Colony American Finance

35 Replies

I am looking at opening a line of credit with them, anyone have any experience to share?

Terms are as follows.  Looks like a reasonable alternative to hard money.  I'm doing a lot of volume now so I'm pretty sure I can easily deploy all of the money over the year.

-Line of credit from $500,000
-Non revolving
-Up to 70% LTC (Loan to cost)
-9.95% interest rate
-Interest only payments
-1 Year to use
-1 year to pay back
-Residential assets only (1-4 units)
-No prepayment penalties
-1 % commitment fee, 1 % draw down fee
-$2,500 Admin Fee (one time cost per LOC)

@Jerry Padilla  Yes.   I've done a handful of buy and holds in the past year that all have traditional mortgages in place, and I can get more.

This line of credit is primarily for opportunities where traditional financing isn't possible.  Auctions that require immediate cash that I can cash-out refi a month or so later, and fixers that won't appraise until they are rehabed.

I also may use it for some additional vacant land flips where I seller finance -- I can charge at least this interest rate on these after marking up the purchase price significantly.

I'm curious as to whether anyone has experience with this company in particular.

Originally posted by @John D. :

I am looking at opening a line of credit with them, anyone have any experience to share?

Terms are as follows.  Looks like a reasonable alternative to hard money.  I'm doing a lot of volume now so I'm pretty sure I can easily deploy all of the money over the year.

-Line of credit from $500,000
-Non revolving
-Up to 70% LTC (Loan to cost)
-9.95% interest rate
-Interest only payments
-1 Year to use
-1 year to pay back
-Residential assets only (1-4 units)
-No prepayment penalties
-1 % commitment fee, 1 % draw down fee
-$2,500 Admin Fee (one time cost per LOC)

John, I was also looking for someone who had experience with Colony American Finance. I asked the rep to send me a copy of the LOC Agreement a week ago and he said he had to get permission from legal first, but then tried to hard close me on submitting the application now. I think there may be some terms in the fine print that are not very borrower friendly but I still want to know more about it. I have you received any more information from them since your original post?

Just got a copy of the docs, and they look as expected, so I am going to move forward with a $500k LOC. I'll keep you posted.

@John D. How is the LOC working for you? I am thinking of getting into this as well. Do you happen to know any big bank that will refinance based on Market value with only 4 months of seasoning?

I actually haven't closed yet, I set up an S-Corp first seemed better then tying this loan to one of my LLCs.  Should close later this week now that the corp paperwork is done.

You may find hard money that will lend on LTV without seasoning, but any conventional loans or related I have come across require at least 6 months seasoning.

How did it go? Are these guys for real? I'm wary of anything that requests an upfront processing fee, especially ones in the 4 figures.

Great thread.  Just curious if anyone has worked with Colony American and any feedback, if so.

In the end, I ended up passing on the opportunity.  They couldn't give me 100% clear underwriting criteria.  They will not finance places in very rural areas, but wouldn't define for me exactly what was too rural.  They also said they would finance newer manufactured homes, but would not define exactly what newer meant.  They might be a better fit for someone with more conventional properties in more populated areas.

John D,

How long was the process and what was some of the information they need to make a decision?

Victor

This post has been removed.

They were pushing me to get the closing fee and documents sent, before they could confirm they could work with my properties.  I had to really bug the heck out of them, to get them to tell me my properties weren't eligible, or tell me they weren't sure if they would be eligible.  Unfortunately they do not have clear underwriting guidelines, so it's kind of up to someones discretion it appears, and that person is hard to get to if you haven't pined up the money.

I am grateful I dodged that bullet.

JD,

Thanks for the response.

Disclosure: Head of Bridge Loan Operations

John and Evan, it sounds as though you did not have a great experience in dealing with us, which is concerning. At Colony American Finance we strive to be very transparent with applicants and borrowers. As part of that effort, we are very clear about the types of properties we will finance. Unfortunately, we do not finance mobile or manufactured homes of any kind. I would be happy to walk you through our underwriting and product guidelines in more detail if you would like to re-engage with us.

"we do not finance mobile or manufactured homes of any kind."  That runs directly contrary to the emaisl I received from your company, stating you do indeed finance some manufactures home that were newer, and on permanent foundation.  Similarly, your guidelines/criteria for financing site-built homes in more rural areas was not clearly defined.

Given you require significant upfront fees, I believe defining laser-focused and tight language on what you do and do now underwrite would be appropriate. I was able to obtain none of that without many questions and very pointed follow-ups, despite numerous requests and back-and-forth.

@Stephanie C.

It might be helpful to explain the nature of the referenced fees.  Most of these forums are wary of these type of fees. Most lenders I am aware of instead of charging a fee will make you physically pay for outside work like appraisals (i.e. the outside company requests payment from you directly) etc. 

They do not make you bear costs of internal teams that work on your request. 

John D - thank you for inquiring about our company.  I'm pasting a link to a related discussion that had direct feedback from one of our customers.  Hopefully this is helpful for you, and you can always reach out direct as well:

https://www.biggerpockets.com/forums/49/topics/223517-have-you-worked-with-colony-american-finance-caf

I am trying to close a loan with them but am running into problems with the legal language. below are comments from my attorney

The other main point is that the documents essentially cut off any claim you may have against the Lender. Some of the provisions allow claims against the Lender if they are based on gross negligence or intentional misconduct, but then other provisions say you waive all claims, even those involving gross negligence or intentional misconduct. Ideally all such provisions would be stricken

Tom - glad we were able to get your transaction closed.  Looking forward to growing with you as you continue to conduct successful RE transactions in the future!

Do you know if they ( Colony American Financing) are supporting transactions at New York state as well ?

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