Avatar's Blog
» Creating a Hard Money Loan Request Package
I field over 200 phone calls each week from folks looking for hard money loans. Many are, in fact, looking for rehab loans. However, among those who are seriously looking for a hard money commercial bridge loan for the purchase or refinancing of an income producing property in the US, the most frequently asked questions are 'Where do I begin? What do I have to send you to get this ball rolling?"
The secret to creating a successful loan package is a two part process: be thorough and pay attention to details. Here is what a hard money lender needs to make an initial assessment of the project:
- Good quality color photos of the property - inside, outside, and the neighborhood
- P&Ls (profit and loss statements) for the prior year and year-to-date for the current year.
- Personal Financial Statement on the borrower (sometimes called a 1003)
If you have an appraisal on the property, get it into your computer and email it - faxing an appraisal turns the photos to black and white mush - not much use to the lender. Look at the financials you submit. Determine whether they will support all your expenses including the monthly loan payments. The lender will want to see a ratio of at least 1.1 : 1, preferrably 1.2 : 1 of income to expenses, including the new loan. Obtain and submit payoff documents from existing lien holders if you are refinancing a property. If you are purchasing, submit the purchase and sale agreement with the purchase price clearly marked, as well as a bank statement showing proof that you have 20% of the cost of the property ready to put down at closing. This simple bank statement can separate you from the many who submit loan requests without really having the capital to invest in the property. It will move you 'to the head of the class', so to speak.
For more information about creating a successful loan package, email gillian@avatarfinancial.com
