What is Hard Money?
A Hard Money loan is asset-based, meaning that the loan is considered primarily on the value of the hard asset (usually real estate) rather than on the borrower’s qualifications (income and credit). A hard-money loan has many advantages for the borrower needing a short-term loan for a fix and flip, fix and hold, refinance, construction or bridge loan. Obtaining a hard money loan is faster and easier than traditional financing, eliminating most of the red tape! (More information)
What is your loan process?
Our Loan Process diagram takes you through all the steps of securing a hard money loan from The Investor's Source, from the initial contact, to pre-approval and approval, to closing. To get started, get a property under contract, fill out our Quick Loan Application and we'll take it from there!
Where do you lend?
We lend on properties throughout the entire state of Colorado and in Southern Wyoming. At the moment we do not lend on properties outside of Colorado.& S. Wyoming.
What type of properties do you finance? What don’t you finance? Do you lend on Mobile Homes?
The Investor’s Source LLC lends on a variety of real estate collateral including single-family properties, multi-family properties, land, and commercial buildings - all with or without rehab needs. We will lend on purged, stamped, double-wide mobile homes - typically at 50% LTV - and on mobile home parks. In general we do not lend on vehicles and equipment.
Do you make loans on owner-occupied properties?
We don't make these types.of loans per se. We can, however, arrange the financing whereby we purchase a property you're interested in and lease it to you under a Lease/Purchase agreement. You agree to purchase the property for an agreed-upon price, within a designated period of time. If you already own a property and wish to borrow against it, we can make a cash-out refinance loan as long as it is for business purposes.
Are your loans based on the property alone or on my qualifications as well?
Primarily the property and your liquid reserves. However, your income, assets, liabilities and credit are reviewed to determine your ability to pay existing liabilities, and we'll ask you about any bankruptcies and foreclosures as well as current liens or judgments that could attach to the property. None of these, alone, would necessarily disqualify you from loan approval. We look at your overall financial profile, experience as an investor, reserves, and income to support the loan.
How often do you pull my credit, and at what point in the process?
In general, if you are doing multiple loans with us, we only pull credit every 3 months In certain circumstances, we may require a more recent credit report. We don't run a credit report until just before pre-approval and our property visit. Once we have done a successful loan together, we allow you to pull your own 2-bureau credit report so you don't need to sustain a "hard hit" on your credit score.
Do I need to get pre-approved prior to making an offer?
No. Once you have located a property, make your offer and get the property under contract. Then fill out and submit the Quick Loan Application. We will get back to you within 48 hours with a loan pre-approval decision and amount. Final approval will be given upon confirmation of value - usually by Broker Price Opinion - and all required documentation.
What if I Need a "Proof of Funds" letter to make an offer?
If you need a Proof of Funds letter fill out our Quick Loan Application first, check the box marked “Proof of Funds Letter Required”, and provide the minimal documentation required. Provided we've received your documentation and the deal looks feasible, we will provide you with the Proof of Funds letter the same day.
How fast can you close?
Once we receive your application, purchase contract, Broker Price Opinion or Appraisal, and supporting documentation we can usually close within 10 business days - often sooner. Depending on our schedule, we can also do "rush closings" (5 business days or less) which cost one additional point.
What are your terms, fees and interest rates?
Most of our loans are 6 to 24 months. Rates change depending on market conditions. Our standard origination fee in the Front Range (Fort Collins to Colorado Springs) is 4%; an additional point will apply to loans originated elsewhere in Colorado. We do offer periodic specials, as well as a Preferred Borrower Rewards Program, both of which provide discounts on the origination fee. Check our Rates and Terms to get the most current information.
Do you have a point discount program if I do a number of deals with you?
We work with our frequent borrowers on a case by case basis to give them the best possible terms so we'll do everything possible to keep you coming back to work with us.
What is the payment structure?
Most of our loans are structured as monthly interest-only payments with a balloon payment at maturity.
Does The Investor’s Source charge pre-payment penalties?
There are no pre-payment penalties on our 6-9 month loans. Since our 24-month loans are typically made at a lower interest rate, there is an interest guarantee of 12 months.
Will The Investor’s Source take a second position or allow second mortgages on my rehab project?
Most of our loans are made in the 1st lien position. In certain cases,when there is sufficient equity in the property, we will make 2nd position loans. Our loans do not allow subordinate financing without lender approval.
Can closing and rehab costs be rolled into the loan?
Our goal is to get you into a property for as little cash out of pocket as possible. Thus, as long as the loan does not exceed the maximum LTV (usually 70%), you may have some or all of your closing and rehab costs rolled into the loan and you may get into a property with little or no money down! (Note: If we are doing a first or second deal together, you may be required to put more “skin in the game".)
Can I do more than one loan at a time?
For first-time borrowers with The Investor’s Source, the first loan is followed by a “moratorium,” or cooling off period. This lets us see how the loan performs, and also helps you “walk before you run”; getting to see the ins and outs of your first deal so as to avoid repeating mistakes. For fix and flips, we’re looking for a successful rehab and sale; for buy and holds, two months of timely payments. After that, and with more experienced borrowers, we will consider multiple loans running simultaneously.
Can you help me valuate a property and how do you determine a property’s value?
If you need help valuating a property, prior to submitting a loan application and having the property under contract, we will be happy to provide you with the tax-assessed value of any property you’re interested in. Of course, you may check county records yourself for this. You can also refer to some popular commercial valuation sites such as Zillow, Trulia, Redfin, and ReNav.
Once your property is under contract and you have submitted your loan application, we use county records & MLS comps to conduct a comprehensive market analysis to determine value for conditionally pre-approving the loan.
For final loan approval,all loans require a Broker Price Opinion (BPO) or an appraisal from a licensed appraiser and ultimately the loan amount is based on that value. We will fund loans based on the ARV (after repair value) of the property requiring you to locate an appraiser who is willing and qualified to do an ARV appraisal with your repair budget in hand.
If repair funds are needed, how is the repair escrow funded?
The Investor’s Source will fund up to 100% of the repairs up to the maximum ARV – usually 70%. Any shortage must be funded by the borrower at closing. All funds, including repair funds needed to close, are kept in a repair escrow account.
How is the escrow money paid out?
As part of the loan approval process you will be asked to submit a rehab budget which will be paid out in 1 - 7 draws. To release a draw you will need to submit receipts/invoices, lien waivers and photos of the work completed. Upon submission of these, and an inspection if required, you will be issued a draw check and the process will repeat until the final reimbursement is made at the project’s completion.
How Does Your Construction Loan Work?
Along with your loan application we will need a written description of your plan – what, when, where, how and why you are looking to build, and how you will be acquiring the land. This all can be submitted on our Project Information Form. Once pre-approved, we will ask for more detailed information regarding the contractor, project and budget, and in most cases will need an appraisal based upon the after-construction value of the property. The terms of the loan in general are the same as our short term hard money loan. (See Rates & Terms) The maximum loan amount would be based upon 70% of the appraised after construction value of the property. We would work very closely with you to come up with a draw and inspection schedule that would provide the funding needed at critical points of the project.
Will you refinance a property that I currently own and/or extend a loan I have with The Investor’s Source LLC?
Yes, we will refinance a loan and consider extending/renewing a loan you have with us (terms to be negotiated), depending upon your payment history and market conditions.
Can I take title in the name of my LLC or corporation?
Yes, title may be taken in the name of a validly formed and existing entity. The Investor’s Source LLC will require a personal guarantee on loans closed in the name of the entity.
Do you use your own funds or funds from private lenders?
Both. We have our own funds available for loans that need to be funded very quickly. We also have a broad base of private lenders, each who have unique lending parameters. We find the right loans for each lender and vice versa.
Can you provide me with a “non-recourse loan” that I can use to invest with my Self -
Yes, we make non-recourse loans that the IRS requires when using self-directed retirement accounts to buy real estate. These loans can supplement and leverage your own self-directed retirement funds to increase your real estate purchasing power. Since the lender can only come after the property in the case of foreclosure – and not YOU -, these loans are typically made at a slightly lower LTV and/or higher interest rate than other hard money loans. (See Rates & Terms for details.)
How does your Transactional Funding work?
When you are buying and then reselling a property at the closing table (i.e. “double” or “simultaneous” closing) we can provide the funds at a significantly reduced rate (usually 2 points, 3 points for loan amounts over $350K). Requiring little underwriting, the loan can be closed quickly on our end, often within days. Ensuring that the end buyer and their financing is in place will be the bigger challenge for you. Like a traditional closing, a double closing uses an escrow company and title insurance. We also offer 30-day Transactional Funding. For more information see our Transactional Funding Loan Program.