Borrower Frequently Asked Questions
A: The terms Private Money and Hard Money (also known as a rehab loan or bridge loan) are really one and the same and are used for loans funded by private parties who want a safe and high return. Trust Deed Capital is a broker who arranges loans for and sells notes to private investors. We work directly with property buying investors who use these funds to purchase properties with the intent to fix and sell them for a profit in a very short period of time or will hold them as a rental.
Real estate investors use hard money when they are unable to or do not have time to obtain financing from more conventional sources.
There are many types of hard money loans. Trust Deed Capital specializes in purchase money first trust deeds to investors who purchase homes at a substantial discount. Trust Deed Capital does not do owner-occupied loans.
A: It's really simple. All you have to do is click on the “Apply Now” icon on our website and complete the loan application or call us at (949) 481-3266. We ask you what you are trying to accomplish and we will walk you through the process from there.
A: First and foremost we want to make sure you have a positive outcome on your transaction. We are keenly interested in the type of property, the value, and the marketability of the property being used as collateral. We will also review your ability to make the payments, your exit strategy, cash reserves, and also your experience level.
Larger cash reserves can overcome lesser credit and lack of steady income but not vise-versa. In a declining market, investors must be familiar with the area in which they plan to invest and understand how to successfully approximate future value of the property as well as home repairs. Not knowing, or understanding this, has been some of the biggest and most common mistakes we've seen over our many years in the business (not to mention costly).
As an example of understanding your market: How much have prices declined? How much of a decline are you factoring into your holding time and purchase price? How much has sold in the area recently? What percentage is pending, sold, expired, and active? Out of the solds, why did they sell? What price will you get when you sell? If you don't know the answers to these questions, we highly suggest doing more homework or do some training to better understand how to arrive at these answers.
A: Yes! Upon review of the application, a “Letter of Interest” will be issued to those who qualify. Even though this is not a formal approval or a commitment to fund, it does show that you have been prequalified and that we are interested in making the loan.
A: Please refer the tab labeled “Our Programs” to see the range of terms that we offer. The final terms will be customized to your situation and dependent upon the strength of the overall loan request. And, will clearly be spelled out in the “Letter of Interest” you receive.
There is no prepayment penalty for our one year program. There is an up-front charge for the appraisal of approximately $375. Additionally, there are escrow, title, and fire insurance fees. The maximum loan to value is 60% based on after repaired value.
A: We only lend in the states of California and Tennessee.
A: Our average closing is 10 to 15 business days. However, if we have all the documentation, such as appraisal, escrow instructions, proof of insurance, and a clean preliminary title report, we can close in as little as 3 days. Each transaction is handled on a case by case scenario. If there is a special requirement, we may be able to accommodate you.
A: Trust Deed Capital specializes in purchase money first trust deeds to investors who purchase homes at a substantial discount with the intent to repair and resell the property. We will do private money loans on residential SFR and units (1-4). We also consider small commercial buildings. We do not currently do owner-occupied.
A: Trust Deed Capital may roll some of the repair and loan costs into the loan if the LTV remains under 60%. It is our goal to make both the private lender and borrower successful in every transaction. Our reputation of accomplishing this goal has allowed us to continually grow, even in tough markets.
A: No. Trust Deed Capital only funds on non-owner occupied inventory.
A: Trust Deed Capital does fund trustee sale by way of refinance. Leverage is a great way to increase your buying power. We do not give investors money to purchase at the court house steps. Instead, once an investor is the winning bidder on a property at trustee sale, the investor should place a complete loan application in on our website immediately. This allows us to open escrow so when the trustee's deed is obtained by the investor, funding happens in a few business day.
A: No. Not on our fix and flip loan program. That's one of the main reasons investors work with private money lenders. However, our longer term loans may have a 6 to 12 month prepayment penalty.
A: If you have a low FICO score, Trust Deed Capital may still fund your loan but may need you to come up with more cash down to lower our loan to value.
A: Yes, but we do require personal guarantees from the principles.