Portfolio Lending / Hard Money Lending Advice In Atlanta

[Tim C.]

Hi guys,  

I'm looking to engage some hard money lenders to refinance my portfolio of SFR's that are held in cash (I'm looking to do a loan of $400-$500k on a 30 year fixed rate). I wanted check in with you guys:

1)  What kind of rate can I expect to get on a 30  year fixed for $500k loan?

2) What costs are there involved in closing? (I have on my list 2-3 points, valuation of $500 per property, closing costs of 1%, is this roughly correct)

3) Most importantly I have never done hard money lending only convential.  This may be a stupid question but what happens if I forget to make a payment for say 2 months because my auto payments failed and I forgot to check.  I know a bank will never forclose on me, but will a hard money lender do so?  I'm based in Atlanta and thats where all the properties are.  I'm trying to avoid a situation where a lender can catch me off guard and forclose on me.

Thanks in advance!

[Richard Scholtz]

@Tim C. 

@Brit Foshee

Hello Tim 

• Hard money loan is a no docs  (private) non-bank loan...without the tax returns and many of the qualifying criteria...but it could be on one property could be 100
• A portfolio loan could be from a bank or a hard money loan or a hedge fund...and this is many properties (portfolio) all wrapped in one loan ...so they are cross collateralized.

Banks loan to US residents and are now required to get a 4506(t) from the IRS on loans they close...if they are Federally insured and regulated. So the Hedge funds and Finance companies have come in and do what the banks cannot. The are not as cheap as the banks but will still do 30 year fixed loans under 7% where as banks are under 5% for the same loan. A bank will not make a commercial loan for longer then 10 years...so you will get a 30 year loan with a 10 year adjustment or call. (This way they place the interest rate risk on you) 

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I have closed loans with all the Stated (NO Doc)  money portfolio lenders out there...

B2R and Dwell (Blackstone Hedge fund subsidiaries) are only one of them but they just upped their minimum loan amount to to $1 million for their portfolio loans.. In Dec 2015 I closed a 500K loan with 8 Milwaukee properties....Stated income for a new LLC..through them.

I am now placing another such portfolio of 13 properties in Dekalb and Decatur counties (Decatur and Atlanta) and these are my findings....

B2R is no longer the cheapest as they price off the 10 year swap rate...so you will end up at about 7.75 - 8.5%.

B2R will cost you $700.00 for a legal review to review the LLC docs and they also hit you you for some excess massively expensive insurance requirements - and you will NOT be able to sell any part of the portfolio off as they do not allow for deed releases....

So you have to hold all the properties and NOT sell one until you sell them all as B2R prices then as one security.

There are better sources that will give you a commercial loan and price it close to 6.5% if you have good scores...

1. Your idea of closing costs are accurate...What costs are there involved in closing? (I have on my list 2-3 points, valuation of $500 per property, closing costs of 1%, is this roughly correct)
2. NO a hedge fund wont will not foreclose on you any sooner than a bank will so you get the normal grace periods and the normal nasty grams to to get caught up, as they do not want the R.E.O. any more than a bank does.

Given your scores a portfolio loan should price around 6.5% to a foreign national or LLC with no tax returns and NO SSN---

As most banks who will loan at 4.5 - 5% may not loan to a LLC and foreign NON US national with no SSN. Banks are now required to obtain a 4506(t)  through the IRS on all loans they close if they are Federally regulated or insured.  So they are less able to make Stated Income loans with no documentation. Graham Dodd and the mess of 2008 changed all that.

Anyhow Tim.... ... 

1. More importantly is will your lender allow you to sell 1 or two of the properties off later...if they are all tied together....Can you get deed releases written in to the loan so when you sell one you get it releases....and keep the rest.
2. Would it be cheaper to get 10 smaller loans....1 for each property --with same closing costs...

Question for you...

How were you able to get those good credit scores built up with no Social Security Number...for consumer accounts??

These are the parameters you may find better...

As a mortgage broker....we get paid by the lender --  so your cost to use usr is no more expensive than had you approached the lender direct. It was that way with B2R and the portfolio loan we did in December....same with SE Capital  and Civic and Velocity Capital and Regis and others....

Email me the property addresses and we will send you a complete written proposal....of costs and rates etc...

Regards

Richard Scholtz

Commercial Lending