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The Hard Money Loan Funding Process: A Guide for Rehabbers

You spot a house that you would like to rehab or flip and decide make an offer. You plan on financing through a hard money lender, but haven’t yet done this kind of deal, and wonder what happens after you’ve got the house under contract. Here’s a brief look at the process:

Some will loan a percentage based on appraised value, while others will loan a percentage based on the purchase price. It is better to find the lenders that will loan on appraised value. The lender will give you a breakdown of your fees along with their terms, including:

1. Loan Points
2. Closing Costs (Escrow Fees, Document Fees, Notary Fees)
3. Interest Amount

A typical lender might say:

I will loan 60% of ARV (appraised repaired value), with 5 points, 500 in document fees and a 6 month interest only balloon payment loan at 10%.

To translate on a deal that appraises at $200,000:

They will loan you up to 60% ($120,000). To get the loan you will pay $6,000 in points + $500 in document fees, and you will pay $1,167.67 on the loan, until you sell the property or until 6 months is up. They will take a trust deed and make you sign the other documents like on a typical mortgage.

Before you present a property, you should get familiar with local lenders and pre-qualify with them. Their lending requirements are often-times different than that of a traditional mortgage lender. Hard money lenders are usually most worried about the amount of cash you have, your level of experience, the specific deal and your credit.

Here’s the typical hard money lending process:

Step 1 – Pre-qualify: talk to the lender and see what they require of you and your deal.

Step 2 – Find and put a good deal under contract.

Step 3 – Call the hard money lender and inform them of what your contract price is, the estimated cost of the repairs, and what you think the ARV value is. Here’s a good worksheet to help you out.

Step 4 – The lender will either send their appraiser or give you an approved list of appraisers, and you will then get the property appraised.

Step 5 – They may request some of the escrow documents to verify the paperwork.

Step 6 – They will agree or disagree to fund the loan and will tell you what amount and under what terms it will be.

Step 7 – You close the loan — In many ways, its just like a conventional loan in that you do the closing at a title company or lawyer’s office. The lender puts the loan amount into escrow at the title company. The buyer might have to put in money or might get money back, depending on the deal. The title company issues checks as specified on the HUD; typically, a big one to the seller and points back to the lender. If there’s cash to the buyer, they would issue that check, too. The title company will ensure that all the proper paperwork is completed in the correct order and that funds are sent to the appropriate people.

Lets get started today... Call us at 609-365-0001 or Visit http://imndirect.net/fix-flip

Hard Money Loans101 - The complete guide for Fix Flip REI Loans

As the name implies, private money lending is the business of lending capital for investments secured through various vehicles, such as real estate. There are 2 ways to obtain capital: through personal investors or through private lenders. Personal investors could be individuals with direct capital (ie- friends and family) or groups of individuals who pool their money together to fund loans. Private lenders are companies who manage their capital and issue loans, similar to a bank.

THE PERSPECTIVE OF BANKS

Banks will lend capital using the 3 C’s:

1. Credit: The borrower’s credit score and payment history.
2. Capacity: The borrower’s ability to make payments.
3. Collateral: The asset pledged as security for the loan. 

Often times, borrowers do not fully qualify for the stringent credit and capacity requirements of a bank, even though they have sufficient collateral. In this case, private loans can be a great win-win option for both parties. The borrower wins because he or she gets the loan they desire, and the private money lender, or investor, win because they can create an opportunity to earn above-average returns.

FINDING THE RIGHT LOAN

Although private lenders/companies are easier to find, their rates and terms are often higher –which is some call them hard money lenders. However, finding a private investor can be tricky and difficult to do on your own. Mostly found through word-of-mouth referrals, private investors can also be found through a real estate mortgage broker.

The real estate mortgage broker is not an employee of the investor, but rather a highly specialized entrepreneur who is in the business of matching right borrowers with right investors. They will package and coordinate your loan from start to finish, and maintain constant communication throughout. 

Private loans are never “cookie cutter,” and the investors who provide capital are very sophisticated and savvy individuals. Therefore, each broker will have different private loan programs available at different terms because the lending criteria of each investor is different. The best thing you can do is to build a good relationship to determine exactly what projects brokers can refer capital for and the specific requirements their investors desire.

Let’s take for example that your situation is “outside the box” of traditional bank lending and you consider engaging a private lender. The following is a process that you should expect:

A QUICK PROCESS BREAKDOWN

Though banks are on every corner, such is not the case with private money lenders and investors. But there are a few great ways to find these lenders! For example, you can use a directory service, ask around for referrals, or a quick web search. Once you find someone, ask them for references from both recent and long term clients. Also, to avoid those with high foreclosure rates, make sure to request who services their private loans. From there, you can research through your county court’s online portal or visit the courthouse in-person to track their number of foreclosures. While most private money lenders and investors have no desire to take your property as they best profit from your continued payment on the loan, do your best to stay away from those with higher than normal foreclosure rates as this may indicate they have very low flexibility or tolerance for any breech in repayment terms.

Submit Your Loan Application

Once you find a private lender, or investor, you may have to complete a loan application and the Statement of Information to give a snapshot of your financial situation and capacity. Be sure to provide complete and full disclosure on these forms, as these forms provide the lender or investor with an initial “picture” of you and your financial standing. 

The Statement of Information form is crucial in facilitating a thorough title search on the subject property. The documents you provide to support the information in these forms varies on your financial status, the type of loan you are seeking, and the collateral property involved. Examples of documents you may be asked to provide are (but not limited to): tax returns, financial statements, bank statements, valuation information on other properties owned, and leases.  Each lender or investor will have specific supplementary documents they require based on the type of loan.

Do You Qualify? Review of Credit, Assets, & Income

While the application process may seem cumbersome, you will receive a quicker decision with prompt communication and full disclosure. Don’t be afraid to be up front about problems you may have on your credit report, title, or with the collateral. Private money lenders and private investors are good at working with you to resolve these problems. The more up-front you are, the quicker you can get to a confident answer on the viability of your real estate loan.

Choose a Loan Program

The amount of funding available and the loan terms is dependent on the strength of the file you assemble and how you present yourself. The assembled file should be typed or neatly written and as comprehensive as possible. The key to remember is the lender wants to know that you are an organized, competent business person as they will likely be a stakeholder in the loan, either as a financial participant or as a servicer. Be prepared, and be yourself. Speak intelligently and thoughtfully about your project and your plan for the loan proceeds. If you’re applying for a rehab loan, for example, be prepared to talk about your plans, the types of properties you consider, a business plan regarding your profitability, etc. Once an application has been completed and a loan program identified, the terms and state and federal disclosures will be provided for your review.

Title, Appraisal, and Escrow

Once the documents are submitted, and the loan type identified, the private money lender or investor will start to process the loan. Your involvement will generally be limited to providing access to an appraiser, or providing other supplementary requests as determined by the lender and/or the investor.

A preliminary title report will be ordered from a title company who researches the property and the entity under which the loan is vested for liens, judgments, and other encumbrances. 

The value of the property will most likely be determined by an appraisal prepared by a licensed appraiser. If an appraiser is not available, a Broker Price Opinion (BPO) may be prepared by a real estate broker or an Automated Valuation Model (AVM) is created by compiling and crunching public data using specialized software to arrive at a value opinion. In many cases, the investor may do their own evaluation of the property to confirm the numbers. 

Escrow companies are a neutral third party who oversee the closing and disburse all funds in accordance with the lender’s instructions. They are also responsible for recording all applicable deeds, mortgage, or trust deeds, and other required documents after loan closing.

Review of Documents

Unexpected liens or judgments against the property or yourself, or the entity under which the loan is vested, are required to be resolved prior to funding the loan. Investors want title insurance to guarantee their loan will be in the desired lien position, often first position. Any outstanding liens or judgments do threaten that position and therefore must be cleared (paid off) prior to or at closing in order for a title insurance company to offer coverage. Often times, a lien is still showing even though you paid it off. This happens because the lien-holder you paid off may not have recorded the appropriate release. In this case, you will be required to provide documentation proving the lien was satisfied, and/or contact the lien-holder and ask them to provide the appropriate document to be recorded.   

Final Private Money Loan Approval

After property valuation and title is reviewed by the investor, the private money lender or private investor will let you know the loan is approved and ready to “go to docs.” Sometimes they can generate docs in their office or sometimes they use an outside company. Expect a few days for this process, and give yourself a day to go through them before your signing to make sure everything is in order and that the terms match what you were previously offered. 

Settlement

Once the real estate loan is approved to close, you may sign your documents at the escrow company, in the lender’s office, or arrangements may be made to use a notary service to come to you at your home or office to execute the closing package.

Loan Funded

Once documents are signed, the private money lender will arrange to have the funds wired to the escrow company and the loan proceeds will be disbursed at the direction of the investor.

Documents Recorded 

The escrow company will arrange for the appropriate documents (deeds, mortgages, or trust deeds) to be recorded with the county which makes the new loan a lien against your property until it is paid in full. When these documents are recorded, your lender and/or escrow agent will let you know that “recording is confirmed.” Once recording is confirmed, escrow will disburse funds. 

Payments to Loan Servicer

After funds are disbursed, the loan servicing company “boards the loan.” This means the loan is added to the servicer’s loan system so they can accept payments, send statements to you, etc. As part of your disclosure packet, you will be given instructions on where to make the first payment. Often times, interest will be prepaid for 30 days to give the servicer time to get the loan boarded. A key to remember is to not wait for your first statement. Be sure to send the amount as directed to the appropriate company so your first payment is not considered late. If you are unsure, ask your private money lender or investor. Most often, the loan will be serviced by your lender and the person who originated and coordinated your loan will remain your main contact throughout the life of the loan.

For more Hard Money Info visit www.imndirect.net or Call 609-365-0001

How Home Improvement Contractors Can Generate More Leads

Getting more leads is key to increasing sales and growing your business. And to do so successfully, requires a combination of digital and traditional forms of lead generation strategies. Incorporating these six steps into your current lead generation efforts can help you close more sales. 

1. Offer Financing Options

One of the biggest decisions potential customers can have before committing to a contractor is how they’re going to pay for their home improvement.   As you know, there are two types of customers—those that have the cash and those that need to finance the project. About half of all homeowners that plan to remodel their house at a project cost of $5,000 or more finance the project in some way.  So, it’s important to provide all customers with a choice of payment options.  Yes, even if a customer is ready to write you a check. There are two important reasons why. First, many cash customers prefer a Same-As-Cash Loan using a bank’s money interest-free for six to 24 months while they watch their own money grow. Second, either type of customer is more apt to select the better or best project proposal you presented rather than settle for the “good” baseline solution. This in turn, helps your customer get the project they really want now and you end up with a more profitable project, more positive online reviews, and more referrals.

2. Email Consistently

Email marketing is a great way to keep your customers engaged and drive more traffic to your website. When creating an email campaign, start by understanding your customers’ sales journey. If you’re emailing a list of new customers, start out by building trust with meaningful content such as videos and infographics. Once you know exactly what your customers are interested in, follow-up with an email campaign that includes whitepapers and product info. No matter what your specific email campaigns look like, make sure that you’re always providing value to the subscribers. For example, you can use email campaigns to offer relevant seasonal information, sales on remodeling materials, and design tips and recommendations. With a non-intrusive email, you can stay at the forefront of your customers’ mind and turn them into a lead for future projects.

3. Earn Referrals from Current Customers

Referrals are one of the best ways to grow your business and get more leads. Word-of-mouth not only speaks volumes about your quality, but creates raving fans out of your customers. But how do you get your customers to refer you? Asking them to spread the word can help ensure that you always have projects coming down the pipeline. And of course, people are more likely to trust a company that has been referred by a friend. A great way to increase your referral rate is to create an incentive program. For example, rewarding customers for their referrals with gift cards will motivate them to recommend your services. 

4. Get a Nice Sign & Logo

Your image says a lot about you—before you even step foot in the door. As simple and straightforward as it may sound, sometimes the most powerful tool is a high-quality yard sign. When starting on a project, a yard sign can attract the attention of all the comers and goers in the neighborhood. Adding a sign to the yard can improve the professional quality and credibility of your company. When neighbors see a high-quality sign and logo they will automatically associate your brand with high value without needing to learn your name through the grapevine or online. Well-designed signs can also lead to the occasional walk-up lead.

5. Take Before, During, and After Photos

Another rather easy way that will help you boost leads is by taking progress shots of the project. Prospective customers love to see before and after pictures. Putting progress shots up on social media not only gives followers interesting content, but also exposes them to the quality of your work. Customers that see their home project featured may also be more likely to interact or leave a positive review on the page. Showing off completed pictures and gaining more social media interaction will help get your name out there and can secure more leads.

6. Start Blogging

Though it may seem intimidating, do not be afraid to start blogging. Creating a blog that is updated a few times a month is a great way to establish a strong presence for your business in the home improvement industry. Becoming a resource for DIYers and home improvement junkies can turn into qualified leads down the road. The more readers and followers you gain as a blogger, the more likely you are to be trusted when it comes to converting prospects into customers. They will be far more likely to turn to you because there is already an established trust between the author and reader.

Conclusion 

Generating leads is critical to a strong sales and production pipeline which ensures that your business can grow consistently year over year. 

The Most Popular Small Business Loans

The world of small business lending is no longer just traditional term loans. From SBA loans to invoice financing, your business has options with APRs starting at 6.29%.

The Most Popular Small Business Loans

• SBA Loan.
• Term Loan.
• Equipment Financing.
• Business Line of Credit.
• Invoice Financing.
• Short-Term Loan.
• Merchant Cash Advance.
• Small Business Startup Loan.

IMN Direct Capital's marketplace covers many different business loan products—offered by a variety of our hand-picked lenders.

Call us for more info 609-365-0001 www.imndirect.net

LOAN BROKERS - MAKE MONEY AT HOME AND COME JOIN OUR TEAM

AN OPEN INVITATION TO COME AND JOIN OUR TEAM

If you have experience offering business or real estate financing or working with business owners, and are looking for an opportunity to work from home or remotely with an unlimited income potential, this is the opportunity for you!

Ask yourself these questions:

■ Could easier access to business and real estate lending options help get me more clients?
■ Do I have a natural ability to sell financial services?
■ Could I benefit from a work opportunity from home/independently where I set my hours and have an unlimited commission potential? 

If your answer to these questions is YES, then contact IMN DIRECT CAPITAL today to register as a loan broker. 

As an Independent Loan Broker with us, you will help numerous clients in all 50 states secure financing through our various and flexible non-banking loan alternatives. You will earn the highest commission rates in the industry by offering:

BUSINESS LOANS (from $5K to $5MM, all 50 states, Canada, and Puerto Rico):

■ Revenue Based Business Loans (Daily and Weekly Payments)
■ Merchant Cash Advance (Payments based on Credit Card Processing)
■ Unsecured Business Loans (Monthly Payments and Low Rates)
■ Equipment Financing

WE CAN ALSO CONSOLIDATE AND REFINANCING ANY EXISTING BUSINESS DEBT

REAL ESTATE FINANCING PROGRAMS (from $50K to $50MM in all 50 states)

■ Commercial Real Estate Loans (Purchase, Refinance, Cash-out) - All Property Types Eligibles (Retail, Office, Warehouse, and more)
■ Residential Real Estate Financing (Fix and Flip, and Rental Investment) 

IMN Direct Capital provides all the back-office support, training, and assistance you need in securing clients. This is a commission only position, and you can work from anywhere. We also offer monthly incentive bonuses for top producers. 

Sign up today and start earning with IMN Direct Capital!

Email jobs@imndirect.net or call 609-365-0001 x100

Business Loans for Doctors and Healthcare Facilitys

Our HCA (Healthcare Cash Advance) product is the perfect financing solution for medical practices, healthcare companies, and any business that provides health-related services and accepts insurance payments. Through our proprietary underwriting, we can account for the unique nature of healthcare reimbursements. 

 Here are the highlights and guidelines for our HCA program:

►  Min. time in business = 1 year

►  Min. monthly deposits = $25K

►  Min. # of monthly deposits = 5

►  Min. FICO = 500

►  Min. & Max. financing = $25K - $1M

►  Min. & Max. terms = 3-15 months

►  Daily and weekly payments available

 Let me know what we can do to help you market the HCA to the healthcare provider industry. Remember, any business that accepts government and/or private insurance payments is qualified.

Talk to me about your financial needs at 609-365-0001 x100 Mike Corso