Investor-Rehab Financing

The Bankers Group has established itself as one of the leaders in Investor-Rehab loan financing.

How to finance an investment property with no money down

OK... So you found the perfect property that you want to invest in.... Now, how do you buy it with no or very little money down...

STOP

Here's the most important thing... We have to figure out what the spread is. (spread equals discount below market value) There's a spread right? If a property has a market value of 100,000... Anyone can pay 100,000 for it... The true real estate investor is going to get it for less. The degree of ''less'' is the spread or profit for you, the investor. If you're paying market price for a property, this is probably not the program for you.

What is Rehab Financing?

  • The Bankers Group is one of only very few lenders to offer Rehab Financing, a loan targeted exclusively to the rehabilitation of properties in need of repair.

What is your Down Payment?

  • You make absolutely no down payment as long as your loan amount is no higher than 65% of the ARV [After Repair Value].

What properties do we accept as collateral?

  • The Bankers Group considers the following property types as acceptable collateral: commercial and industrial properties, non-owner occupied residential properties, loans in corporate names, offices, mixed use properties and warehouses.

What properties don't we consider?

  • Residential owner-occupied properties.

How do we determine the appraised value?

  • Easy. We send out an independent appraiser who is familiar with real estate in your local area. You give the appraiser an itemized list of repairs and improvements that you'll make to the property. The appraiser then determines the property's current and future value after all the repairs are made.

What are the terms?

  • The terms of The Bankers Group Balloon Loans are usually 12 months.  Amortizations are flexible.  Sometimes 20 years.  Sometimes interest only payments. Or sometimes no payments at all.  It depends on you experience and the property.
  • Alternate One: If you decide to rent out the property instead of selling it, we will give you a long-term permanent loan at a much lower rate at no additional cost.
  • Alternate Two: If you need a longer than expected time to fix up or sell the property, we'll extend the loan.

Can the deed be held in a corporate name?

  • Yes.  You can hold the deed as a corporation, LLC, partnership or individually.

What if the property doesn't need any repair?

  • That's fine.  The Bankers Group will still offer you a loan base the loan to value (LTV) off of the appraised value as opposed to the purchase price.  So, if you're buying the property at a discount, you can still do it with No Money Down!  Also we can offer higher LTVs and lower interest rates on properties in good condition

What else do I need to know?


Time Frames:

Approvals --usually within the same day. 
Closings --as soon as we get the appraisal and title report.
Your whole start to finish process is fast and smooth.

Loan Amount:

Maximum--$1,000,000

Costs:

Typical rates for this program are 9-15% interest with 3-5 points up front and 0 -3 points on the back end.  Rates and fees are determined by your credit, your experience, and the property.

Disbursement:

At closing, we advance the purchase price and the 1st  draw to get the repairs started.  As you make more repairs, we disburse more money. It's typically in 4 installments.

Creditworthiness:

Our minimum credit score for rehab loans is 620.

Eligible Locations:

Northern California


So here's a practical example of a rehab loan....

An investor can buy a distressed single family property for $45,000, He believes that he can fix it up to salable condition for $40,000. When the properties done, it should be able to sell for about $145,000.

In this case... we'd loan the borrower up to $94,250 which is 65% of 145,000!

In other words...

We'd give him:

 

the 45,000 to buy the property

 

the 40,000 to fix it up

 

plus any money for closing costs...

 

LOAN PROGRAMS

All loan programs require investor's to contribute their own capital in the form of hard cash, no matter how good of a deal the investor secured. This is non negotiable and aligns the investors interest with The Bankers Group and provides for a mutually beneficial relationship 

The Bankers Group has 4 Investor Rehab Loan Programs, each one with a different degree of Investor experience required. Experience is verified prior to funding. Please determine which loan program applies to you, then submit your loan request and upload the required submission documents at our Submit a Loan tab on our website.

LOAN PROGRAMS (see below for further information)

  1. Rehab Pro
  2. Rehab Experienced
  3. Rehab Beginner
  4. Auction Cash Out

1) 

Investor has completed 3 or more profitable transactions with in last 12 months

Pre Pay:

none

Loan Amounts:

$25,000 to $400,000

Term:

6 months with up to two 90 day extensions

Rate:

12.5%

Points:

3.5

Borrower Down Requirement: 

10-20% of Purchase Price.

Liquidity: 

10% - 30% of total project cost.

Rehab Budget Financing: 

Up to 75% of rehab budget with fund control.

LTV:

Up to 65% A.R.V.

FICO:

625+ **

Rehab Timeline:

All rehab work must be fully completed within 75 days of funding.

Underwriting/Loan Documents: 

$1,100.00 plus $350.00 for appraisal ordered by The Bankers Group directly.

Timeline to Fund: 

7 to 10 days after submission of full package

See submission form for other parameters.
** Lower FICO's considered on a case by case basis, however we is not a subprime lender.

2) 

Investor has completed 3 or more profitable transactions with any lender in last 12 months.

Pre Pay:

none

Loan Amounts:

$25,000 to $400,000

Term:

6 months with up to two 90 day extensions

Rate:

13.00%

Points:

4.0

Borrower Down Requirement: 

15-25% of Purchase Price.

Liquidity: 

10% - 30% of total project cost.

Rehab Budget Financing: 

Up to 75% of rehab budget with fund control.

LTV:

Up to 65% A.R.V.

FICO:

625+ **

Rehab Timeline:

All rehab work must be fully completed within 75 days of funding.

Underwriting/Loan Documents:

$1,100.00 plus $350.00 for appraisal ordered by us directly.

Timeline to Fund: 

7 to 10 days

See submission form for other parameters.
** Lower FICO's considered on a case by case basis, however The Bankers Group is not a subprime lender.

3) 

Investor has less than 3 transactions, or is just starting out.

Pre Pay:

none

Loan Amounts:

$25,000 to $400,000

Term:

6 months with up to two 90 day extensions

Rate:

14.00%

Points:

4.5

Borrower Down Requirement: 

20-30% of Purchase Price.

Liquidity: 

10% - 30% of total project cost.

Rehab Budget Financing: 

Up to 75% of rehab budget with fund control.

LTV:

Up to 65% A.R.V.

FICO:

625+ **

Rehab Timeline:

All rehab work must be fully completed within 75 days of funding.

Underwriting/Loan Documents:

$1,100.00 plus $350.00 for appraisal ordered by us directly.

Timeline to Fund: 

7 to 10 days

See submission form for other parameters.
** Lower FICO's considered on a case by case basis, however The Bankers Group is not a subprime lender.

4) 

Pre Pay:

none

Loan Amounts:

$25,000 to $400,000

Term:

3 months with up to two 90 day extensions

Rate:

12.5%

Points:

3.5

Cash Out Max: 

Up to 80% of what investor paid at court house auction.

Liquidity: 

10% - 30% of total project cost.

FICO:

625+ **

See submission form for other parameters.
** Lower FICO's considered on a case by case basis, however The Bankers Group is not a subprime lender.
 

 SUBMISSION DOCUMENTS

 1) The Bankers Group Application Packet 
     (see our - forms section)

 4) Credit Report (Tri-Merge)

 

 2) Completed Submission Form
     (submit a loan tab)

 5) 3 Months Bank Statements

 

 3) Purchase Contract (if a purchase)

 6) Ten Colors Pictures - Inside, outside, and street
     view or color appraisal

 

Additional Requirements:

  • Lien position - First only.
  • Rehab funds - control fund required if rehab portion is financed. Third party control fund fee of $1200 applies.
  • Property must fall at or below disposition value, as determined solely by The Bankers Group.
  • Investor must demonstrate ability to repay or refinance in the event of inability to sell the property.
  • Investor must always personally guarantee all loans, regardless of title vesting.
  • To review any submission, we needs a minimum of:

EXAMPLES OF QUALIFIED REHAB LOANS:

1. INVESTOR A – The Bankers Group REHAB PRO (ZRP)

Investor A is experienced and has bought and sold at least 3 properties all financed with us within the past 12 months, each with a substantial profit.

Investor A locates an REO or distressed property and negotiates a purchase price of $100,000. Investor submits a loan submission to The Bankers Group. The Bankers Group confirms that $100,000 is at or below the disposition value for other situated properties in the area.

Investor A has two options:

1) The Investor can now secure the loan immediately for up to 80% of the initial purchase or in this example $80,000.


A.R.V.

$175,000

After Repaired Value

Purchase Price

$100,000

 

The Bankers Group Loan Amount

$80,000

 

Loan Fee

$3,200

4.0 points

Appraisal

$350

 

Underwriting

$1,100

 

Title/Escrow/Other

$1,000

Estimate

Cash Required

$25,650

Plus 10-30% in reserves, or $10,000-$30,000 in this example

 
OR
 
2) The investor can secure rehab estimates to increase the loan to cover a portion of the rehab budget. If the investor chooses to secure a rehab estimate and the rehab bid comes in at $30,000, the Investor may request a loan amount of up to 80% of initial purchase of $100,000, and up to 60% of the rehab estimate of $30,000 for a total loan request of $98,000 ($80,000 + $18,000).
If a portion of the rehab is financed, the entire rehab budget, including the investor's portion is escrowed in a control fund and is disbursed at up to 3 stages of the rehab, if and only upon:

  • Physical inspection of completed work
  • Required lien releases by all sub contractors have been secured, and
  • Appropriate county inspection sign offs, confirming completion, have been secured.

A.R.V.

$175,000

After Repaired Value

Purchase Price

$100,000

 

Rehab Estimate

$30,000

 

The Bankers Group Loan Amount

$98,000

(80%*100,000+60%*30,000)

Loan Fee

$3,920

4.0 points

Rehab Fund Control

$1,000

3rd party control fund fee

Appraisal

$350

 

Underwriting

$1,100

 

Title/Escrow/Other

$1,000

Estimate

Cash Required

$39,370

Plus 10-30% in reserves, or $10,000-$30,000 in this example

There is a fee for the 3rd party control fund process.
See submission form for other parameters.
 

2. INVESTOR B - Auction

Investor B purchases a distressed property at the County Courthouse Auction for $100,000. Investor B pays for the property, as required, at the auction on the day of the auction. Investor submits a loan submission to us, to obtain up to 80% of the cash just spent in order to provide liquidity to the investor enabling the investor to purchase more properties immediately.


A.R.V.

$175,000

After Repaired Value

Purchase Price

$100,000

Investor already paid this at auction

The Bankers Group Loan Amount

$80,000

 

Loan Fee

$3,200

4.0 points

Appraisal

$350

 

Underwriting

$1,100

 

Title/Escrow/Other

$1,000

Estimate

Cash Back to Investor

$74,350

 

In either loan process, the rehab investor must have skin in the game in the form of hard cash, no matter how good of a deal the investor negotiated. This is non-negotiable and aligns the investors interest with The Bankers Group and provides for a mutually beneficial relationship.

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