Colorado Hard Money Loans

Faqs

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Qualifications

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.

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No. Good Funds Lending, LLC is a hard money lender that provides asset based loans secured by real estate in the Denver Metro Area.

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At this time, we provide hard money loans almost exclusively on non-owner-occupied residential properties. In some cases we will provide hard money loans on small commercial buildings. We typically will not lend on condos, townhomes or attached homes unless all units of the structure are included (i.e. both sides of a duplex, but not half a duplex). 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.

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(Good Funds Lending, LLC provides hard money loans in the Colorado Denver Metro area)

For the pre-approval application, we will perform a cursory evaluation of your financial estimates for the project (purchase/acquisition cost, rehab budget, after repair value), and your level of experience and your answers to few other questions. If we believe there is a reasonable likelihood that we would make a loan based on the information provided, we will inform you that you are pre-approved. If approved, and you request a pre-approval letter (Often pre-approval letters are submitted with offers on properties; however, some borrowers may choose to complete a pre-approval application after the property is under contract). A pre-approval is not a guarantee that the loan will be approved or made.

For the full application you provide more details regarding the project and your experience. We more carefully review the borrowers and project. We evaluate the current and after repair value of the property and closely review the expected repair/rehab costs. We examine credit history (via a “soft pull” working with the potential borrowers using a service like CreditKarma.com or a “hard credit check”) of all human borrowers. We do not look for a minimum credit score, but primarily focus on your credit activities/events in the last two years. Prior to making a decision on a loan commitment we typically do a property walk through with one of the borrowers.

At some point prior to a loan commitment we need to meet all human borrowers on the loan and take a picture of each driver license (or State ID) and do a property walk through.

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We can work with borrowers to utilize a “soft pull” credit history service such as CreditKarma.com (and avoid hard credit checks).
It is important to us to know if potential borrowers are in currently in financial trouble. We are a hard money lender, so our loan decisions are primarily based on the underlying value of the property (“hard asset”); However, even as hard money lenders, we do consider recent credit related behavior among other factors. We will typically review credit history for each human borrower. We are not looking for a minimum credit score, but will evaluate recent credit history focusing primarily on the following aspects:

  • Related recent bankruptcies
  • Related recent foreclosure proceedings
  • Judgments
  • Recent history of late payments
  • Currently owed payments that are past due

We look at the each loan as a whole package including the asset, the borrowers and the market.

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Yes, if we pre-approve the loan after reviewing a free pre-approval application (remember a pre-approval is not a loan commitment).

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Our typical hard money loan process follows the the process linked here. Start the process by submitting a Loan Inquiry.

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If you (your family or your employees) are living in the property (single family residence or a 2-4 unit residential property) or the loan is for personal, family or household use, the loan is classified differently by federal and state law and we would not be allowed to offer these loans or would have additional process and administrative requirements. Therefore the restriction that you, your family and employees may not occupy, reside in, or live at the property is strict and is expressly prohibited in our loan agreements. Additionally we like lending for investment purposes only and do not want to be put in the position of ever having to potentially foreclose on someone’s home.

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  • We only work with experienced real estate investors, which on average have lower risk to us.
  • We are working with one source for funds, so we are the final decision makers and do not need to consult with or comply with anyone else in making our lending decisions, restrictions and rules. We don’t have to promise outside investors higher rates of return.
  • We have low overhead.
  • We don’t use or charge for third party appraisals.
  • We underwrite in-house and don’t need to spend resources communicating back and forth with other parties.

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As direct private hard money lender, we do not use an appraiser. We will review your proposed rehab budget and expected level of finishes/improvements and compare your intended finished product with similar properties sold in the area in the most recent 6-12 months, based on the MLS and county records, using net price after any seller concessions. We may make adjustments based on other similar properties that are currently for sale nearby. We typically estimate market value of properties based on what we believe will be a price likely to produce a sale with in 30-45 days on the market. One of the benefits of using a local Colorado direct private hard money lender that does not use appraisers is that we are free to consider information from the borrower if relevant, when making our estimate of value.

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  • Use of a settlement agent and title insurer that is acceptable to Good Funds Lending, LLC
  • Loan title policy must include expanded coverage including the following endorsements: ALTA form 09-06/9.3-06 Form 100, ALTA form 8.1-06, ALTA 22-06 and ALTA 6.2 Form 110.8 (or equivalents endorsements; endorsements and requirements may vary by property type and other specifics)
  • The title commitment is acceptable to us and the title insurance underwriter provides a verified closing protection letter prior to the closing
  • The title commitment for the title loan policy must remove Standard Printed Exceptions (typically 1-4) and the Gap Exception. If there are are rehab funds in the loan, then Standard Printed Exception (4) may be modified to state any lien or right to a lien, for services, labor or material furnished, incurred and imposed after the date of closing.”
  • Good Funds Lending, LLC loan must be a first lien on the property (except for property taxes not yet due and payable)
  • The title commitment for the title loan policy must remove any exceptions not acceptable to Good Funds Lending, LLC.”
  • Settlement agent must execute and return Good Funds Lending, LLC closing instructions at least 1 full business days prior to closing.
  • Title Insurer must provide and verify an acceptable closing protection letter to Good Funds Lending, LLC at least 1 full business days prior to closing.
  • Settlement Agent must supply acceptable settlement statements to Good Funds Lending, LLC at least 1 full business days prior to closing.

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We do not require you to use a certain title company or hazard insurance company, as long as the corresponding requirements for hazard and title insurance are met. Here are some companies our people have worked with successfully in the past; however, we make no representations or warranties about these companies. You should select the vendor that best meets your needs (provided they meet the requirements set forth in the loan requirements and documents).

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Yes, but you need to comply with Colorado and other laws regarding the purchase contracts, process, etc.

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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.

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Typically our hard money loans have payments of $0 until the earlier of the end of the initial term, the property is sold or refinanced or there is a default; hence we are not generally concerned about $0 loan payments, but we are concerned with your ability successfully complete the project and have funds available for related expenses. If we do not think you can make the $0 loan payments, pay for some repairs before drawing rehab funds (if there is a rehab account) and complete the project we will not make the loan.

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(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.

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(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.

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