Do I have to bring money into the deal to close?
Yes. We require some money to be brought into every transaction. Though we will go to a very high loan to value, above 100% of the purchase price at times, there will always be money required to close.
How do you determine the money required to close?
Our formula relates to the Total Deal and the After Repair Value. We will lend up to 65% of the After Repair Value and require a minimum of 15% of the Total Deal to be brought into the transaction. The Total Deal refers to the Purchase Price + Fees + Interest Reserve + Rehab costs.
What is After Repair Value or ARV?
ARV is the estimated value of a property after the rehab is done.
Will you joint venture on a deal?
We will consider it, but we don’t have a specific guideline. If the company or one of the partners, or other associates would like to joint venture, we will offer terms, but we would prefer to do the loan.
Can we do the rehab using credit and not bring in the rehab dollars?
No. The rehab dollars will need to be brought into escrow. You can do it on credit and get the money refunded later though.
Is the interest reserve required?
We will sometimes go down to a 3 month reserve.
Do you have minimum credit score requirements?
We do not have a minimum credit score, but we will not be quite as aggressive with a lower credit score.
I’m a broker, why do you need to work directly with the client?
We have accepted brokered loans for many years under this program and due to the complexity of the rehab component, this was an internal decision. Fees can be paid to licensed brokers, but we must work with the client after the loan is reviewed. We do understand that this is not acceptable to some brokers and we wish you the best of luck in the future if we’re unable to work with you and your client.