25

-Draw Fees - if applicable: $150-$250

-CDA Certified Desktop Analysis- if applicable: $250

-Prorated Interest: Yes, Depending on your closing date

-Are loan Extensions Available: Yes

Third party fees:

-Is a Title Policy Required? Yes

-Is an Insurance Policy Required? Yes

-Is a Hazard Insurance Required? Yes

-Is an appraisal Required? Yes

We are not responsible for 3rd party fees

Title

Insurance

Appraisal

Legal fee from your lawyer

Commission

Etc

* Fees can change at any time. All fees will be disclosed on the term sheet/LOI

No, we only lend in 1st lien position.

The subject property you are requesting a loan for will be used as collateral and a personal guarantee.

A rule of thumb to determine a property’s As-Is value

As-Is = ARV – (Rehab x 1.1)

In lame terms: Whatever you paid for the  property is the As-Is Value

Lenders base their loans on the (ARV) After Repair Value and rely on appraisals for the ARV. Appraisers are trained on market conditions, (COMPS ) and compare properties sold on the MLS in the past 6 months, within 1/2 a mile from the subject property, not crossing over major roads, bodies of water or neighborhoods. Appraisers use the As-Is value, and the value of the work / improvements to be done on the subject property, to calculate the ARV.

The work to be done is provided by the borrower in the  form of a Repair Estimator / Rehab List / Scope Of Work (line items should include labor and materials).

Things considered on when appraising a property.

Adding Square footage

Bedrooms being added.

Bathrooms being added.

Finishes used when rehabbing the property.

Kitchens

Change in use.

Any significant changes which will result in added value to the subject property.

The appraiser does not know what the borrower / investor is planning to do, and since the appraiser cannot value what they don’t know about, the more information you provide in your SOW the better  understanding the appraiser will have to ensure an appraisal for the highest ARV.

A Proof of Funds letter is a document that demonstrates how much money a person or entity has available. When purchasing a home, you may need a POF to show the seller that you can cover the purchase costs of a home. Remember that purchase costs can include the down payment, escrow and closing costs

Providing a (POF) Proof of Funds letter with YOUR offer adds credibility makes the offer stronger by letting the seller know that you are a serious investor that has done his due diligence, and has requested a Proof of funds letter to secure funds before you made the offer.

We don’t provide blanket proof of funds. 

Why?

Because the seller or the real estate agent representing the seller will call us to verify if we are actually funding the deal, and ask if we have done our due diligence vetting the borrower, run credit, and verified that the borrower has the liquid assets to close that deal.

We only provide POR letters to borrowers that have completed a loan application or requested terms. Once we have a term sheet we can send a Proof OfFund Letter to the borrower.

We don’t guarantee that you will receive a POF.

We will evaluate proof of funds on a case-by-case basis if the property is within our lending criteria and a fully completed loan application is submitted. We do not provide blanket proof of funds. 

POF letters take 12 to 24HRS to process.

Request sent after 5 pm CST will begin after the next business day to process.

POF requested after 5 pm CST Friday, Saturday, Sunday, or a Holiday it will be processed on the following business day.

The Minimum loan amount is $75,000 and the Max $20,000,000. All loan amounts and Leverage is based on the borrower's credit and experience

LTV- The Max Loan To Value is 75% to 80% and it depends on the type of loan requested Plus your credit and experience.