High Net Worth Borrower: Properties in Multiple States, Commercial and Owner Occupied Residential Loans

Inevitably high net worth borrowers run into a scenario that requires equity based financing (also known as a private money loan or hard money loan). Since high net worth borrowers, at least at the moment, are gradually being stricken from the traditional financing mold, the onus is placed on the mortgage broker to find an alternative source of financing for their valuable projects.

Whether the borrower is a corporation or just a high net worth individual, they’re needs are typically very similar: they either need capital to move a valuable project forward or they need access to liquidity to handle day-to-day expenses. Whatever their situation, the circumstances are typically always the same – they have money, but it’s tied up in their assets. Enter private money lenders: mortgage finance companies with the ability to underwrite and fund on an equity basis without making borrowers jump through circus hoops to get access to the capital that they need.

The process of obtaining an equity loan can be simple at times, especially when borrower have significant equity in a property and are looking for a smaller loan amount to bridge a financial need. However, it gets much trickier when a borrower has plenty of equity but it’s spread out over multiple assets. It’s even worse when those assets are spread out into different states, as is the case when borrowers have multiple residences or have investment holdings in a number of different areas. There are several reasons why this can be a deal breaker for many private lenders:

1. Most private lenders will not operate in all of the states that the assets are located in. 

A private lender may be willing to lend in Florida, but the second that they have to secure a second home on the Jersey shore as additional collateral they’re suddenly not interested in financing the loan submission anymore.

It could be a licensing issue, an underwriting issue, an investor issue, or even an experience issue. Whatever the reason, geography is going to be a deal killer to plenty of private money lenders. If they don’t lend in a number of different states, their propensity to handle high net worth borrowers plummets.

2. Most private lenders aren’t willing or prepared to handle the legal issues with loans that cross state borders

Especially when it comes to mortgage lending, every state’s laws and procedures are different. Private lenders often develop a comfort zone in a specific state or area of the country simply because they get to know the laws and understand the risks inherent with a defaulted borrower in that geographic location. Taking on a new state and attempting to understand its laws and how they’ll relate to the laws in another state can be daunting. The complications of cross-collateralization across state border can be difficult, and many lenders simply won’t venture out that far.

3. Most private lenders don’t want the hassle of managing multiple pieces of collateral

Sometimes the problem lies in the simple fact that a lot of lenders don’t like cross-collateralization. Either they’re not set up for it, it doesn’t fit their philosophy or it’s too complicated for them. It doesn’t fit into the common formula of: take application, set LTV, appraise property, approve loan, fund loan. There’s a lot of work that goes into assessing the risk of cross-collateralizing as it related to foreclosure, and many lenders simply aren’t going to be willing to go there.

The good news in all of this, of course, is that we work with a Lender willing to go there. We specialize in loans to high net worth borrowers that have property in multiple states and require equity-based financing on their real estate. We regularly approve and fund loans for borrowers that have multiple pieces of collateral to pledge for an equity-based loan. We actively lend in all 50 states and we’re not afraid to deal with slightly more complicated transactions for both commercial and residential loan requests.

If you’re looking for a private loan, hard money loan, or equity-based financing and you’re struggling to find a lender with the flexibility and geographic reach that you require then we are the source for you.

FAQ's Commercial Lending # 1

FAQs: Commercial Lending

What does "Loan-to-Value" (LTV) mean?
This is a ratio used by lenders to determine how much they will lend on a particular property. It encompasses the ratio of the loan amount to the value of the property. For example, let's say that an investor/borrower wants to purchase a property that is valued at $5,000,000. He/she pays $1,000,000 as a down payment, meaning this individual would be seeking a loan amount of $4,000,000. Thus our ratio of loan-to-value would be $4M/$5M, or 80%. Generally, a lender prefers to see an LTV no greater than 75%, but most will go higher if the quality of the property is exceptional and/or the borrower has a substantial net worth.


What is meant by a "point"?
When we are talking about financing, the term "point" essentially means percent. For example, one point on a one million-dollar loan is equal to $10,000, or 1% x $1,000,000.


What is a rate lock?
Borrowers do not want to be surprised at the close of the transaction with a rate which is higher than what was quoted at the beginning of the process. Hence, many borrowers ask that the lender commit or lock the initial rate that was quoted for the length of the loan. When a rate is locked, the lender is being asked to guarantee the price of a commodity, the price of which may change on a daily basis. (For example, check out the fluctuation of the bond market -- a daily measure of the price of money.) The longer the lock period, the riskier the position of the lender, hence the higher the loan price (points) charged the borrower.


What is meant by "capitalization rate"?
The capitalization rate, or "cap rate" as it is more commonly referred to, is a ratio used to estimate the value of a commercial real estate property.
In more general finance terms, according to the Appraisal Institute, it is a method used to convert an estimate of a single year's income expectancy into an indication of value in one direct step, by dividing the income estimate by an appropriate rate.
The relationship between Cap Rate (R), Income (I), and Estimated Value (V) is as follows:

V = I / R
I = V x R
R = I / V


What is "Debt Service Coverage Ratio" (DSCR)?
The final ratio that a lender will use when evaluating a commercial real estate or income-producing property is the debt service coverage ratio (DSCR). The debt service coverage ratio is a sophisticated ratio only used for large loans on commercial real estate and/or income-producing property.
The debt service coverage ratio is often used by loan officers when making loans to perspective income property loans.

A Closer Look at DSCR.
The most important ratio to understand when making income property loans is the debt service coverage ratio. It is defined as:
DSCR = Net Operating Income (NOI) / Total Debt Service
To understand the ratio it is first necessary to understand the numerator and the denominator. Let's take a look at net operating income (NOI) first.
Net operating income is the income from a rental property left over after paying all of the operating expenses:
Gross Scheduled Rents $100,000
Less 5% Vacancy & Collection Loss $5,000

Effective Gross Income: $95,000
Less Operating Expenses
Real Estate Taxes
Insurance
Repairs & Maintenance
Utilities
Management
Reserves for Replacement
Total Operating Expenses: $30,000

Net Operating Income (NOI) $65,000

Please note that lenders always insist on some sort of vacancy factor regardless of the actual vacancy rate in an area to cover collection loss. In addition, lenders always insist on using a management factor of 3-6% of effective gross income, even if the property is owner-managed. Their logic is that they would have to pay for management if they took back the property. Finally, NOTE THAT WE HAVE NOT INCLUDED LOAN PAYMENTS AS AN OPERATING EXPENSE.

Next let's look at the denominator, Total Debt Service. This includes the principal and interest payments of all loans on the property, not just the first mortgage. NOTE THAT WE HAVE NOT INCLUDED TAXES AND INSURANCE. They were already accounted for when we arrived at the net operating income (NOI).
To calculate the debt service coverage ratio, simply divide the net operating income (NOI) by the mortgage payment(s). For the sake of simplicity, let us assume that there is only one mortgage on the property:
$500,000 First Mortgage
11% Interest, 30 years amortized
Annual Payment (Debt Service) = $57,139

Then:
DSCR = Net Operating Income (NOI) = $65,000
Total Debt Service $57,139
DSCR = 1.14
Obviously the higher the DSCR, the more net operating income is available to service the debt. From a lender's viewpoint it should be clear that they want as high a DSCR as possible.
The borrower, on the other hand, wants as large a loan as possible. The larger the loan, the higher the debt service (mortgage payments). If the net operating income stays the same, and the loan size and therefore the debt service increases, then the lower the DSCR will be.
Life insurance companies are very conservative and generally require a 1.25 or 1.35 DSCR. This means that their loan-to-value ratios are low. Savings and loans (S&L's) generally only require a 1.20 DSCR, and sometimes will accept a DSCR as low as 1.10.
A DSCR of 1.0 is called a breakeven cash flow. That is because the net operating income (NOI) is just enough to cover the mortgage payments (debt service).
A DSCR of less than 1.0 would be a situation where there would actually be a negative cash flow. A DSCR of say .95 would mean that there is only enough net operating income (NOI) to cover 95% of the mortgage payment. This would mean that the borrower would have to come up with cash out of his personal budget every month to keep the project afloat.
Generally lenders frown on a negative cash flow. Some lenders will allow a negative cash flow if the loan-to-value ratio is less than around 65%, the borrower has strong outside income such as an electronic engineer, and the size of the negative is small. Lenders rarely allow negative cash flows on loans over $200,000.

Floriday Purchase/Rehab Loan - 100% Financing

TRTY             CA, FL Only                       
AMNT            $50k - $5M
LTV               100% LTC of 70% ARV
INT                14%
PTS               4 - 5
TRM              12 months
PPP               None

No Credit Reports or Verification of Income
Points & Closing Costs Can Be Rolled Into Loan
Experienced Investors Only
Need Appraisal

This product currently allows up to 100% of the acquisition & rehab costs to be included in the loan as long as the total LTV is less than 70% of the completed projects value!
Quick closing! (15-20 business days from complete submission)
100% of costs rolled into the loan!
Fee's rolled into the loan!
Closing costs and points paid at time of closing
Increase your liquidity by leveraging your experience to borrow the capital!
No Credit Check or Income Verification!

SUBMISSION REQUIREMENTS:

Completed Application 
Signed borrower's authorization 
Executive Summary (include written exit strategy)
Proof of History of Flipping or Investing
Schedule of Real Estate Owned
Signed Purchase Agreement
Estimate/Repair Bid
Preliminary Title Report
3 months current bank statements
Copy of state issue ID/Passport
Appraisal of subject property (to be ordered by Lender)
* If closing in a LLC, Corporation, or other entity please provide the following:

Articles of Incorporation/Formation
Operating Agreement
Corporate Bylaws (if applicable)
Certificate of Good Standing (must be less than 60 days old)
Corporate Resolution naming signers
Copy of sate issue ID/Passport of all principals with 25% > ownership

California Purchas/Rehab Loans - 100% Financing

TRTY          CA, FL Only                       
AMNT         $50k - $5M
LTV            100% LTC of 70% ARV
INT             14%
PTS            4 - 5
TRM           12 months
PPP           None

No Credit Reports or Verification of Income
Points & Closing Costs Can Be Rolled Into Loan
Experienced Investors Only
Need Appraisal

This product currently allows up to 100% of the acquisition & rehab costs to be included in the loan as long as the total LTV is less than 70% of the completed projects value!
Quick closing! (15-20 business days from complete submission)

100% of costs rolled into the loan!
Fee's rolled into the loan!
Closing costs and points paid at time of closing
Increase your liquidity by leveraging your experience to borrow the capital!
No Credit Check or Income Verification!

SUBMISSION REQUIREMENTS:

Completed Application 
Signed borrower's authorization 
Executive Summary (include written exit strategy)
Proof of History of Flipping or Investing
Schedule of Real Estate Owned
Signed Purchase Agreement
Estimate/Repair Bid
Preliminary Title Report
3 months current bank statements
Copy of state issue ID/Passport
Appraisal of subject property (to be ordered by Lender)

* If closing in a LLC, Corporation, or other entity please provide the following:

Articles of Incorporation/Formation
Operating Agreement
Corporate Bylaws (if applicable)
Certificate of Good Standing (must be less than 60 days old)
Corporate Resolution naming signers
Copy of sate issue ID/Passport of all principals with 25% > ownership

Purchase/Rehab Lender # 1

TRTY        Chicago Area Only
AMNT       $50k – $5M
LTV          65% ARV up to 100% LTC
INT          14%
PTS         4
TRM         6 – 8 months
PPP         No
Properties: 1 – 4 units and larger apartment buildings
Lender has Borrower escrow all loan payments at closing
Lender has Borrower escrow 6 months PITI of future end loan
1. Term can be up to 10 months, need Lender to know
2. At closing, Borrower gives term of loan in payments to be put in escrow
(example: 7 month loan, 7 months into escrow
3. Lender looks at all loans as exit strategy refinances
Lender qualifies Borrower for end loan as part of underwriting
Lender has Borrower bring to table 6 months PITI of end loan payments

Purchase/Rehab Lender # 2

TRTY        Chicago Only
AMNT       $20k – $5M
LTV          70% ARV (Up to 100% LTC)
INT          24 – 36%
PTS          1
TRM          6 – 12 months
PPP          4 month guarantee
Property: 1 – 4 units, Commercial, Apartment Complex, Condos

Purchase/Rehab Lender # 3

Territory          Chicago
Amount            $50k – $400k
LTV                 80% of purchase and rehab (but max is 65% of LTV)
INT                 18 – 24%
PTS                 5 (min of $2,500)
TRM                12 months
PPP                 4 months guaranteed
CRDT               600
Will do JV

Loan Program # 4

Refinance Only Lender
TRTY           Chicago Area Only
AMNT          $25k – $1M
LTV             60 – 70%
INT             12 – 20% (15%)
PTS             5
TRM            12 – 24 months
PPP             3 month guarantee

Private Lending: Assisted Living Facilities, Senior Care Centers, Rest Homes

Loan Program # 1

TRTY       Nationwide

AMNT      $300k - No Max

LTV          70% LTC

INT           12 - 15%  (12% in above states)

PTS          5

TRM         12 – 36   months

PPP          None

Loan Program # 2

Territory   National        

Amount    $25k - $2M

LTV          65%

INT           10 - 14%

PTS          3 - 6

TRM         6 - 24 months

PPP          No

Credit       No score requirements

Loan Program # 3

TRTY       Nationwide

AMNT      $500k - $20M  (East Coast)

                  $1M - $20M     (Outside East Coast)

LTV          65%

INT           10 - 14%

PTS          2 - 4

TRM         12 - 36 months

PPP          No

Loan Program # 4

TRTY       Nationwide

AMNT      $1M - $50M

LTV          70%

INT           6.75 - 10.75

PTS          2

TRM         1-5 / 15, 30 or IO

PPP          Borrower choice

Private Lending: Apartments, Multi Family, Multi Familly Complexes

Program # 1

TRTY    Nationwide
AMNT    $500k – $100M
LTV       65% as is or purchase – Residential
INT       10 – 14%
PTS       3 – 5
TRM      1 – 15 years
PPP       None

Commercial Construction up to $50M


Program # 2

Territory    Nationwide
AMNT        $100k – $2M
LTV           65%
INT           10 – 15%
PTS          3 – 6
TRM         12 – 36 months
PPP          None
CRDT       Not FICO driven

Trophy Homes: AZ, CA, CO, FL, ID, HI, NV, NY, OR, UT, WA
Construction / Construction Completion $1M and up, SE & SW $200k and up


Program # 3

Territory    Nationwide
AMNT        $3M – $100M (Hotels $500k – $15M)
                                       (Small Commercial $250k – $5M, 65%)
LTV           75%
INT           12 – 15
PTS           2 – 6
TRM          12 – 36 months
PPP           None

Hospitality, Major Flags Only (to 70% purchase, 65% LTC for Construction)
Apartments
Commercial
Permanent, Mezzanine, Bridge


Program # 4

Territory    National
Amount     $25k – $2M
LTV           65%
INT            10 – 14%
PTS           3 – 6
TRM          6 – 24 months
PPP           No
Credit        No score requirements

1 – 4 Unit Buildings in CA Only

Purchase/Rehab : 60% of purchase and 60% of rehab, will roll in pts and cl costs
100k purch + 20k rehab = $120k / Will loan $60k + 12k = $72
Bridge Loan : 60% As Is, 5 pts, 13% , term 24 months

No Ownership Seasoning on Refinancing, off Current FMV

Loans from $100k to $3M
Full Doc Commercial Lending
Apartments, Strip Malls, etc
Bridge Financing
$100k to $50M

Stated and Full Doc to 65% LTV
DSCR may not be relevant in some cases

Documents
2 years P & L
2 years tax returns
Rent roll
Proof of funds
1003
Business Financial Statement
Personal Financial Statement
Appraisal (if have)
Color Photos
Credit Report


Program # 5

TRTY       Nationwide
AMNT      $100k – $10M
LTV         50 – 70%
INT         10 – 15%
PTS         2.5 – 6
TRM        15 / 30
PPP         None

Refinance: No ownership seasoning will take off of current value

Will not lend on 1 – 4 unit apartment buildings

Multifamily, Apartments, Mixed Use, Office, Retail, Warehouse,
Industrial, Shopping/Stip Centers, Storage, ALF, Mobile Home Park,
Auto Repair, Restaurant, Daycare, Funeral Home, Gentleman’s Club,
Gas Stattion, Motel, Church, B & B, Golf Course, Dary Care, Other

No Ratio Income / Verified Assets - Commercial Properties

Here are the criteria for the NO RATIO INCOME, VERIFIED ASSETS

purchase and refinance (rate & term or cash out), no rehab

Loan program:

TRTY                 Nationwide (Not: AL, AZ, HI, MI, OH, SD, WV, VT)

AMNT               $100K - $3M

LTV                    Up to 75%

INT                    7.5 - 11.5%                  

PTS                    2 - 3

TRM                   3 – 5 – 10 / 30 yr amort.

PPP                    Fixed Rate Period

CRDT                 Min 650 middle

Property Types:              Apartments                   Retail                          No Residential

                                           Mixed Use                     Self Storage               (1 – 4 Unit)

                                           Mobile Home Parks    Warehouse

                                           Office

Properties Financed:      No Limit

Ownership Seasoning:   None

Borrowers:                      No Foreign Nationals

Closings:                           45 - 60 days from loan submission

Preliminary

Documents:                    1003

                                          P & S Agreement

                                          Deposit Receipt (or check, front & back)

                                          MLS Listing or Photos

                                          Credit Report

                                          Driver’s License & SS card (Passport for Foreign National)

                                          Business License & CPA Letter (2 years for self employed)

                                          3 months bank statements

                                          2 years tax returns

                                          Rent Roll

                                          Resume

                                       

Stated Income / Stated Assets, Up to $2M, NY & GA

TRTY                 NY & GA

AMNT               $200k - $400k    /      $401k - $2M

LTV                    65%                      /      60%

INT                    5 – 6%

PTS                    3

TRM                  3 – 5  /  30

PPP                    No pre payment penalty

CRDT                 Min 650 middle, no lates last 12 months

Property Types:           Standard with case by case exceptions

Church Loans

Loan Program # 1

Territory           National
Amount            $250k – $20M
LTV                 80%
INT                 3 / 25 7.25 PPP 1 yr Pts 1
                      5 / 25 7.45 PPP 2 yr Pts 1
                      7 / 25 8.15 PPP 3 yr Pts 1
                     10 / 25 8.45 PPP 5 yr Pts 1
PPP                No
No                 Application Fee


Loan              Program # 2

TRTY             National
AMNT            $500k – $10M
LTV               70%
INT               5 / 30 5.625 – 7.875 (then ext 5 years)
PTS               1
PPP               5 / 4 / 3 / 2 / 1

No up front fees. After Commitment Letter issued, then
wants 1/10 of 1% for fee.


Loan Program # 3

TRTY          Nationwide
AMNT         $500k minimum
LTV            80%
INT            1 yr ARM 15 / 20 amortization – 2 / 6 caps Prime + .5
                 5 yr ARM 15 / 20 amortization – 2/ 6 caps Prime + 1.5
PPP            None


Loan Program # 4

TRTY          National
AMNT         $50k – no max
LTV            Up to 90%
INT             5 / 25 5.25
                  10 / 25 5.85
                  20 / 20 6.9
PTS             1 – 3
PPP             Varies with length of term

Church must be in business at least 3 years
Purchase, refinance, renovation, construction

Business Loans, Non Real Estate

Loan Program # 1

Capital rasing in North America, South America, Africa & Asia

Mining

Metals

Oil & Gas

Energy

Shipping

Manufacturing

Healthcare

Technology

Retail

Telecom

China

Latin America

Loan Program # 2

Lender is asset based funding source.  Our programs are specifically

designed to provide funding for customers that have prior bad credit.  We

fund traditional deals as well as sale leasebacks, private party sales, start ups, and

owner/operators.  Use Of Cash:

Working Capital

Purchase New Equipment

Inventory

Advertising

Business Debt

Seasonal Merchandise

Remodeling

Loan Program # 3

TRTY       Nationwide - Need $5M to $100M in sales

AMNT      $500k - $30M

Factoring

PO Lending

Inventory

Refinancing on Equipment

Non-Business Expansion Lending

Energy

Blanket Mortgages, Commerical And Bulk Residential REO

Loan Program # 1

Territory   Nationwide Blanket Mortgages  (DF Lending Div)

Amount    $250k - no max

LTV          70% LTC

INT           13%

PTS          4

TRM         5 year interest only

PPP          No

CRDT      Exit Strategy Needed

Loan Program # 2

Asset Based

Amount    $100 - $2.5M

LTV          60% purchase or as is

INT           start 12%

PTS          3

TRM         1 – 5 years

PPP          1 – 5 years

CRDT      None

Loan Program # 3

Territory   Nationwide & International

Amount    $100k - $34M

LTV          65 - 80%

INT           10 - 16%

PTS          3 - 6

TRM         12 - 36 months

PPP          None

CRDT      Need Exit Strategy

Loan Program # 4

TRTY       Nationwide

AMNT      $1M - $50M

LTV          65% ARV

INT           12 - 14%

PTS          6 -9

TRM         6 - 12 months

PPP          None

Bridge Loans, Commercial and N/O/O Residential On ARV

True Hard Money.  Multi Family, Office, Strip Malls, Etc

Residential, must be a minimum of 5 houses

Can roll in interest payment reserve for period of loan

Iowa Purchase And Rehab Lending

TRTY           IA & Nationwide
AMNT          $50 - $5M
LTV             65% ARV (Borrower contribution 15 - 20%)
INT             14%
PTS             4
TRM            12
PPP             None

Missouri Purchase And Rehab Lending

Loan Program # 1
Territory MO (St. Louis Only)
AMNT                   $50k - $1M
LTV                      75 - 100%
INT                     12% 8 months
                          24% 9 - 12 months (Plus 4 points)
PTS                     4 + 4 for extension
TRM                    4 months (ext of 4 pts for 4 more months - then additional interest rate)
PPP                     None

Loan Program # 2

TRTY                  AZ, CA, ID, MO, NV, OR, TX, UT
AMNT                $200k - $25M
LTV                   60%  Land
                        65% Developments
                        75% Construction
INT                   8 - 14%
PTS                  2 - 6
TRM                 6 - 12 months
PPP                  No

Loan Program # 3

Amount            $10k - $300k
LTV                  50 - 60% ARV (100% of purchase/rehab)
INT                 12% 5 4 months (ext of 4 months with 5 pts - will refund prorated)
                      12% 8            6 months
                      18% 8 9 months
PTS                 4
TRM                6 – 12 months
PPP                None

Loan Program # 4

Territory St. Louis, MO and surrounding counties
Amount           No min or max
LTV                 Up to  70% ARV  Will loan on purchase only, no money for the rehab.  Will loan 100% of purchase and roll in points if goes up to the 70%
INT                15%   700 score and over
                     18%   Less then 700 score
PTS                4 (Min of $2000)
TRM               4 months    Then ext of 2 months at a time up to 12 months - 2 points or $1000 min for each extension
PPP                No

Will find 2 loans at a time max

Loan Program # 5

Territory          DE, IL, IN, KS, MI, MO, NC, NJ, NY, OH, PA, TH
Amount          $25k - no max
LTV                70% ARV  (Will pay 100% of deal)
INT                Prime + 6  (Floats)
PTS                5 (ext add 2)
TRM                9 (ext add 4 = 13)
Credit             680
Docs               Full

All costs rolled into loan
Purchase one at a time until track record
20% of Loan into escrow account OR Cross collateralize residence