1. How does the program work?
Loan money is available to real estate investors in metropolitan areas who buy houses, fix them up, and re-sell them. With funds readily available, you can demand large discounts from your sellers (many people will sell for less if they can be assured of a quick closing). Loans are provided only on detached single family residential houses. These programs are ideal for those who can buy right, fix a property up quickly and get it sold or refinanced. Getting started is easy, just follow our application checklist.
2. What is involved in the loan application process?
Our simple online loan application consists of three sections. The first section requests information required for borrower pre-approval. First time borrowers will be required to provide a copy of their social security card and their driver’s license. Two month’s bank statements may be required to show that you have some contingency money available in the event that you run into unforeseen difficulties with your project.
The second section involves a property evaluation that identifies the important details on the property you intend to purchase such as how much you are paying, how much is needed in repairs, how much the property will sell for, and a list of other costs. This will give you a good idea of how much profit the property may generate for you.
The final section requires the applicant to provide a detailed list of all exterior, interior and miscellaneous repairs needed for the property. Upon submitting your application, you will also have the option of paying for your appraisal online by credit card. You can expect a preliminary answer within 48 hours after you have submitted all required forms and documents. A final commitment and approval budget letter will be provided after we have received and reviewed the appraisal and inspection report.
Our pre-approval application is provided to investors who don’t have a property yet but would like to become pre-approved as a borrower.
3. What are the loan programs (interest rate And terms)?
- 13.88% annual interest rate that is payable monthly.
- 4 points due at closing that can generally be rolled into the loan.
- 6 months term.
- At maturity the rates may increase.
4. Do you allow interest to be deferred to the end of the loan?
No. The available programs require monthly interest payments.
5. What Loan-to-Value is offered?
We offer a unique portfolio of competitive financial lending programs. We use Zillow as our first pass To see what the neighborhood average appears To be.
- If neighborhood average appears less than $125K,
- loan amount Is based On zillow rent values And mandatory maintenance And vacancy deductions
- If neighborhood average appears greater than $125K,
- 65% LTV Program
6. What is the term of the loan?
Loans are for a six month term.
7. What are the costs?
Costs are usually limited To an inspection fee Or appraisal, title policy, documentation, And about 4% of the loan amount For origination fees (underwriting, processing, etc.).
8. What paperwork do I need to submit?
- Contract To purchase, Or, deed showing you own the Property
- 2 months bank statements
- Completion of the online application
9. Can I receive repair money?
Yes. Repair information must be completely identified in the Loan Application to determine the amount you need. The repairs will be verified by our inspectors during the initial loan review. As you make improvements to your property, you may request the release of your repair money by submitting a Draw Request (online, email or fax). Repair money is not provided in advance. Funds are released only as the repairs are completed and as agreed to by the borrower prior to closing.
10. How do I submit a draw request?
You may submit a draw request online by logging in to the Customer Log In section of the website with your email and password. Click on “Draw Requests” to submit an application and proof of completion. In some cases we may be required to send an inspector to evaluate the property.
11. How do you determine what repairs are necessary?
Our inspectors are required to include in their budgets all of the necessary repairs to bring a property to retail sellable condition. The repairs that they identify, in addition to supplemental repairs the borrower may choose to make, will be used to determine the final repair budget. The repair budget must be approved and agreed to by the borrower prior to closing. All draw requests must be made using the budgeted amounts. Requests for repair money that were not approved on the initial budget will not be released. The only exceptions will be made when a written request is submitted by borrower to renew and/or modify their initial budget and it is approved by our loan committee. There will be a minimum charge of $100 for any budget change requests after closing.
12. What if my repair costs exceed my acquisition costs?
Borrowers with properties that fall under this scenario may be required to make an initial down payment, provide proof of previous renovation experience and/or be declined for this specific request.
13. What if the costs to repair exceed my original budgeted repair amounts?
Approved inspectors will verify the property’s cost-to-cure. All budgeted amounts are inspector-approved and agreed to by the borrower prior to closing. The borrower will be responsible for any repair costs additional to what was originally assigned for the specific repair.
14. Does my credit matter?
An applicants’ credit report is evaluated to obtain insight into the individual borrowing the money. Depending on the location of the property and the county population, credit scores may affect the loan amount and require a down payment. Please use our loan calculator as a general reference.
15. How is the loan amount decided?
The total loan amount is calculated off of either: a) the After Repair Value, or, b) rental income approach using our formulas
- a) After Repair Value - We will calculate this percentage against the After Repair Value. This amount can be used for the property acquisition, repairs and closing costs. If these amounts exceed the LTV threshold, a down payment will be required. The points and fees are then rolled into the loan to determine the total loan amount. The points and fees are not calculated against the LTV ratio under our 65% program.
- b) Income approach - we take the zillow rent value And deduct maintenance, vacancy, management, taxes, insurance And a servicing fee. The balance Is Then used To compute a Present Value using Excel
Loans are available in cities and counties with a population over 300,000 or where there is a Super-Walmart, and where the lender is licensed or approved to do business. In the event that a property is located in a city or county that does not meet this requirement, the loan may be reevaluated on the merits of the applicant’s credit and may require down payments or be declined.
17. In which states are loans provided?
To view a list of current licensed states, click here.
18. Do I need an appraisal?
Yes in most cases. To view appraisal guidelines, click here. An appraisal might be waived in a geographical area where we or our affiliates have a rental presence.
19. Can I choose my own appraiser?
Appraisals must be provided by lender-approved appraisers.
20. What factors on the appraisal could affect my approved loan amount?
Lack of MLS sourced comparables on the appraisal can be a deciding factor in whether we can offer a loan. Additionally, comps that are not within one half mile of subject property and were not sold less than 6 months ago may necessitate a lower LTV and/or a higher down payment. The appraisers are asked to stay within a "neighborhood" for comps and so comps are not expected to cross major roadways from the subject property. All factors on the appraisal are taken into consideration when making the decision on what loan we might offer for any given property.
Additionally, we have the appraiser look at 50 houses in the subdivision and if there are more than 2 vandalized or graffiti'd houses, we will not do the loan.
21. Do you require inspections?
Appraisals and inspections are required on all properties prior to funding. Follow up inspections maybe required before a draw is issued to ensure that repairs are completed in a workmanlike manner.
22. Do I need to put money down?
Down payments are determined by the purchase price, repair costs, the loan program and the after repair value. In the event that the property does not meet our population requirement, your credit score may be used as an additional determining factor for a down payment requirement. Please refer to our loan calculator.
23. How long does it take to fund?
Funding is generally available within 48 hours upon receiving the appraisal, proof of insurance, clear title, and verification from your title company stating that they will follow specific closing instructions.
24. How many loans can I have opened at one time?
Previous experience, your credit score, your performance history with us and available cash are used to determine how many loans will be opened at a given time. Initially, borrowers are allowed one open loan. Upon payoff of their first loan, they are allowed two open loans. Another payoff will allow them to have a third open loan. This process is followed up to five open loans (assuming that loans are based on average borrower loan amounts). Having more than five open loans will require committee approval and a review of your loan history and financial condition. If you are attempting to submit concurrent requests under your individual name and a related entity (i.e.: LLC, Corporation, Partnership, etc.), please contact our office prior to submitting such applications.
25. How much will my monthly payment be?
To figure your monthly payment simply multiply the rate by the loan amount and divide that number by 12. The payment for a $40,000 loan on our 13.88% program would be $462.66 (40,000 x 13.88% divided by 12 = $462.66). This example assumes your repair funds have been fully drawn. We issue monthly statements where the interest is calculated on the outstanding balance of the loan.
26. Do I need to go through the pre-approval process?
Yes. To become a pre-approved customer you can either fill out the pre-approval application or submit a loan application. You will also need to fax a copy of your driver’s license and proof of your social security number. Being pre-approved will give you access to free pre-qualification letters that are property specific. Please Note: Being pre-approved as a borrower does not guarantee that funds will be extended to close on a specific property. All loans are subject to our underwriting criteria. Borrower pre-approval is generally valid for 90 days. We reserve the right to review borrower documentation to determine changes in credit or availability of funds.
27. Will you finance commercial properties?
No, our loan programs are for detached single family residential properties.
28. Will you finance apartment buildings?
No, our loan programs are for detached single family residential properties.
29. Do you require a survey?
Not generally. However, if the title company will not insure the loan without one, it will be required.
30. Is refinancing available?
We will need to analyze the circumstances. Our programs are generally designed for property acquisition from independent third-parties. Cashing out or refinancing a borrower out of any property that they currently own or control, will depend on the circumstances -- if the property is currently listed on MLS -- probably 'yes'; if property was rented and needs repairs -- probably 'yes'.
31. Are loans available for rural property?
Perhaps. The properties must be in a county or city with a population over 300,000 OR have a Super-Walmart. Properties located in cities or counties that do not meet these requirements will be subject to a complete evaluation based on the merits of credit and required down payments or declined.
32. Are loans available for rental property?
Yes, but you will need to have the property refinanced upon the maturity of your loan.
33. Can the property be in a flood zone?
No. Please confirm that your property is not in a flood zone.
34. Are extensions granted?
Extensions are granted on a case-by-case basis based on payment history and property inspection. If payments are current and repairs are complete you will likely be granted an extension. You will be notified by mail, prior to maturity, explaining your extension options. The lender reserves the right to request updated borrower information (including credit score and bank statements) if the borrower information on file is over six months old.
35. What if I wish to purchase a property that contains mold?
If the inspectors or appraisers identify and report that mold is present in the property, it is required that the borrower conduct a mold inspection test using a certified specialist. The borrower is then required to present the test results/report for further review. The results will be taken into consideration in determining whether or not to fund the loan. It will be the borrower’s responsibility to pay for these reports. Applications for properties with extensive mold repairs or that contain harmful mold will be declined.
36. What if I wish to purchase a property that has been previously damaged by fire?
Our programs are not designed for properties that have been previously damaged by fire. A committee evaluation will be required for these requests and the borrower will be required to provide a structural engineer’s report that identifies the scope of needed repairs. In the event that the loan is approved, a follow-up report from a structural engineer will be required before repair money is released for the required repairs. It will be the borrower’s responsibility to pay for these reports.
37. What requirements do you have regarding foundation repairs?
Foundation repairs are fairly common repairs on distressed properties. It is extremely important that a foundation is repaired correctly and prior to cosmetic repairs being made to the property. We require a structural engineer’s report to be submitted in conjunction with the draw request when the foundation repairs exceed $3,000. We also require foundation repairs to be performed prior to cosmetic repairs on a property. Failure to repair the foundation in a logical order or failure to submit the required reports can delay the draw approval process. In addition, in the event that the initial inspection identifies foundation work needed of $4,000 or greater; a structural engineer’s report will be required prior to closing. It will be the borrower’s responsibility to pay for these reports.
38. What requirements do you have with regard to add-ons, property modifications and “gut” jobs?
Borrowers who wish to add additional square footage onto an existing property, modify an existing property or to completely “gut” and restore a property will be required to submit building plans drawn by an architect and supporting budgets. They may also be asked to provide proof of previous experience with this type of renovation. Borrowers who have no previous experience with our company and who are submitting loans with renovations exceeding $40,000, or we determine to be an add-on, "gut" job or extensive modification may be subject to down payment requirements. In addition, a financial review of the borrower and/or contractor performing the renovations may be required.
39. Do you finance properties that are involved in assignments or flips?
Our loans allow for these transactions, but we have limitations on the number of assignments or flips per transaction and limits on the dollar amount allowed. Please contact our office for additional details.
40. Are there limitations on the size of property and the after repair value of a property?
Our loans require that a property be at least 800 square feet and have an after repair value (ARV) of $50,000. Although we do not have maximum amounts on size and after repair value, any property with an after repair value of over $385,000 will require two appraisals and a review of the borrower’s credit, financial situation and their liquidity. In the event you are requesting financing on properties that exceed $385,000 in ARV, please be prepared to submit a signed copy of your most recent financial statement and support of your current cash and other liquid assets. A committee decision will be required on requests that fall below our minimum requirements or exceed an ARV of $385,000.
41. What documents are needed for pre-approvals?
For individuals, you will need to provide us with a copy of your driver's license, social security card, and two months recent bank statments.
If you are applying under a company name, then, in addition to the information required for individuals, you will also need to provide copies of your Articles of Organization, Certificate of Existence, Operating Agreement, Certificate of Good Standing, Tax ID number and company bank statements
42. What is the refund policy for credit card payments for appraisal?
There will NOT be any refunds for appraisal fees unless the refund is requested prior to the time we engage an appraiser. In the event the refund is requested before the appraiser is engaged, the funds will be returned within 5 business days of your request in writing via fax to 972-421-1994.
43. What if I only need the money for a few days?
If the loan Is paid off In less than 30 days, we will refund 50% of the origination fees.
44. What if I just need the funds For a same Day flip And double-close?
Go To www.DoubleCloseFunds.com