Below are my Denver hard money loan guidelines.
My hard money niche is from $200,000 to $800,000. Can you arrange financing outside of you niche? Certainly, under the right circumstances and for the right borrower. I do have the capability to arrange loans as large as $10,000,000.
The property must be located in Colorado. While most of my business is along the Front Range, I will consider other areas of the state.
LTV (Loan to Value)
The LTV on most loans that get funded today will be in the 50-70% range. It is possible to get an LTV as high, 75% in some instances, if I can get comfortable that the market for a particular property is strong and is on the incline or the property is in a niche market area.
Typically the loan term will not be longer than 2 years. This works for most borrowers since hard money is definitely more expensive than conventional financing and is used temporarily until conventional financing can be arranged or the property sold. However, extension clauses can be inserted into the loan documents that allow the borrower to extend the loan beyond the maturity date if the loan is performing and circumstances with respect to the borrower and the property have not changed substantially from the time the loan was initiated.
My rates today can be as low as 8.5%. Rates vary according to the LTV, property type, property location, borrower, etc., but are generally lower than most other hard money lenders active in Colorado.
My origination fees are typically 2-4, points. Again, depending on the borrower, property, location, loan term, etc.
All loans are closed using a title company. The borrower is responsible for all costs involved, (a) a lender’s title insurance policy, (b) closing/settlement fee, and (c) recording fees.
I try to keep paperwork to a minimum, but the two loan documents absolutely necessary are a promissory note and a deed of trust. Other documents often needed include a loan guaranty, a disclosure of risk factors, and subordination agreement.
Realistically, it is going to take at least a week to fund a loan from the time borrower submits a request. Small loans are generally the quickest and easiest to get done. Can a loan get funded in a few days? Yes, if my desk is clear, the borrower has all the information needed immediately at hand, the property is free of any peculiarities and the loan request is not pushing the envelope with respect to LTV, term, interest rate, etc. I have funded loans with as little as two days notice.