(Question and answer applies only to Fix & Flip and Fix & Hold Loans)
Please open a dialog with us as early as possible. Although we don’t change the total amount of draw account or loan amount, but we typically try to be flexible in allocation and work items assuming we believe the changes are financially wise and we have been kept in the loop.
Why do you charge a $75 fee for a rehab draw?
(Question and answer applies only to Fix & Flip and Fix & Hold hard money loans with rehab accounts)
There is time and expense involved in evaluating your draw request and transferring the money to you. Typically, we (the hard money lender) will have the loan servicer inspect the property to verify that the work has been completed in accordance with the agreements.
Am I charged interest on the rehab funds before I draw them?
(Question and answer applies only to Fix & Flip and Fix & Hold Loans)
If the hard money loan includes a funds borrowed from us held in a rehab account, then such funds are part of the loan and interest is charged to the borrowers from the date of origination of the loan. This is because as soon as we originate your loan we set aside the full amount of your rehab budget in an account ready for disbursement. When the money is in the rehab account we cannot loan this money to any other borrowers.
What is your method of transferring money for rehab draws (check, wire, ACH, etc.)?
(Question and answer applies only to Fix & Flip and Fix & Hold hard money loans that include a rehab draw account)
We will typically disburse funds to you either by ACH transfer or business check. To facilitate ACH transfer, you will need to fill out appropriate paperwork and your bank must accommodate the transaction. We typically do not disburse by wire due to the costs associated for both parties.
What is the purpose of your seasoning loan? What does that mean?
This hard money loan can be used if you buy a property that you intend to flip with no rehab or refinance, but you need to hold onto it for a certain period of time before you can sell it to the next buyer or refinance the loan. This could be some sort of deed restriction, a bank rule or law about how quickly you can flip a short sale or the end buyer’s lender’s rules about how quickly title can be transferred. We are a hard money lender that requires that we hold the first and only lien on the property (hard asset).
How many hard money loans can I have with you at one time?
After you have completed and paid off one hard money loan with us, typically repeat borrowers are permitted to have up to four concurrent loans with us, but a sum total maximum principal of $650,000, but this determination will be made in our sole discretion and will involve a more in-depth understanding of the availability of your work crew(s).
As a Colorado hard money lender, we require that we hold the first and only lien on properties.
Can I borrow money from other parties for other expenses?
As a Colorado hard money lender, we will only make loans as the first and only lien holder on a property. In our loan agreements, you will agree not to further encumber the property (e.g. no 2nd mortgage, other liens etc.). You should plan to have cash available for 3rd party closing costs (title insurance, closing fees), holding costs (insurance, taxes, utilities), property maintenance and cleaning expenses, staging expenses, cost overruns, other expected or unexpected expenses and rehab labor and material expenses (until you receive rehab draws, if you have a rehab draw account). If you borrow money for any of these purposes, it may not be secured/collateralized with the property or items attached to the property.
Will you take second position (second mortgage or other second lien arrangement)?
In general no, we will only loan as the first and only lien holder. As the loan is a hard money loan we want the hard asset (i.e. the property) to be unencumbered by other loans, whether subordinate or superior to our loan. In some cases we require a first lien on the project property and may be secured by junior liens on other properties.
Will you roll 3rd party closing costs into the loan?
No, you will need to have cash available for 3rd party closing costs (title insurance, closing fees, etc.).
Can I roll the origination fee into the loan for Flash/Transaction Loans and Fix & Hold Loans?
Yes, as long as the loan meets our loan amount to value criteria and you want to roll in the origination fee into the hard money loan.
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