I started Capital Fundings because I was I knew I could provide a better Private Money Lender experience. I have been in real estate for the past 10 years and have worn several “hats”. I have renovated houses in Nashville, TN and Orlando, FL. I have wholesaled hundreds of houses at all price ranges in the Central Florida area, I’ve even flipped a house in the exclusive neighborhood of Isleworth in Windermere, FL. I have represented Buyers and Sellers as a licensed Realtor and been part of numerous transactions as a licensed Mortgage Loan Originator. Most of the transactions I have been involved with have been CASH, however, a decent percentage of my deals involved the Buyer using a private money loan or hard money loan. My experience with the private money lenders were one of the following:
- a local individual investors that had access to some unknown amount of capital
- a local licensed Private Money lending company
- a National Hard Money lending company out of Miami, FL or somewhere in Southern California
My experiences with the local individual investor were somewhat of a mixed bag. In general, if the individual had money to lend they would lend it to you, but usually at a high rate at 14% with several points loan origination. The problem I would encounter is that the individual would sometimes be out of pocket and not be able to fund your deal. If this news arrived when you presented the financing opportunity to the individual you would be OK, but may times individuals will say they are OK to fund the deal hoping that they will receive some loan payoffs before your funding and have the amount you needed when closing date arrives, which wasn’t always the case. I’ve been at a closing and the borrower couldn’t get the “lender” on the phone and the funds weren’t there which gets ugly pretty quick. The individual lenders were never licensed, which is illegal, and definitely weren’t insured if errors were made.
My experiences with the local licensed Private Money lending companies have been mixed as well. For some reason these companies are usually led by knowledgeable, intelligent people yet fail miserably at customer service. Communication from the application process through the closing date is very limited and often delayed, and combined with the fear of not funding there was always a high level of anxiety for the borrower. In many instances the closing was delayed or cancelled due to the timing of the lenders inflow and outflow of capital. In addition to very poor service, the rates and terms with the local Private Money lending companies were always the worst. Interest rates were 14.9% and higher, loan origination fees were 4.9 percent, that’s right 4.9 percent, and to top it off you would pay a $496 documentation prep fee, a $400 appraisal fee, a $250 survey fee, a $200 inspection fee and sometimes even more. If you added up the amounts you were close to usury laws, and I thought the credit card companies were high! You would think with these rates and fees the lender would be giving away money at 100% of purchase price but they would still require large down payments and cumbersome escrow policies and still had uncertainty if you could close on time. Although they provide access to the real estate investment market, it came at a very high price and was only intended for beginners without knowledge.
Finally, my experiences with the National Lenders out of Miami and California were probably the worst. These Private lenders offered Buy, Fix, Sell loans starting at 8% which gathers a lot of attention from Real Estate Investors. When a proposed Borrower would call the company and have their credit report run, they would find that 8% was usually for an unattainable line of credit and rates for Buy Fix Sell financing would start at 12% and generally creep up based on loan to purchase price ratios and borrowers credit. Most Borrowers using hard money loans are not 800+ credit scores and usually need the least down payment possible so even if you qualified for their 12% rate most borrowers couldn’t meet their demanding terms. In the few instances the Borrower could meet these terms an appraisal would be ordered (and paid for the by the Borrower) and the property values would come back light. The low valuations were because the lender was in Orange County, California, not local and didn’t understand the market with expertise. The lower valuation would result in higher down payments. These games played by the out of state lenders would waste 7-10 valuable days, endure a Borrower credit pull and in the end get the Borrower no closer to funding and now staring rapidly approaching close date right in the eye.
In all instances, these funding results were unacceptable and caused Borrowers tremendous amounts of stress, which is NOT GOOD! But these experiences would become the core values of what I knew Capital Fundings could improve on; Better Service, Better Rates and Better Terms….and on closing day your money will be there. For the past 6 months Capital Fundings has been streamlining our processes, branding and working on obtaining the lowest possible cost of capital so we can offer our Borrowers a reduced stress, low cost and efficient way to fund their next real estate investment property. Capital Fundings takes a partnership approach to our lending and wants to ensure that we are not just Funding Your Real Estate Needs but each transaction is profitable for you and helping build your future. We are proud of our hard work and would welcome the opportunity to show you, the Borrower and our Partner, that funding your Real Estate Investment transactions and your dreams will be a smooth easy process when you use Capital Fundings.