Check out some common questions we get asked about our products and programs!
FAQs
Can we use any title company we choose?
Yes, you can use any title company. However, it is important to make sure the title company you use is familiar with this type of commercial loan product. They are required to prepare the warranty deed and provide clear title including a survey endorsement indicating property is free of encroachments. Also, title company will need to be approved by Lender
Who needs to be a Guarantor?
Products require a guaranty from all individual guarantor that directly or indirectly have an ownership interest greater than or equal to 20%. A qualifying individual guarantor is an individual that provides sufficient financial and industry experience support for the subject loan. Experience, FICO scores, and liquidity.
On which members of an LLC does investor conduct a background check, credit check, and OFAC check?
••Background Check: Typically required for all borrowers, guarantors or owners or individuals with managing control or ≥ 20% direct/indirect interest.
••Credit Check: Required for all guarantors and members with ≥ 20% direct interest. Some lenders will allow only one credit pull guarantor
••OFAC Check: All members, owners and managers of the entity.
Do we lend to non-US citizens?
At this time, we lend to us citizens, permanent residents aliens, non-permanent resident aliens that reside in the US and foreign nationals from eligible countries.
Can I renovate a home that was damaged in a disaster like a fire or flood?
Yes, you can! You can do partial renovations as well as from foundation up. You can use this product to bring a home up to code after a natural disaster such as raising elevation after a flood or using fire resistant materials in a fire prone area.
Can I use retirement funds to qualify?
Yes you can. Any accounts that have a tax penalty for early withdrawal can be used to qualify for your line of credit. However, lenders may only consider 70% of those funds.
Can I use these products if I have never owned a home before?
No. Our investor requires that at least one member of the LLC to have prior home ownership experience.
Is there an age requirement for the product?
Varies per state most states require you to be at least 18 years of age.
Can I place properties into a trust?
Yes, a revocable trust can be eligible however will require full trust review. However only certain lenders allow this
Are there property types that are not allowed to be purchased?
Yes. Manufactured and mobile homes, co-ops, property greater than 20 acres, working farms, bed and breakfasts, boarding houses, log homes, owner occupied houses,
Can I purchase a rental property in a resort area and use it for short term rental?
Yes, There are products for short term rentals. Generally purchasing a short term rental is easier then refinancing. Lenders use Airdna to qualify the property DSCR ratio.
Can I use this product after a bankruptcy or foreclosure?
Yes, you can access this product once you have settled out of the bankruptcy or settlement of foreclosure for at least 2 years.
Is a mixed-use property allowed?
Yes, you can get a mixed-use property provided that at least 75% is designated as residential use. minimum loan amounts may vary between 250,000.00-500,000.00.
With the Fix & Flip products, what does the borrower pay interest on? Starting when?
Interest accrues from settlement date based on the applicable interest accrual type (either Full Accrual or Balance Accrual.) All interest is payable monthly and due on the first of the month.
••Full Accrual: Interest accrues based on the full loan amount, regardless of outstanding principal and disbursements. Funds that are not disbursed at close will be held as an escrow holdback for future renovation draws.
••Balance Accrual: Interest accrues based on the balance outstanding, including initial disbursement and the amounts of subsequent disbursements.
Why is an accurate and detailed budget so important?
So that the lender may validate that the borrower submitted the budget properly. It must consider all repairs, including contingencies, that support the prospective value of the repaired house. This budget is given to the appraiser to factor into the after-repair value (ARV) calculation, which drives loan limits.
How do appraisal requirements for a Fix & Flip loan differ from appraisal requirements for a traditional owner-occupied property?
Property valuation include an “As-Is” value and an “After-Repair” value, if applicable, to determine maximum initial advance and repair/rehab holdback, if applicable.
For Fix & Flip and New Construction loans, is an ACH account required?
Yes, all loans require ACH authorization at close. Given the shorter duration of the loans (typically less than one year) and the changes in monthly interest payments, ACH provides for an automated and accurate payment method.
Can you explain the escrow holdback?
Company reviews a borrower’s construction/rehab budget and qualifying budget eligible for financing. This budget amount is held back as an escrow holdback. The borrower can request these escrowed rehab funds using the Draw Request Form after portions of the rehab are completed.
How does the construction draw process work?
A borrower completes the Draw Request Form. The borrower must provide contact information for property access and include bank wire instructions for draw/advance proceeds. Within 24 hours of receiving the order, the inspector contacts the borrower directly to coordinate a date/time for the property inspection. Report is typically received within two business days, and a copy is provided to the borrower. Depending on the percentage of the project that has been completed, funds will be released of that same percentage of funds from the rehab escrow holdback, minus a draw fee.
How do appraisal requirements for a Single Rental Loan differ from appraisal requirements for a traditional owner-occupied property?
An appraisal for an investment property may have additional scope, compared to a traditional owner-occupant appraisal. This is similar to how appraisal requirements may vary between FHA and VA appraisals. Investment properties often have a complex or distressed vesting past with large variations in value, conditions, owners and general comparability. These fluctuations make it more complicated for appraisers to evaluate appropriate comparable properties in a market and create atypical property characteristics.
For example, if an appraiser is appraising a duplex, the most comparable properties are similar duplexes. However, if the subject property is in an area with limited or stale comparable duplex sales, this may limit available and comparable data needed for the appraiser to make an easy assessment.
Can you lock a rate on a rental DSCR loan?
Rate lock varies in the industry from 30-45 days. On some occasions rates are only locked when the file has been approved.