Who We Lend To
We only lend to LLC and Corporations, not to individuals.
How Lenders Fund
On both fix ‘n flips and buy and holds, lenders typically fund 80-90% of the purchase price and 100% of the rehab. This will depend on your Fico score, experience, liquidity and the appraisal.
Lenders typically max their loans at 65-75% of the after repair value or ARV.
Example: Purchase price $200,000, rehab $100,000 and ARV $450,000. Loan up to 70% of ARV. At 90% of purchase price, you will need to bring $20,000 towards the purchase price or 10% of $200,000 and the lender will fund $280,000 ($180,000 + 100,000 rehab). This is 62% of the ARV ($280,000/$450,000)
How Lenders Determine Value of the Deal (Property)
Lenders will appraise the property. On a fix ‘n flip, the appraiser will determine the “as-is” value and the after repair vale or ARV. Both numbers are important to determine how good the deal is, the level of risk for the lender and the actual loan amount you will receive. A low appraisal is riskier and you may have to put down more money for the lender to do the deal. So it is important to ensure your comps are good from the start of analyzing your deal.
Our minimum loan size is $75,000 and max is $3M. Loan combines purchase price + rehab or construction amount.
Rates, Points and Terms
Our rates range from 6.99% to 13% and 2 to 3.5 points depending on 3 Factors: Fico Score, Experience and Liquidity. Appraisal and location can sometimes play a factor. Points are paid at closing. Rates vary whether you are doing a fix ‘n flip, buy and hold or refinance.
How Much Money Do I Need at Closing
At closing you will need to pay for points, closing costs and have at least 5 months of payments and carrying costs in the bank.
So if your loan is $100,000 and you are paying 12% and 3 points, you will owe $3,000 at closing and pay $1,000 per month towards the loan.
At closing, construction monies will be dispersed in accordance to the scope of work agreed to by the borrower and lender. We will agree to this prior to closing. Once you complete a portion of the job, an inspector will come out and confirm by line item and then wire the funds to you. Lenders only pay for work completed. Typically, the cost to inspect is $100-$150.
Most lenders prefer Fico scores of 650 or higher. But we do have lenders who will fund with Fico scores under 650 including scores in the high 500’s too. The actual deal is the most important factor.
Time to Close
Typical closing time is 10-15 business days. Closing depends on how fast you submit all paperwork and how long it takes for the appraisal to come in.
Proof of Funds
A Proof of Funds or POF is critical to be able to get your offer presented and potentially accepted. We will gladly provide a POF. We require your Fico score and proof of assets. This infofrmation determines the POF value.