Below are my Denver hard money loan guidelines.
Loan Size
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.
Property Location
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.
Loan Term
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.
Interest Rate
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.
Origination Fee
My origination fees are typically 2-4, points. Again, depending on the borrower, property, location, loan term, etc.
Closing Costs
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.
Loan Documents
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.
Timing
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.
We tried other lenders that indicated they would have no problem completing a refi for our investment property, given our credit situation. In each case it was a waste of time and money. In an environment where banks do not lend, it was such a relief to find Forrest Financial. Chuck is fair, efficient, and knowledgeable. He explained the hard money process to us and was available whenever questions came up. The transaction was smooth and fast, and he is an absolute pleasure to work with.
I contacted Chuck through a mutual client and proposed a cash out refi on a property that we had acquired and cleaned out with some basic value added by new roof and HVAC units. We needed cash out to further other projects that we had in process. Chuck asked “When do you need the money?”. I told him that we would like to close in 5 days. He said he would drive up and meet me at the property that next morning. The meeting was on time, his previous lending experience was invaluable in being able to review what we purchased, the value added and he was satisfied with where we were going with the property. Closed on the 5th day. Property is now under contract with a substantial profit anticipated upon closing.
It has been a great pleasure to work with Chuck as our lender on several deals. He not only is professional in his demeanor, but shows a sincere interest in the rejuvenation of Denver neighborhoods and the production of quality work. He takes pride is his relationships with real estate investors and is constantly sending referrals to help expand our business presence as well. He does business with integrity, follows through with his commitments, and is timely with his decisions. We appreciate his contribution to our business.
