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Q. What is “hard money”, “private capital” and/or a “rehab loan”?

A. “Hard Money loans”, also called “rehab loans” and “private capital”, refer to non-conventional real estate loans. Private capital sources and specialty lenders usually fund them. Interest rates and points on such loans are usually higher. Terms usually range from 3 to 12 months. These types of loans have one basic requirement. There has to be some substantial equity in the property to give the lender a reason to invest their funds in an otherwise risky venture.

Q. So, why would you utilize a hard money/private capital lender?

A. The property to be purchased might be presently vacant and in need of repairs. It may be an older property in a failing neighborhood which has the potential for revitalization. It may be a foreclosure and can be purchased on a short sale. You may just need a quick closing to secure a property before you find an investor/rehabber to which you want to wholesale the property. You may want to purchase a run down piece of property, rehab the property, and refinance it for rental income. In all these cases, you would need a hard money loan because conventional financing is not an option or it would take too long to secure. Hard Money/Private Capital is just a cost of doing business and is an effective method of doing business as a real estate investor.

Q. How does the program work?

A. We loan money in metropolitan areas within North and South Carolina, with a few exceptions, to people who buy single family residences (SFR’s), Multi-Family properties, 5 + Unit apartment complexes, Mixed-Use properties and Multi-Tenanted Commercial property. These investors then fix up the properties and sell them or refinance them to rent out. We work very hard to fund quickly so that you can demand large discounts from your sellers. Our program is very good for people who can buy right, fix a property up quickly, and then get it re-sold or refinanced. There are three easy steps to our loan process:

  1. Submit an application to get pre-approved.
  2. Find a property, get it under contract and prepare a cost estimate for repairs.
  3. Send us the information and then we process and close the loan if the investor and property qualifies.

Q. What are the costs?

A. We charge five points, 5% of the loan amount, for first time borrowers. We charge four points, 4% of the loan amount, for repeat borrowers. These points are in addition to the other costs associated with any other loan closing such as attorney’s fees, processing fees, recording fees, etc. These fees typically run about $1850.00 plus the points. This is however just an estimate. Other costs involved may include pro-rating of taxes, insurance and interim interest. Although the term of the loan is generally six to nine (6-9) months, there is a renewal fee charge of two (2) points of the loan balance that is paid to the lender at the time of renewal. Most of the loans are paid off within 190 days.

Q. How do you decide how much to loan?

A. We can loan up to seventy percent (70%) of the After Repaired Value (ARV) on single family residences (SFR), 55%-65% for other type properties. If you are buying right, you could get in for no money down, however, you cannot get cash out of a hard money rehab loan.

Q. Where do you loan?

A. We loan in  North and South Carolina, with a few exceptions.

Q. What do you look for when approving a loan?

Mostly, we look at days on market for the subject property very carefully, exceptions to that rule are sometimes made to those with A+ credit and money in the bank or borrowers with whom we have an ongoing relationship. We also look at the investors basic background, as well as, credit worthiness.

Q. Do I need to put any money down or have any money in the bank?

A. In some instances, no money down loans are available. As long as the loan to value (LTV), including purchase price and rehab, does not exceed seventy percent (70%), you can potentially acquire the property for no money down. You must however bring points and fees to closing and have reserves to satisfy the underwriters. You cannot get cash out of a hard money/private capital loan.

Q. How much will my payments be?

A. Your loan is an interest only loan. To figure your monthly payment, simply multiply the interest rate by the dollar amount of your loan. Since the interest is computed on an annual basis, you simply divide by 12 (months) to get your monthly payment.

Q. Will you finance commercial properties?

A. Yes, we have some finance programs for commercial properties although the criteria is different. Please contact us for more information. 

Q. Will you finance apartment buildings?

A. Yes, however strong cash and a strong credit score are needed to qualify for these larger loans. Please contact us for more information.

Q. Do you allow interest to be deferred to the end of the loan?

A. Not at present. You pay interest only payments monthly during the loan term on the total loan amount. There is never interest charged in advance, no prepaid interest is brought to closing.

Q. Do you require a survey?

A.  Yes, in some cases a survey is required.

Q. What paperwork do I need?

A. Fill out the online application. We will contact you within 2 business days to discuss your application and inform you of additional documentation that may be needed.

Q. Do you loan on rural property?

A. No. The properties we loan on must be within a county or city with a population of at least 300,000 people. Exceptions sometimes made for those with A+ credit.

Q. Does Carolina Hard Money lend on properties in the flood zone?

A. Yes,  flood insurance is required.

Q. Will you loan money in my corporate, LLC or trust name?

A. All loans at present are made to corporations, LLC’s and trusts only.

Q. Do you pull my credit for each loan?

A. We pull complete background checks, including credit, on all borrowers. This helps us to determine that you will still be able to qualify for the permanent financing when it comes time to refinance. Our goal is to make sure that you are able to refinance out of the hard money rehab/private capital loan, as soon as possible.

Q. What kind of credit rating do I need to get approved for a loan?

A. Our approval is based upon your past credit history, credit score, funds available, credit cards(s), available balance, and the value of the property you want financed. We look at the total overall potential of the Investor. Carolina Hard Money does require its investors to have an “A” or “B” credit grade, generally 640 or higher. We look at your credit and background to get a feel for the person or persons who are borrowing the money in order to screen for borrowers who obviously never intend to repay or may have issues with following rules and directions. We look for ways to finance your investment, not for ways to turn you down.

Q. How long does it take to get approved for a loan?

A. Within 2-3 business days after you have submitted your loan application and documentation, we can usually make a decision or give you a general idea if we can help you.

Q. How long does it take to close the loan once I have been approved?

A. There are many factors which prevent us from making any guarantees as to if/when a loan will close. If you have already been pre-approved in advance, it normally takes around seven business days once you find a property and submit the property information to us. Sometimes it takes a little more or less. We have closed in as few as two (2) days. Many times it all depends on how long it takes to have a title search completed, get the appraisal and schedule a closing. There are other factors that can also delay a closing. Always allow yourself plenty of time when writing your contract. 

Q. Should I have a property under contract before I fill out the loan application?

A. Carolina Hard Money can pre-approve you for our loan program prior to finding the right investment property. Our process is two-fold: we approve the applicant and we approve the investment property you are interested in financing. We recommend that you go ahead and get pre-approved so once you find a property to purchase, we can close faster.

Q. What is the term of the loan?

A. We write 6- 9 month interest only loans. We charge four to five (4-5) points at closing and an additional two (2) points renewal fee is paid to the lender for one ninety (90) day extension period. The average life of a hard money rehab loan is 190 days. The purpose of a hard money rehab loan is to either turn the property quickly or have it rehabbed and refinanced with a conventional lender. Carolina Hard Money does not have any prepayment penalties; you may prepay the loan anytime you wish prior to the term of the loan.

Q. How do I get refinanced to pay off the hard money rehab loan?

A. If you are purchasing a property to rehab and rent, you can begin processing your refinance loan as soon as the repairs are complete and the final inspection has been made. You may also seek alternate sources to refinance and pay off your rehab loan if you wish.

Q. What is the interest rate charged?

A. The current interest rate is 13.75%. *Subject to change without notice

Q. Can I get purchase and rehab money too?

A. We will fund the purchase and all your repairs up to seventy percent (70%) Loan to Value (LTV), if you and the property qualify. We do require you to complete a detailed, itemized repair list of the repair work. A draw schedule identifies the number and amount of each draw. After a certain percentage of the repairs have been completed and verified, the monies are forwarded to you.

Q. How many investment properties can I finance at one time?

A. We will start with one property until we have established a business relationship with you. As you become more experienced and have successfully completed a few loans with us, we can look at funding up to 2 properties as they are identified.

Q. Do I need to get an appraisal?

A. Carolina Hard Money will order an appraisal from a qualified appraiser of their choosing who is familiar with evaluating investment properties. The appraiser will determine an “after repaired value” (ARV) based on the list of repairs that you and/or your contractor will be completing.

Q. How does the draw procedure work?

A. You may have as many as five (5) draws as described in the “Rehab Loan Draw Schedule”. Each draw request will require an inspection to ensure that the work is completed in a thorough and professional manner. After completing a certain percentage of the required work, you will fill out a “Draw Request Form” online. We will schedule an inspector to visit your property and authorize release of your funds. The inspector is one approved by Carolina Hard Money. There will be a $150 inspection fee charged for each draw, which is deducted from the total draw amount. If you request a draw and the work requested for reimbursement is not complete, you will be charged for the initial inspection and for the re-inspection, if you request one. Upon completion of the complete project, you (and the contractor if there is one) will sign a completion certificate verifying all work is complete and code violations, if any, have been satisfied. Your payments must be current in order to draw funds. Draws will not be released on or after the first payment is due and not received.

Q. Do you make loans on rental property?

A. Yes, we do loans on rental property. It is usually when the property needs to be rehabbed prior to being rentable. When the renovation is completed, you will need to have the property refinanced.

Q. What type of insurance do I need on the property?

A. Before closing you will need to have a builders risk or a one-year prepaid vacant dwelling fire policy in place.

Q. Do you also make traditional loans to investors?

A. No. You must get approved for the refinance with a traditional lender.

Q. Where do I get an application and other forms needed?

A. All forms needed to apply, get pre-approved and also to submit your property for approval are on our website. Click here for pre-approval.

Q. Do I need to be an experienced rehabber to qualify?

A. The majority of our borrowers are experienced in real estate investing and rehabbing. Investors with limited experience can still qualify on a case-by-case basis. 

All programs and guidelines are subject to changes, modifications, deletions and/or cancellations.

Carolina Hard Money
234 Johnston St.
Rock Hill SC 29730
Phone- 803-831-2262
Fax- 336-217-8432

North Carolina Private Money Lenders & South Carolina Private Money Lenders


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