Freedom Fund Lending w/Josh Cantwell

[Mike B.]

Hello fellow real estate enthusiasts.  I came across this company who says they do "asset-based" lending, meaning that they provide loans based solely on the property and not the borrowers credit history.  They claim to fund the purchase and complete rehab, including closing costs, upfront.   They charge 6 puts at close and a 16% interest only payments.   The initial loan period is 6 months, with a possible 6 month extension, for a small fee of course.  

I have done rehabs before and the 6 month window for a purchase, rehab, and prepare for sale is feasible, so Im trying to see what the "catch" is.  I have done a little research on Josh Cantrell and his other seminars, so it seems legit, but I figured I would bring it up on this forum since there are so many people in this community who have proven to be very knowledgeable about what works and who are scam artists.  

[Gina Williams]

Yes, I also got into the program for $995. And I agree, it's not worth it unless you are REAL careful with your numbers. Here is the thing, they fund the property for 65% of the ARV. That includes your rehab costs. Your responsibility is Ernest money of any amount you negotiate, appraisal, inspection, and whatever start money for rehab. They'll give the rehab start back to you as wel as anything else you put into the property including appraisal and inspection. This is after you resale or refinance.

They pay all the rehab cost. If you don't have rehab cost, then it's 65% of the ARV. You don't have to rehab. Sounds good so far right? Then you have up to 6 months to hold while rehabbing or holding property and you will pay interest only payments of 16%APR. Well, if you sell it, it would have to be for that initial ARV. Then the profits are split. You 70%, they get 30%. That SOUNDS not too bad. But then, before the profit split, they charge 6 points on the original purchase price plus $2,500 in fees and then the price of closing costs. Kind of bad, right? I think what's really bad. Well if you refi to get out of their loan, you have to refi with the original purchase price and still give them all those fees INCLUDING the charge of the 30%!!!!! You can keep the 70% in the property.

So they are making out like bandits!!! I was under the belief that if I buy and hold and refi out of their high 16% loan, I don't have to give them the 30% on top of everything else. That's not true. They don't make that clear. So buying with them and holding would be a horrible idea. Maybe, just maybe, you do a rehab, flip, hope you sell at the ARV, pay the fees, and run with your 70%. The numbers have to really work and you have to get a property probably below the 65%. Again, the final profit number for you after ALL that craziness has to work for you if you choose to use Freland Funding.