Private Money Q & A
Private Money Q&A
Q: What kinds of financing can I obtain using private money with REPF?
A: We provide short term financing for purchase only, purchase and rehab, or cash out projects (properties purchased using cash and need rehab). We do not provide funding for owner occupancy.
Q: How do I apply?
A: You can apply by visiting our website, www.RealEstatePrivateBank.com and clicking the “Borrow” tab. You will need to complete the Private Money application. This is a two part application. You will first need to complete the online application, and second you will need to complete the application documentation package. You will automatically be redirected to the documentation package once the application is complete. You can also find the documentation package under the “Forms Download” tab on our website.
Q: Are there any up-front fees involved?
Q: Are you credit score driven?
A: No, we are not credit score driven, however we must pull a credit report on the borrower (and spouse if applicable) in order to calculate an accurate monthly debt to income ratio. We want to make sure the loan we will provide to the client is affordable and logical. We do not want to over extend the clients monthly obligations and put them in a bad position down the road.
Q: If I have had a recent bankruptcy, can you still approve me?
A: Recent bankruptcies are not a problem. We will be interested in learning the situation; however this is not a deal breaker.
Q: What states do you lend in?
A: We do lend nationwide, however there are a few red flag cities and locations we are extremely cautious about. If the project you are interested in funding is within one of these cities we will make you aware right away. Please do not ask for a list of these “red flag” cities as it changes weekly while the market continues to adjust.
Q: How much can I borrow?
A: We can lend as little as $10,000 to as high as $5,000,000. Our approvals are not solely equity based. We must be sure that the client will be able to afford the monthly interest only payments on the loan they are requesting. We may also request that an interest reserve is collected at closing on some of those higher risk transactions.
Q: Is there a maximum amount you will lend for rehab/repair costs?
A: There is no maximum limit to the rehab being requested; however there is a fine line between rehab and construction. We do not finance any major demo, construction or additions. Rehabbing would consist of repairing and upgrading the current condition of the property through normal and needed repairs.
Q: What is your maximum LTV?
A: Our rehab loans can fund a max of 60-70% of the future value of the property (to be determined by a Broker Price Opinion or Appraisal). We can include purchase price, rehab cost and closing costs, not to exceed 70% of the after repair value (ARV). Our purchase only loans can fund up to 100% of the current value of the property. Our cash out programs can fund up to 60% of the current value of the property.
Q: Is down payment required?
A: We do have 100% funding programs available; however we also have programs which may require down payment. When a client is approved they will be issued an approval letter disclosing all of the programs they qualify for. A few programs may require down payment and a few may not. The client will then get to decide which program best fits their needs and they will get to select the program they wish to move forward with.
Q: What are your rates?
A: Annual rates can vary depending on which programs the client qualifies for. Rates can be anywhere between 6-18% annually, however we typically lend money for a max of 3-36 months with monthly interest only payments between .75% and 1.5% of the total loan amount.
Q: How many points do you charge?
A: Points can vary depending on which programs the client qualifies for. Points can range from 3-9 in total. Loans below $25,000 will have a minimum fee of $2,500.
Q: How quickly can you approve me?
A: Once an application is submitted in completion (complete application and documentation package), we can have an approval within 24 hours. This approval will disclose any and all programs the client qualifies for complete with rates, terms, points, down payment etc. The client will then have the opportunity to ask questions, address any concerns and come to a decision if REPF is a good solution for their funding needs.
Q: How long are loan approvals good for?
A: Once a client is approved and they agree to move forward with the approval issued, that approval is good for up to 1 calendar year. This allows the client to shop for a property without making illogical offers due to being strapped for time. We want to allow the client to shop with ease and make smart investing decisions. The approvals are issued for a single transaction with REPF. If a client is interested in multiple transactions simultaneously, they will need individual approvals per each transaction.
Q: Will you provide a proof of funds letter?
A: Yes. Once a client is approved and the client agrees to the terms and conditions of their approval, we will begin issuing proof of funds letters. We can submit these as frequently as needed as general letters or specific to the property address and offer price the client requests to be disclosed.
Q: How quickly can you close?
A: Once the client has a property under contract and we have collected the full documentation package needed, we will be able to fund within 7-10 business days.
Q: What documentation is required?
A: We do have stated programs as well as full documentation programs. The approval the client is issued will disclose which programs are stated income and which programs are full documentation. There is a documentation checklist of all items that will be requested. You can find that by visiting the “Forms Download” tab on our website
Q: Do you require a specific amount in reserves prior to approving a loan?
A: No, we do not require a set amount of funds to approve a transaction; however you may be approved for a lower loan amount than originally requested. We want to be sure we are not setting the borrower up for failure by approving them for loans they simply cannot afford. If a cash partner is needed, please review our Joint Venture product.
Q: Do my reserves need to be seasoned?
A: No, we are not concerned with where your reserves came from, however if your reserves are a result of a personal loan from a friend or family member we would want to be made aware of the situation.
Q: Do you require an appraisal?
A: Yes, we do require an appraisal and/or a broker price opinion. This must be ordered in house prior to closing. Previous appraisals will not be accepted. The appraisal/BPO is an expense to the client.
Q: Will you accept a recent appraisal, broker values or recent comps when evaluating a property?
A: Absolutely not. We can look at comps or broker values when doing an initial evaluation of the project to help the client decide if it is a logical project, however the final loan amount will be based off an appraisal/BPO ordered in house.
Q: Do you take depreciation into account?
A: Yes we absolutely take depreciation into account.
Q: Are there properties you will recommend not purchasing, even if they meet the loan parameters?
A: Yes, we see this all the time. There are plenty of properties that could fit within the loan parameters, however may be on the risky side. The decision to move forward in purchasing the property is solely the client’s decision; however we are here to help assist the client in make a good decision.
Q: Do you report this loan to the credit reporting agencies?
A: No, we do not report to the credit agencies. Only if a loan was to default and we had to foreclose, then yes, the foreclosure would report to the credit agencies and pursue the collection procedures. Remember; our capital investor lenders depend on our ability to produce returns. If the borrower fails, we fail.
Q: Do you do construction loans?
A: No, we do not fund construction loans at this time.
Q: Can I flip a house without rehabbing it first?
A: Absolutely yes! This is where the purchase only funding comes into play. In most cases out clients will already have end buyers lined up!
Q: If I just purchase a property, are you able to lend only the rehab needed?
A: Yes, if the property was just purchased using cash (no liens), then we can complete a cash out loan to the client for rehab needed. In this scenario we can only lend the client up to 60% of their purchase price. For example, if a client were to pay $10,000 to purchase a property yesterday, we cannot turn around and let that client $50,000 for repairs needed. In some cases we may be able to provide 65% of the borrowers purchase price, plus additional rehab funds.
Q: Can you take second lien position?
A: No we cannot take second lien position ever on a property.
Q: Do you charge a pre-payment penalty?
A: No, we do not charge a pre-payment penalty. We encourage a quick flip.
Q: Can I close under my LLC, trust or corporation?
A: yes the client can close under an LLC, trust or corporation however they must be 100% owner and the client will still be the personal guarantor on the loan. If the borrower is not 100% owner of the LLC, trust or corporation, the partner(s) must sign as well.
Q: Are you able to close under the business name of a company I am part owner of?
A: Yes, however the other part owners would also be guarantors on the loan.
Q: Can I occupy my investment property until I am able to refinance or sell it?
A: No. We only lend for non-owner occupied properties. If we did find out the client is occupying the property, it could cause the note to be called due and payable immediately.
Q: Can a renter occupy my property until I am able to refinance or sell it?
A: Yes a renter can occupy the property.
Q: Are your loans recourse or non-recourse?
A: Our loans are all full recourse loans.