All Forum Posts by: Rob Beeman

We are a direct lender (Rehab Financial Group, also known as RFG) that lends 100% of the purchase and 100% of the rehab up to 75% of the ARV on 1-4 unit properties (including mixed-use) in 18 states (even newbies can get 100% financing from us). 

We gain many borrowers from referral sources (partners). Some of those sources are mortgage brokers, while others are businesses that network with real estate investors (settlement agents, title companies, realtors, wholesalers, contractors, etc.). The referral source is paid their fee on the loan closing HUD. We are able to close quickly and respect repeat borrowers from the referral source (paid on borrowers that come back for more funding). We also lend 85% of the purchase & 100% of the rehab up to 65% of the ARV on 5-10 unit properties.  

If you network with real estate investors that seek capital to start or grow their business & are seeking additional income, then let's connect and make it a win/win relationship for all parties - my contact info - Email: [email protected] Direct: 215-913-1580, Rob.

I am an old head in the game and started before many forms of private or hard money lending existed. I stumbled across private lending and was amazed at what borrowing money did for my investing (the supply of leverage). Not just more cash to do more deals, but cash to do better deals in different neighborhoods. I even was able to attract better contractors once the projects were in nicer neighborhoods - all thanks to other people's money.

I guess I never looked at the cost of the money (fees/interest) as a negative, since I realized that in order to experience growth, capital would be necessary. I factored the cost of that capital into my calculations from the start (working the numbers backwards from the ARV to the purchase price)(this also encouraged me to buy the properties at a lower cost).

I will say that the borrower has a better chance to negotiate on the fees, interest and when they are to be paid with a private individual lender as opposed to a hard money style lender (that has more overhead). I typically didn't negotiate the interest rate or points (as they would invest it elsewhere for more), but did negotiate the way it was to be paid (at the sale or refi, as opposed to upfront or monthly).

Looking at it from both ends (as I was an investor before I was a lender), to me an investor friendly lender is one that understands what is important to investors and operates their business to accommodate their needs while at the same time making it a win-win transaction.

Examples:

Have the rehab draw request be non-cumbersome and as seamless as possible

Offer maximum lending (use of leverage) and minimal down payment to help stretch the borrower's funds, even for lesser or non-experienced borrowers.

Have the loan NOT show up on personal credit reports. Issue the loan to the borrower's entity (LLC).

Either be available to receive a call or return the call as swiftly as possible when the borrower comes calling.

Allow the borrower to have multiple open loans simultaneously (if all parties are comfortable with it) to help the borrower grow their business.

Have loan products that help the borrower to expand their investing options in relation to ground-up construction and/or multifamily.

Have staff that are knowledgeable to investing that can assist and understand the borrower's concerns or requests.

Just a few that come to mind. 

Can't speak for other lenders, only for what we offer. We supply loan quotes all day long to investors that buy & rehab 1-4 unit properties and 5-10 unit properties (including mixed use in all of those unit sizes). Many times they do not yet have the property under agreement. In some cases they don't even have a targeted property, but need to run a scenario. There is no cost and it supplies a clear understanding of the numbers for the transaction. I would think this is a common practice that lenders perform, but if not....message me.

As a former operator that transitioned to lending I believe that the biggest challenge for newer or newbie investors is making the numbers make sense. There are lenders that will finance newbies, even at 100% of the purchase & rehab, but if the numbers do not make sense, the chances of that deal getting to the table are thin (especially if the lender wants to help borrowers succeed, not help them fail).

The lender's underwriter looks at every deal, but especially the lesser experienced operator's deal to determine what is exposed vs what is the return. The way to gain 100% financing for purchase & rehab is to get your purchase & rehab numbers to fit within 65%-70% of the ARV (not easy, but possible). This also makes it easier to either gain a larger profit if flipping or room to do a cash out refi if holding. It's really very simple math - buy it low, rehab it appropriately to gain a higher value (ARV).

The problem is, the inexperienced operator hasn't perfected the ability to buy off market properties at the purchase price that makes sense, so they often over-pay and then encounter less lending options as a result. Never underestimate the power of negotiating a lower purchase price, as you never know what you can encounter in the rehab (that may not have been planned) and make it easier for a quality lender to fund the maximum leverage they can.

You read it right! Now even newbies can qualify for 100% financing! (100% of the purchase & 100% of the rehab) up to 70% of the ARV (in 18 states). Experienced can qualify for 100% & 100% up to 75% of the ARV! But that's not all - no tax returns needed. We lend 100% of the purchase & rehab up to 65-75% of the ARV on 1-4 unit properties. Our loans do not appear on personal credit (the loan is supplied to your LLC). We are a direct lender since 2009, lend in 18 states and lend on 1-4 unit as well as 5-10 unit properties. Getting a quote is quick, painless and free, just reach out. Email: [email protected] Direct: 215.913.1580.

@Lauren Sanford 
Thanks for the feedback. We enjoy networking with investors via our VIRTUAL (Zoom style) meetings which are free to attend and consist of a knowledge presentation (from a source that gained hands-on experience) followed by around the Zoom room networking. In the networking portion everyone is encouraged to share what they do, what they need, or what they have to offer, so all can benefit and make connections. To register and attend our virtual meetings, you can do so at: www.reiknowledge.com/#event

As a direct lender we heard what real estate investors wanted in the way of rehab loans - and updated our guidelines to match that.

No tax returns on our short-term loans for purchase & rehab!

Loan amount of 100% of the Purchase and 100% of the Rehab on 1-4 unit properties (including mixed-use properties) up to 70% of the ARV. Even for newbies!

Experienced investors qualify for 100% of the Purchase and 100% of the Rehab on 1-4 unit properties (including mixed-use properties)
up to 75% of the ARV!

Ground-up construction loan on 1-4 unit properties at 10% down, and 70% of the ARV, even for newbies and even with no new construction experience.

Will finance up to 100% of the assignment fee on deals bought via wholesalers!

Lending in these states: AL, CT, DE, FL, GA, IN, KY, MA, MD, MO, NC, NJ, OH, PA, SC, TN, TX, VA.

Getting a quote is simple: Message me your contact info, or request mine. Or contact me: [email protected]   Direct: 215.913.1580

@Tony Sherman For years I used private lenders. I learned that in order for my investing business to be successful I needed three important ingredients: (1) Money (2) Quality contractors (3) Off market properties.

That led me to concentrated on finding deals that the numbers worked within, even with rates at 12%+ and up to 4 points for short-term money, and in areas where quality contractors wanted to do work. I always made certain to pay my private lenders and my contractors as agreed and as a result never had trouble getting either. 

I didn't have control over the ARV figure (the market controls that) and I found that if I tried negotiating a lower rate/points with my private lender they would find other places to invest their money. So instead I concentrated my efforts on better negotiating for purchase prices and locating off market properties. When I focused on the purchase price being the most important part of the transaction (locating off market properties helped accomplish this) the deals always got funded and rehabbed......and money made. I understood that the lender wanted their return & the contractor wanted their fair price for services and in doing so (because purchase price became EVERYTHING) I had the room in the numbers to make it happen.

@Adaze Foltz  

Benefits:

Direct to the source; more control over the receipt of the funds (initial and any rehab draws); able to not just establish a relationship, but also perhaps gain referrals of other private lending sources (those that are happy with the returns and payoffs - talk (boast) to their friends); faster to the table; can negotiate the terms (rate, when payments are made, other fees and when they are paid, etc.); usually nothing reported to credit bureaus.

Risks:

Using up the private sources money (tapping them out); The private lender didn't receive their payoffs on other loans as anticipated so they are short of funding your deal(s). 

In short - private lenders are preferred over traditional financing, but it might be wise to use both.