Hi all - I am looking for a lender that will do Earnest Money Loans. Does anyone know of anyone who could help with this? Pre-Transactional Funding could be the wording to???
Thank you and any education on this would help - CALIFORNIA loans are mainly the need.
Hey @Kim Williams Would you be looking for Bridge Financing?
@ Jason Shackleton
I am familiar with Bridge, but there seems to be something out there strictly for EMD - I could be wrong. I have a very large solar client that invests in large new construction deals - they have their REIT for funding, but wants us to find quick EMD for them. They are very busy and I need the funds turn around quickly - so bridge is fine, but seeking a go to relationship for the EMD.
@Kim Williams I've personally never heard of such a thing. I don't know a single lender who would lend someone an EMD. What would be the lender's collateral? It's not like they can secure a lien to the property based on EMD for someone not yet on title. EMD is something the buyer is expected to have as a very basic piece of skin in the game. If an investor can't put down their own EMD it sounds like they're not financially capable of doing the deal. No bank's underwriting would allow for an EMD to have been borrowed anyway... Sorry if this comes across harsh I just think you're on a wild goose chase. The title company will often look to ensure that the earnest money deposit came directly from the borrower's account to rule out money laundering.
If you have no EMD $, no need to be investing in real estate. No lender will risk money when the borrower has no skin in the game.
@Kim Williams I'm looking for the same just out of curiosity. I've been offered transactional funding twice this week. However, they'll issue POF on your behalf, but not EMD in the event it's asked for. I'm like why let a deal fail because of EMD if the deal is viable?
For example, I was told: "EMD is your responsibility. If it is a pre-bank, they can negotiate for a low EMD or no EMD at all. If it is a pre-list or post-list, it is the bank that requires EMD.
1st Person: Earnest Money Deposit is always negotiable when you are working directly with the property owner. You can negotiate it $10 or $100. If you are working with a realtor, it is common for them to require a 1% EMD,.Then that check is held by the closing atty in escrow and not cashed until closing.
If it is a Pre-List or Post-List, minimum is $500. Banks usually include that the EMD is refundable in inspection period so you still have a way to get it back. Ensure that your EMD is low".
Keep in mind this is a double close situation and the money from the second close would pay back the Transactional funder from the buyer. So you got both players in place but the only thing you're lacking is a EMD to get you through the first transaction. What do you do?
a. With financially distressed homeowners who must sell very quickly
b. The REIer lacks the capital to pull it all off alone
c. In real estate markets that feature lower cost properties
NOTE: We ARE flexible and open-minded to extraordinary deals, that offer superior profits, for investments of more than $100,000. Please feel free to submit any deals that look particularly attractive to you.
4. Our JV Partner is not required to provide any out-of-pocket investment capital; they are essentially our "sweat equity", boots-on-the-ground partner. We do not require any upfront fees.
B. We pay a 2.5% referral fee to those who refer other JV Partners to us and with whom we subsequently do deals that we fund. The 2.5% referral fee, as consideration, is based on the actual funded amount.
On second person: Can't get to further specifics until I sign a NCND form to see whether or not they provide EMD coverage. I read in another forum they do. Doing my due diligence before I proceed
@Kim Williams Forgot to mention the second person is out of California and has two more programs
@Keith Hicks and @Kim Williams Investing is a risk-reward game in real life. Most lenders need collateral in the event the borrower defaults on the payment. EMD has no backing of hard assets and it is hard to find someone willing to take the risk of giving funds towards EMD.
You can have a partner in your business who can do that with a payment plan as part of a business agreement. They can be friends, family and some one whom you know.