Does anyone have experience with Corevest Finace line of credit?

44 Replies

Originally posted by @Herbert Sears :

@Vik P Thanks for sharing this indepth info regarding your experience with Corevest. Truly helpful insight for a Newbie like myself. 

Originally posted by @Vik P.:

@Nicole B. - First of all sorry I never responded to your message. I am not a frequent BPer and I logged in today after a while. My apologies. I have been trying to be more

I am not quite sure if I understand this part

"I was told that LOCs begin at $1MM and around 15-18% liquidity is needed for the line amount you want. So if I put up $150k or $175k or more, I was expecting a large LOC to outright purchase properties cash"

Basically when you apply for a LOC Corevest is going to look at your past experience with real estate deals (whether its rentals or fix n flips or whatever else) but for them to approve LOC they require one to have around 20% (they can probably do with 15-18% like you mentioned) of the LOC amount in liquidity (cash on hand, stock/ira/401(k) etc.). In your case if it's an LOC of a million you will need to show liquidity of ~ 200k or at least between 150k-180k.

I think a lot of people who are new to this (I was too when it came to borrowing hard/private money) think of LOC from a private lender (such as Corevest or FOA or others) as he/she having access to this large line that they can use properties outright (like a credit card or a HELOC)

That's not how these LOCs work. Yes you do get approved for a large line say 0.5 a million or more which can help you work on multiple deals at the same time but having said that when you find a deal that you want to acquire you still have to send a request for an 'advance' for them to issue those funds (off the LOC) to you.

For acquisition - depending on the #s for the property you'll be putting 20%-30% down payment with 70-80% from the LOC. 70%-80% borrowed funds is what you make IO payments on to Corevest

"I was told that I could do this but I had to have a minimum of 2 properties for this LOC" - I am not sure what you meant by this. I don't know if the above paragraph answered this already or not. If not please let me know and I will try to answer your question

As for the update regarding my own journey - As of today (since I closed on the LOC in Nov) I have acquired the following on my LOC

1) SFR - BRRR

2) A package of 3 townhomes - Not a BRRR really per se but I think I got a decent deal and I had other rental properties in the same area so it was a good addition to my portfolio. I bought the portfolio at 84% LTV so at 75% cash-out I'll be in the deal with around 9% down. Yes I will have a little higher int rate on a refi as I won't be doing FNMA financing for refi but in spite of that it still should help me quite a bit with my cash-on-cash return

3) A quad - I just closed on it last week. I wasn't really looking for MF as I have mainly been investing in C+/B and higher class singles. It was a property that was neglected and basically needed a full rehab. It won't be a BRRR but I came across the deal and I liked it because of it being in an A class neighborhood, separately metered including water and just overall area where the property is and demographics and the tenant pool that I will be attracting. Based on my pro-forma I will be in the deal with about 10-15% down at 75% cashout-refi. Considering all the factors I decided to go for it.

1) and 2) together above are currently being processed as a portfolio cash-out that I am looking into to get them off the LOC. I am looking at 30 yr amort 10/1 ARM for this

As for 3) when the rehab is ready I will be using my last 10th FNMA financing spot for it. I was kind of having that reserved for something special and I think 3) sort of met that criteria.

A couple of important points that I would like to mention for some of the new investors

1) Any LOCs from private lenders that are being offered are not really the same as cash from a CC balance transfer check or a HELOC or some other line that gives you access to cash on the spot. It does provide you some benefits which is the credit check and underwriting is done only once at the beginning and once the LOC is approved and closed on you won't have to send any documentation/paperwork etc. per deal. Yes the lender still do their DD and run an appraisal/BPO but the documentation per deal is only purchase agreement, rehab bid (if you're borrowing funds for rehab) and EOI.

You can definitely speed up your RE holding with an LOC

2) If you're close to 10/20 (if you're married and planning to use those) FNMA financing spots being used I will not recommend properties that are valued below 90-100k ARV. I have been talking to a ton of brokers and lenders and there are very few private lenders (if any) that will be ready to take on your refi if the loan amount is < 75k. Even with lenders who do blanket loans with a handful of properties and even if the total portfolio value is over 75k many of them require each property to have a loan amount of 75-100k

I will let you all know how my refinancing with 1) and 2) goes in the next 3-4 weeks. The rehab and cash-out refi on quad is a non issue for me as it'll be a FNMA refi plus the ARV would be around 250k on the quad so any lender would be ready to do the refi on that once the property is stabilized

Hope this post helps people who are in the same boat as I was 4-5 months ago or are looking into LOC/funding options for your RE investment journey

 You are welcome ! happy to help.

@Marylynn B. Just to clarify your previous post, did Corevest ask you for prepayment of fees and is that why you were hesitant? It sounded like the fees should be in the closing costs although I just said no to 5 Arch because there were asking for $$ to start the application process which I have never had to do before with any of my lenders. I just asked Corevest whether they needed a pre-application fee to start the process, and they said no only appraisals were needed to be paid to process the application. Is that different from what Corevest told you? 

I've had the unfortunate experience of beginning to use them.  Their terms are not the best out there.  But if you are desperate to get a deal done, then they do take action. I will update you after my cluster has been resolved with them.  Steer clear as I wished I had done my research ahead of time and wasn't pressed to make a decision to use a lender without my research of the firm that I was going to be doing business with. Research, Research, Research and do not send a company like this money ahead of time. 

Hi....l used a HM lender way back in 2006...boy have things changed! I just finished the application process with CoreVest and l'm waiting on pricing. I will be doing one property at a time BRRR . l will be using their bridge loan product or rental product for my acquisitions. I have not spoken with or researched the other HM company Sortis mentioned in this post . Has anyone out there used Sortis?...secondly has anyone used CoreVest for acquisition funding...not using their LOC product...?...

Ty U...journyman investor Los Angeles

Hi guys, I'm a Loan Broker and have just found out about this LOC from Corevest. It seems like an excellent product for my clients and target audience. I'm currently making sure I understand it perfectly as it seems like a hybrid between an LOC and a regular bridge loan. Just wanted to see if you still recommend it?

Thank you. 

Hi...l just started working with CoreVest....they do have some great products.  Make sure you understand their criteria for each project.  They are definitely above board and Sean Troncosco is great to work with....very thorough in explaining their products.

@Vik P. I have not deal with this lender but similar to other LOC. But I can say there are better options available.

50k min liquidity x10 LOC.

90% LTC- 100% rehab -75% LTV ARV max.

12 months term on each deal you submit

You can submit a deal 30 days before the 12 month review.

2 options available- interest on full amount or interest on purchase and rehab (lower rate)

Originally posted by @Guifre Mora :

@Vik P. I have not deal with this lender but similar to other LOC. But I can say there are better options available.

50k min liquidity x10 LOC.

90% LTC- 100% rehab -75% LTV ARV max.

12 months term on each deal you submit

You can submit a deal 30 days before the 12 month review.

2 options available- interest on full amount or interest on purchase and rehab (lower rate)

I am sure there are. I would like to know more about it as all my properties are off the line as of today (refinanced into 30 yr fixed) and the draw period on my line is past 12 months so it's open just for name sake anyway. I have an option to renew it which I may consider.

Can you share the name of the vendor or PM me please?

 

Yes, I have a institutional revolving credit line $3-25M (reusable per project based on a simple $2500 fee to use each time and no underwriting) they do not offer revolving line only regular line from $1-3M. I highly recommend it if your a serious investor (difference between hobby and business). Must have 20% of the LOC in assets, 5% liquid, taxes required 2 years and a 650 credit, If you need details just contact me thanks.

This loan is designed for the active investor who actually has at least $600K in assets ( could be property, 401K or cash, retirements but must have 5% liquid.)  If you making headway in the Real Estate game and want to have an available credit line this is the way to go.  This is not a blanket credit line it is property based you can leave it unused for 18 months if you don't use it it expires. 

I really like this product because you don't have to go through underwriting every 3-6 months of flips or projects.  For those reasons alone if you going to get money form a lender this is the way to go.  I can do 3-5 flips a year depending on fast I move.

Hope it helps.

Originally posted by @Vik P. :
Originally posted by @Guifre Mora:

@Vik P. I have not deal with this lender but similar to other LOC. But I can say there are better options available.

50k min liquidity x10 LOC.

90% LTC- 100% rehab -75% LTV ARV max.

12 months term on each deal you submit

You can submit a deal 30 days before the 12 month review.

2 options available- interest on full amount or interest on purchase and rehab (lower rate)

I am sure there are. I would like to know more about it as all my properties are off the line as of today (refinanced into 30 yr fixed) and the draw period on my line is past 12 months so it's open just for name sake anyway. I have an option to renew it which I may consider.

Can you share the name of the vendor or PM me please?

 

Yes the Long Term Rental loan is a ballon product 5-7-10 years and it amortized over 30 years range of 5-6% under your business name or LLC. They will finance unto 75% of the LTV of the property based upon an appraisal by their 3rd party appraisal service.

This is where people get into trouble and are dis illusional. Everyone thinks they are sitting on a pot of gold like a leprechaun and over estimate the Value of the property. Be realistic on the LTV and you will be happy, be unrealistic trying to cash out all your equity which is a rookie move but feel free to do it, I don't recommend it.

 

Originally posted by @Vincent Chen :

@Vik P. Can I know any details about the product you choose as LOC or HML mainly for flippers? Not for BRRR, not for Buy-and-Hold? Thanks

 Hi Vincent,

I am not a flipper but I think Corevest LOC or similar product is a very good option IMO if you're an active flipper and plan to do lot more flips in a year.

If it's going to be a few flips in a year it might be easier and cheaper to go with HML or private money lender.


Thanks

Originally posted by @Vincent Chen :

@Vik P. Thanks, so do you have any good experience for HML side? I plan to do a few flips (5~6) not too many ,so HML is way for me to go, thanks

Not really. I do have a point of contact @ Sortis Financial who do private money lending but I haven't used that resource yet so can't really say good or bad things about them

I have studied most of the available loan products out there.  IMO it really depends on your strategy and your investment style what your overall plan?  I work for a lender my honest opinion is don't borrow money at all.  Let me explain.  Lets use a simple $300K flip for numbers.  On average it cost you 2 points plus closing costs to acquire this property.

1.Cost to get loan funded most lenders 2 points and up= $6k

2.Closing costs = we will round it up to $4k 

3. Carrying costs = 6 months is average flipper hold time 10% intrest average soft money loan cost = $2400 a month = $14,400 (minus downpayment of 60K) = $2400

Total costs to acquire and hold minus all other non financial costs = $24,400

You guessed it! On average a $300K home costs you $25,000 to hold in financial costs!!!!!!!!!!

This means you need to profit an additional $25,000 per project to come out ahead, want to make $25K in profit from the start of your project don't borrow money.

So this is one of the many mistake undereducated and ill advised real estate investors fail to take in to account the real amount of money it costs to carry most projects.  

Like I stated its better to not even borrow money if you can avoid it at all costs, and it does cost about $25,000 to borrow!!

Originally posted by @George G. :

I have studied most of the available loan products out there.  IMO it really depends on your strategy and your investment style what your overall plan?  I work for a lender my honest opinion is don't borrow money at all.  Let me explain.  Lets use a simple $300K flip for numbers.  On average it cost you 2 points plus closing costs to acquire this property.

1.Cost to get loan funded most lenders 2 points and up= $6k

2.Closing costs = we will round it up to $4k 

3. Carrying costs = 6 months is average flipper hold time 10% intrest average soft money loan cost = $2400 a month = $14,400 (minus downpayment of 60K) = $2400

Total costs to acquire and hold minus all other non financial costs = $24,400

You guessed it! On average a $300K home costs you $25,000 to hold in financial costs!!!!!!!!!!

This means you need to profit an additional $25,000 per project to come out ahead, want to make $25K in profit from the start of your project don't borrow money.

So this is one of the many mistake undereducated and ill advised real estate investors fail to take in to account the real amount of money it costs to carry most projects.  

Like I stated its better to not even borrow money if you can avoid it at all costs, and it does cost about $25,000 to borrow!!

I agree. Know your numbers really well otherwise it can bite you.

I'd highly recommend using 'Property Fixer' from realestatetools.com. I have the app even though I am a long term buy & hold investor and not a flipper.

I bought their 'Property Evaluator' app which is excellent and a 'must have' I feel for any buy&hold investor and it got me into buying their 'property fixer' just in case if I ever need it. Combined I paid 75 or 80 bucks on those two apps for full versions but those are the best 80 dollars I have spent in my real estate business.

@Vik P. This is a really informative threat, thank you Vik for the information. I am in the process of setting up a CoreVest LOC. It'll be my first time using HM-type funding. Do they charge interest on the amount drawn at the time, or is interest charged the total amount that would be tapped from the LOC, regardless of whether it's been drawn or not? For example, if acquisition requires $70k to be drawn from the LOC and rehab requires $30k, and I tap in to the 70k for acquisition but haven't yet tapped into the $30k, do I get charged interest on the $30k?