Frequently Asked Questions

What upfront fees do you have?

There are no upfront fees before issuing a commitment. All we require is our one-page submission, rent rolls, and color pictures.

What is a hard money loan?

A hard money loan is any loan secured by a “hard asset,” like commercial or residential real estate. It is sometimes called a bridge loan, private capital loan, or private loan. A hard money loan is a first mortgage on investment real estate. A hard money lender looks to the property as the primary collateral instead of the borrower’s credit score or other factors. A hard money loan is an alternative to a traditional bank loan.

What types of clients utilize this product?

Our borrowers are new and experienced investors; they can be credit challenged or have difficult situations, or they can make a simple purchase or refinance.

How do I submit a loan?

Please complete our one-page application, and a loan officer will contact you within 24 hours (during regular business hours).

What property types do you lend on?

General Residential, Commercial properties: Office, Retail, Mixed-use, Industrial, Multi-family, 1-4 units. Etc. Check if not listed.

What is your minimum/maximum loan amount?

We lend from $50k to $250 million, depending on the property type, location, loan to value, etc.

What is your max LTV?

95% of the property’s value (or purchase price, whichever is lower). We do not always require appraisals and look at each property (income and sales approach) to accurately determine the value.

How do you calculate LTV?

It varies but is calculated based on BPO or appraisal.

Why use a hard money loan?

A hard money loan is used for various reasons. The number one reason is time. The loan needs to close quickly for whatever reason. Our average close time is 5-30 days (depending on deal size, property, location, etc.).
Hard money loans can also be utilized when conventional financing is not an option, including credit scores, income statements, etc.

What type of programs do you offer (interest only, etc.)?

We offer interest-only loans along with amortizing loans, depending on the needs of the transaction. The loan structure will be determined based on the unique situations of each transaction.

Can you do blanket loans?

We can do blanket loans on residential rentals or commercial properties.

What are your rates?

There is no formal rate matrix since each deal is unique. We price each deal aggressively based on the individual needs of the client, property type, loan to value, location, etc. Please call or e-mail us for more details; we can provide a no-obligation quote for free.

Do properties have to be seasoned?

Typically not. The purchase price is usually a good indicator of value, especially if it was a recent purchase.

What is your minimum credit score?

We do not have a minimum credit score. We are underwriting solely on the value of the property.

Can you do a CLTV? If so, what is the max?

Combined Loan-to-Value for purchase is capped at 90%. Generally, we can provide refinance loans up to 65% CLTV. The borrower must put some of their cash in the deal or have good reserves.

Can you get a better rate if you have good credit but want a “no-doc” program?

Depending on the property type and your credit. Our lending partners offer competitive stated loan rates.

How do you determine the rate?

Each transaction is unique and is priced individually based on the property type, cash flow of the property, etc. Please fill out our one-page application for a no-obligation quote.

Are you ok with tax liens?

Yes. We understand tax liens and have closed numerous transactions with various tax issues. All of the tax issues are typically paid off at closing since we normally cannot close a loan with any material title exceptions.

Can you lend on a commercial property that is fully owner-occupied?

Yes, we have closed commercial loans on fully owner-occupied properties.

What if the borrower is currently in foreclosure?

We can handle transactions where the borrower is in foreclosure as long as they have enough equity in their property to pay off the first lender to enable the lender to receive a clean first mortgage.

Do you do second mortgages?

We have arranged for 2nd and 3rd mortgages up to 65-70% CLTV.

What areas do you lend in?

We have nationwide lending partners who lend on residential and commercial investment properties.

Can you help a company with cash flow issues?

Absolutely. We have closed several transactions for companies that have cash flow issues. We have various financing solutions to choose from that are non-real estate based.

Can you help with the turnaround of a company?

We can assist in financing the real estate for companies to gain working capital and pay off debt.

Can we close the loan in a corporation, LLC, etc.?

Yes, we can accommodate various loan structures based on the transaction.

Can you lend to foreign nationals?

Yes, we have done loans for foreign nationals.

Underwriting / Valuation

Is your evaluation the same as an appraisal?

The decision to order an appraisal or BPO solely depends on the deal.

How do you value a property?

Sometimes, in-house valuation, BPO, existing appraisal, or new appraisal.

What is DSCR (debt service coverage ratio)?

Debt Service Coverage Ratio (DSCR) is the cash flow available to meet annual interest and principal payments on debt.

How is DSCR calculated?

It is calculated as net operating income/total debt service.

Why is DSCR important?

The debt service coverage ratio is used by most lenders to ensure that the cash generated by the property is sufficient to cover the interest payments to the lender. They evaluate if the positive cash flow can cover the debt obligations. Any number less than 1.0 shows that the property’s cash flow is insufficient to service the debt.

Do you require a debt service coverage ratio greater than one?

No, we do not require the debt service coverage ratio to be greater than one, although if a property is not currently producing a positive cash flow, we typically set up an interest reserve to cover the payments until the property can fully cover the debt obligations. We also have zero ratio options.

How is the debt service coverage ratio calculated for a fully owner-occupied property?

Assumptions are made for market rents, expenses, vacancy, etc., to determine an estimated net operating income for the property.

What if the property does not have cash flow?

We are ok with properties that do not entirely cash flow. We have done several loans of this type.

How do you value a non-cash flow-producing property?

We will look at the sales comparable approach (valuation) and make assumptions of market rents, vacancy factors, expense ratios, etc., to determine a possible value via the income approach.

What is the Cap Rate?

This is the rate of return that a reasonable investor would expect to receive because of their investment.

What Cap Rate do you utilize when valuing a property?

Each property and market is unique. There is no blanket cap rate used in our underwriting.

How is the cap rate utilized?

The cap rate is utilized in underwriting to determine the property’s value based on the income approach.

What is the formula to calculate a value based on the income approach?

One method to determine the property’s value is to take the net operating income/cap rate.

How do you value a fully owner-occupied property, since there is no rent roll?

We will make assumptions on market rents to back into a value via the income approach. We will also utilize a comparable sales approach.

Closing

How soon can you close?

The typical close time is 5-30 days, depending on your needs.

Do you require an environmental? Can you use one if you’ve already had one completed?

Typically, a phase one is required on each property. If the borrower has an environmental less than 6 months old and it meets the lender’s requirements, we can typically utilize it. The environmental is ordered after our property inspection, and the final commitment is issued. This is normally paid out of the closing proceeds.

Can you do a 6-month interest reserve?

Yes, depending on the borrower’s cash flow, we like to set aside an interest reserve to ensure that the borrower has a nice cushion to focus on rebuilding their business, etc.

Are you able to close without an appraisal?

Yes, this is possible.

Do you fund and close on the same day?

No, we cannot arrange the loan that fast.

Explain your pre-pay?

Each pre-pay is unique to the deal. It is typically a declining pre-pay.

How is your pre-pay different from other lenders?

Most lenders impose a lockout or a very steep pre-pay (defeasance) that makes it impossible to refinance the loan in the first several years of the transaction. We have loans with no prepay or structured prepay to fit your needs.

What is defeasance?

Real Estate Weekly defines defeasance as a substitution of collateral. Typically, the borrower uses proceeds from a refinance or sale to purchase a portfolio of U.S. government securities sufficient to make all the remaining debt service payments required by the note. The securities are pledged to the lender, and the lender releases the real estate from the mortgage lien. The note remains outstanding but is assigned by the borrower to an unaffiliated successor borrower, who makes the ongoing debt service payments.

The penalties associated with paying off a loan that has been securitized in the secondary market can be costly. The penalty can be calculated at www.defeasewithease.com or any other website.

Do your loans have a defeasance?

No, not all the loans we refer to utilize defeasance.

Brokering Loans to Us

How does a mortgage broker get paid?

Before issuing the final loan commitment, we receive a copy of the fee agreement between the broker and the borrower. This information is given to the closing agent, and compensation is disbursed at closing.

What must I do to get set up as a broker with you?

There is no setup process to fund a loan through us. We require a copy of a fee agreement between you and the borrower. The mortgage broker must ensure they are licensed in their respective state, if needed.

Is there a Yield Spread?

Unfortunately, we require all fees to be up-front on the settlement statement and do not allow up-selling rates for the broker to earn more fees.

Do you allow table funding?

No, not now. All loans are closed in the respective lender’s name.

How are we different from other competitors?

Many of our competitors are simply broker jokers. We pride ourselves on being different in that we underwrite the loan and then match you with one of our many funders who are ready and capable of closing your loan request with no hassles.

Do you fund your loans?

No, we don’t directly fund any loans.

Do you service your loans?

No, we never service loans; however, many of our lending partners hold notes.

Are you a broker?

Yes, we are brokers. We can work with mortgage professionals and borrowers directly on their loan scenarios.

Where are you located?

Our corporate offices are in New Mexico; physically, we are in Florida, with our partners coast-to-coast.