A “hard money loan” is a loan in which the loan decision is primarily based on the value of the property (the “hard asset”). This is in contrast to criteria such as income history, and credit history. Hard money rates often are higher than long-term rates. However often banks are not fast enough or have reasons preventing a loan. Banks may require high credit scores, high taxable income, and lots of verification, etc. Alternatively, hard money lenders often have very few criteria. Hard money lenders often can underwrite and fund a loan in a matter of days rather than weeks or months. The term “hard money loan” may mean different things to others. Property value is the primary concern for Good Funds Lending, LLC. Good Funds Lending, LLC is not concerned about credit scores or income but considers other aspects of borrowers.
Why would a business want a bridge loan?
A real estate secured business bridge loan can offer a solution. Sometimes a transaction needs to happen quickly or the business owner needs liquidity quickly, but the bank needs more time to process the loan. An opportunity may disappear without quick action. Partner buy-out may have time limits. Sellers may take other offers or value a short closing time. Price may go up. A sale may be canceled. People may need money to avoid other consequences. People need money to avoid default, forfeiture, credit damage, lawsuits, etc. Sometimes a bank or credit union can not provide a loan until there is a certain history of income or a credit or income hiccup prevent the bank from making the loan. Often the advantages of a quick business bridge loan far outweigh the costs.
Quick Bridge Loans Can Be The Solution
Why does divorce sometimes result in a hard money or bridge loan?
Sometimes income or rental property needs to be quickly refinanced after or during a divorce. An ex-husband or ex-wife may no longer willing to be a borrower or guarantor. Sometimes a divorce damages one or more of the ex-spouses’ credit. The ex-husband or ex-wife may not have sufficient income to get a bank loan without the ex-spouse. However, a divorce decree may require the ex-spouse to no longer be a borrower or guarantor on the promissory note. Often with time a spouse may repair his or her credit, sell the property, or provide sufficient income to get longer term loan. Good Funds Lending, LLC provides loans secured by investment properties only (not properties intended for personal, family or household use). Good Funds Lending, LLC does not provide loans for personal residences (rental and investment properties only).
What is a hard money lender?
A “hard money lender” is a lender who makes loan decisions mostly based on the underlying value of the property (aka the “hard asset”). Hard money rates often are higher than long-term rates. However often banks are not fast enough or have reasons preventing a loan. Banks may require high credit scores, high income, and lots of verification, etc. Alternatively, hard money lenders often have very few criteria. Hard money lenders often can underwrite and fund a loan in a matter of days rather than weeks or months. The term “hard money lender” may mean different things to others. Property value is the primary concern for Good Funds Lending, LLC. Good Funds Lending, LLC is not concerned about credit scores or income but considers other aspects of borrowers.
What provisions in the Contract To Buy And Sell Real Estate do I need for Colorado hard money loans?
Financing provisions are a common area of confusion. We do not provide legal advice. You should speak with your real estate agent and your own attorney at your own expense. Often we see something in Section 4.5.3 of the commission approved Contract To Buy And Sell Real Estate where “Other” is checked and the blank is filled in along the lines of: “cash, private money loan, or other financing as selected at the discretion of the Buyer”. However, that may not be correct, sufficient, adequate, or appropriate.
Colorado Hard Money Financing Provisions Section 4.5.3 from Contract To Buy And Sell Real Estate (Residential) (CBS1-6-15)
This post likely to become out of date as forms Colorado Real Estate Commission are changed. As of May 2017, Colorado Real Estate Commission approved forms can be found on the Colorado Division of Real Estate contracts and forms webpage.
Do you provide loans for properties to be used for marijuana related business (retail, medical or cultivation)?
We do NOT provide loans for properties to be used for marijuana related business (retail, medical or cultivation, etc)? We do not knowingly provide loans for properties to be used for any illegal purposes, even if the illegality is related only to unenforced federal law.
Will you provide loans without collateral?
No. Good Funds Lending, LLC is a hard money lender that provides asset based loans secured by real estate in the Denver Metro Area.
Why is a Colorado Hard Money Lender named “Good Funds Lending”?
As “The Colorado hard money lender for experienced real estate professionals™“, we are focused on providing ethical and good service and we reliably fund our loan commitments.
In financial and real estate transactions the term “good funds” often means funds that are bank guaranteed or immediately available, which typically include cash, cashier’s checks, certified checks, bank money orders and sometimes other forms.
As a Colorado hard money lender we want borrowers to associate our name with real estate transactions and the reliability of “good funds”.
In what geographic areas do you provide hard money loans?
We are a Colorado based hard money lender and our primary focus is the Denver Metro Area and we will also lend in Boulder and Colorado Springs. If we have experience with you, we may consider other areas in Colorado and other types of properties as well.
What if the repairs (rehab work items) are more or less than I budgeted for in the Rehab Draw Account?
(Question and answer applies only to Fix & Flip and Fix & Hold Loans)
During the hard money loan application process, you will provide us a detailed list or your expected rehab costs, by line-item. For a brief and simple example, let’s assume $3,500 for a new roof, $2,500 to refinish hardwood floors, $1,500 for a stainless kitchen package, $1,000 for kitchen countertops and $1,500 for kitchen cabinets. That’s a total rehab budget of $10,000.
We then calculate the amount Reimbursement Percentage, which is equal to the amount borrowed for rehab from Good Funds Lending, LLC divided by the total rehab budget (e.g. if you borrowed $10,000 and the rehab budget is $10,000 then the Reimbursement Percentage is 100%. if you borrowed $8,000 and the rehab budget is $10,000 then the Reimbursement Percentage is 80%).
Under Budget – Let’s say you complete the hardwood floors but find someone who can complete the job for $2,000. You would submit the draw request, the lien waiver, and photo of the finished floor (let’s assume that the floor is the only work item for this draw request although it is common to submit many items per draw request). If everything is in order and the work has been completed to a professional standard and manner and appropriate like, kind and quality, your disbursement is granted for the original budgeted amount of $2,500 multiplied by the Reimbursement Percentage (Additionally the $75 draw request fee taken from the draw account and paid to the loan servicer). You can never draw more than what has been borrowed. The last draw is typically lower than the amount of the work items in that draw because the draw request fees that have been paid. Hence if there have been 2 draws (draw requests), there would be a $150 in draw request fees).
Over Budget — Let’s say you complete the roof, but it goes over budget and costs $4,000 and you did not speak to us earlier and there were no changes to allocation across work items. You would submit the draw request, the lien waiver, the finalled permit and photo of the finished roof (let’s assume that the roof is the only work item for this draw request although it is common to submit many items per draw request). If everything is in order, your draw request would be granted, but only for $3,500 multiplied by the Reimbursement Percentage (the $75 draw request fee taken from the draw account and paid to the loan servicer). You can never draw more than what has been borrowed. The last draw is typically lower than the amount of the work items in that draw because the draw request fees that have been paid. Hence if there have been 2 draws (draw requests), there would be a $150 in draw request fees).
Provided that you complete all of the items on time and there are no defaults, you will be able to draw the full borrowed rehab amount minus draw request fees at $75 each, even if you come in over budget. If you come in over budget, your the amount you can draw is the same.
We are a Colorado hard money lender for non-owner occupied properties in the Colorado Denver Metro Area.