This could very well be the simplest and fastest loan you have ever seen. The loan is based on the purchase price of the property without an appraisal. We do check value to help ensure you are doing a quality deal but that does not influence the size of the loan. There is also less documentation making this loan extremely fast. Because the loan is simple and does not require an appraisal we can close these in as little as a day or two. Loan pricing is even more competitive making this a very attractive option for investors that have a small down payment and the ability to fund the repairs. This has become our most popular loan option.
Depending on the size of the loan and the area you are doing business in we charge from 2 to 4 points plus a processing and underwriting fee of $995. There are other fees to be aware of like your hazard insurance, title insurance, closing fees etc. If you have a deal and want to see an estimate of fees we would be happy to provide this at no cost to you. Or just give us a call and tell us what we can help you with and we can give you pricing over the phone.
The interest rate ranges from 12%-15% depending on what area you are in. Interest only payments are due monthly on the first of each month. Our most popular rates are 12.9% and 15%. Using a $100,000 loan amount your monthly payment would be calculated as follows.
Loan to value is calculated by taking the loan amount and dividing by the value. For example if you have a loan amount of $105,000 and the appraisal is $150,000 you would have a 70% LTV (Loan to Value)
$105,000 / $150,000 = 70%
An easy way to determine the maximum you can borrower is to take the ARV and multiply it by 70%
In most cases, the ARV is determined by an appraiser. We provide the appraiser with the list of repairs that will be done and he or she will base the value assuming those repairs are done. This is huge because it allows them to pull comparable sales of other recently updated property so we can get a true after repaired value of the property.
In most cases we make loans for 9 months but do make exceptions when needed. Call for more details on the length of the loan. There are no prepayment penalties or minimum interest due so it encourages you to do your fix and flip fast to save on interest.
All repair money is set aside for you. It is held in trust by Pine Financial Group and is released once certain milestones are reached. We are pretty flexible with the repair draws. Our goal is to be sure the property is repaired to a certain standard and that the repairs that were listed during underwriting are the repairs that are made. Because we base our 100% Rehab Loan on the after repair value, it is imperative that repairs are made so we will always hold a repair escrow fund even if you want to pay for the repairs yourself. We do advance the first repair draw at closing which separates us from our competition.
If your actual cost of repairs is less than the budget (being under budget) you will receive all repair money once the job is complete. We will not hold extra money that was not used if you come in under budget. We actually encourage you to be under budget by being generous with your estimates.
This helps insure the cash is available to complete the project.
If your repairs are higher than the budget (being over budget) you will be required to make all repairs indicated on the repair estimate submitted during underwriting out of your pocket. This extra money will be your responsibility as we do not increase loan amounts once the deal closes and we require all work to be completed based on the original budget. You will not receive your last repair draw until ALL repairs are made. This is why it is smart to estimate the repairs high and try to come in under budget and it is a good idea to include a contingency in your budget.
We will pull our own credit report before we close on a loan but it is not required when you apply. We will only pull credit when we are actually going to do a deal together. We understand having inquiries on your report could influence the score so it is not necessary to pull this report to get qualified. It is also free to get qualified so be sure to get that done today so you are ready to make offers!
Reserves is the amount of cash you have available in case something goes wrong or to help you make your monthly payments. It is always a good idea to have reserves as a real estate investor. No reserves could be your shortcut to bankruptcy.
We require the greater of either 10% of the loan or $10,000 in a liquid account. We do not count retirement accounts towards this requirement. Liquid accounts consist of personal or business checking or saving accounts, money markets, brokerage accounts, etc. You must be able to access the money quickly without penalty. This is not a deposit, nor is it held at Pine Financial. It remains in your account so you have access to it if needed.
Yes, in fact many of our clients use that strategy. This is a great loan to buy and fix a rental as long as you have a solid refinance ready to go. If your strategy is to refinance it we will require documentation that you are approved for the refinance. To get more information on using hard money to buy rentals, check out our FREE special report.