Avatar's Blog

A lot of brokers want to know how Avatar makes its funding decisions. The short answer is: pretty much like any other honorable hard money lender in the US. Here are the three basic questions Avatar asls of every loan:

1. Can the property serve as collateral for this loan?
   To answer this question, Avatar sends out an appointed appraiser to the subject property. The appraiser consults for Avatar - don't expect to see or receive a complete appraisal when the visit is over; this is a consulting job. The appraiser determines what the quick-sale value of the property will be by askimg, "In the event that the loan goes sour and Avatar must sell this property in 3-5 months' time, what could one reasonably expect to receive for the property?" In general, if you are buying property, the quick-sale value is the price you are paying for it today. If you are refinancing, ask a realtor how much you would get if the property had to sell in 90 - 150 days
   
2. Can the borrower afford the monthly interest-only payments as well as all their other expenses, while still having a few dollars left over to put in their pocket at the end of each month?
   Avatar will want to see last year and YTD current year profit and loss statements from whatever entity will support the loan. Avatar does not want to make loans that will drive anyone to bankruptcy or foreclosure. We make loans that make sense for the borrower as well as the lender. So Avatar will want to see that you bring in about 1.2 times the amount you spend each month or more. This will make the loan a comfortable, wise move for you.
   
3. Does the borrower have a reasonable exit strategy?
   Within 36 months, you will need to pay back this bridge loan. What situations will change between now and then that will enable you to refinance this property with a conventional lender? Or will you sell the property? Or will be able to pay back the loan in some other way? A simple statement will serve as your exit strategy, so long as it is reasonable and workable.

For more info about lending criteria, contact Gillian at Avatar - 888-886-0097.