FAQs

Questions? We have answers.

Once you have completed the Sell Your Home Fast Form to the right one of our real estate solutions specialists will contact you shortly (usually within 24 hours). In some situations, we will need to gather additional information. We will research your property and discuss all the details with you. Our company may be able to buy your home directly from you right over the phone, or in most cases we will schedule a time with you to view the property and make you an offer!

We buy houses in any condition, in any area, in any price range, in any situation! We will buy your house as-is, you don’t need to do ANY repairs!

Whether your house is in foreclosure, over-leveraged, condemned, has liens or health department violations, not maintained, fire-damaged, or about to fall down WE CAN BUY IT!

Expedia Homes is a real estate investment and solution company. We are property acquisition specialists that buy houses directly from sellers; we want to BUY your home.  There is never a charge or a commission when we buy your property! However if listing your property is the best solution then we can and will connect you with a recommended licensed agent

Nothing! We do not charge you any fees to discuss your situation, make you an offer or to buy your home.

No! There is no obligation on your side! We will simply review the information, make you an offer, and you choose to accept or reject it, totally your choice!

ABSOLUTELY 100%! Your privacy is of the utmost importance to us. Any information you provide is completely confidential! If you want to deal with a reliable, reputable company who will treat you with professionalism, understanding, and respect – YOU HAVE COME TO THE RIGHT PLACE!

YES! Expedia Homes is a professional real estate solutions company with years of experience in solving these types of difficult situations. Please contact us for a confidential consultation.

Contact us with your questions and we’ll be happy to assist you!  Call us right now at 512-713-9855

Most frequently asked questions.

 

1-What’s my cost of capital?

2-How much money do I need to bring to the table?

3-What fees are involved?

4-Do I need to pay for an appraisal?

 

 To calculate your cost of capiital you have to consider all the cost that are involved in a closing.

 Your Hard Money Lender will provide you with therms. Terms will include their fees, Points and interest.

Your title company or lawyer will provide you with their terms and Fees.

 

One thing that new investors don’t know is. When Hard Money Lenders provide terms that is just the cost of money. As an investor you have to calculate your other costs.

 

 

What costs?

  • Real estate agents commission
  • Holding cost
  • Staging
  • Escrow
  • Title
  • Insurance
  • Inspection
  • Appraisal
  • Advertizing
  • Contingency
  • Second lien position
  • Gap funding
  • Etc.

Once you have all of the costs that are involved in your Real Estate deal you add the cost of Capital, points, Interest and second lien to cover the GAP

 

 

Your ROI should be 15% or more to be successful in a Fix and Flip. 

 

What Loan Documents Will you have to provide & What questions will you have to answer to your HML to get approved?

 

To begin the process of  obtaining a HML loan, you will need to provide documents to your HML. Providing these documents will make the process faster and easier.

 

If you have the documents stored in a digital folder that you can share with your lender it would give you an advantage and show your lender that you are different from the rest. 

 

Note:

This list may not be the same same for every lender, but having these documents updated and available will make it easier when the time comes.

 

LOAN DOCUMENTS

  • Completed loan applications for each individual owner and guarantor.
  • Personal Financial Statement for each individual owner and guarantor.
  • Recent bank statements evidencing funds required for closing and reserves.
  • Contact information for the title company or closing agent.
  • Completed Contractor Info Sheet from the primary contractor.
  • PHOTO ID
  • EXPERIENCE / REAL ESTATE OWNED PORTFOLIO
  • LAST YEAR’S TAXES 
 
 
 LLC Document Check List

For pre-approval, the following documentation must be provided to VCC’s Underwriting

Department for review:

Filed Articles of Organization/Certificate of Formation, including all amendments (or

equivalent document required by the state).

Certificate of Good Standing (or an equivalent document) issued from the state in which

the LLC was formed. The certificate cannot be dated more than 60 days prior to closing

and must be provided regardless of the age of the company.

Signed Operating Agreement, including all amendments, attachments and schedules, if

any. Note: Should the LLC not have any operating agreement pursuant to its state law, a

Member List shall be acceptable.

A complete Member List showing all members and managers and their respective

ownership interests.

EIN Number

CORPORATE SOLUTIONS / BY-LAWS

Any other documents or certificates as reasonably requested by VCC or required under

state law.

If the property is located in a state other than the state in which the company is incorporated,

the following documents issued from the state in which the property is located shall also be

provided:

A filed Certificate of Authority (or an equivalent document) showing the company is

properly registered in that state.

A Certificate of Good Standing (or an equivalent document) dated within 60 days of the

loan closing.

If the company’s ownership includes a non-natural person, documents concerning that entity

may also be required to be submitted for review.

Additional Documentation Requirements

Appraisal to be ordered by: Lenders selected appraisal company.

Confirmation email of payment to appraisal company

Evidence of hazard insurance covering the replacement cost of the subject property.

Evidence of liability insurance for the borrowing entity with coverage of at least $1,000,000 per occurrence.

A lender’s title insurance policy, insuring a first lien position.

Final loan approval subject to a review of all final documentation and overall transaction risk. 

 

* Disclosure Statement and Acknowledgement for business purpose loans: SIGNED BY HAND

*Conditional Loan Approval: SIGNED BY HAND

*Additional conditions may apply.

 

 

PTD Conditions Description

  • Mortgage Pay-off Demand For subject property: For subject property
  • VOM Subject: Recent Mortgage statement and las 12 cancelled checks for proof of payment
  • BP Disclosure Form: And a CLA to be designed with LIVE SIGNATURE or DocuSign Only
  • Handwritten LOE: Describe business purpose, occupancy intent and proposed use for any cash received.
  • Must be on  borrowing Entity Letterhead.

 

Estimated Closing statement

  • Leases: For tenant occupying residence
  • ID Forms: Social Security Card 
  • Evidence of Hazard/ Liability Insurance Coverage: See Attached request form
  • Preliminary Title Report: Title commitment with 24 months chain of title, Plat map. Tax cert, Wire, ad PCL
  • Flood Certification: property in flood zone: Flood zone notice to be signed by borrower
  • Entity Documents: For your Entity ( Better Neighborhoods LLC)
  • Evidence Of Flood Insurance  

 

What questions will your HML probably ask you.

1. Purchase price:
2. Renovation budget: 
3. ARV: 
4. Subject Property Address: 
5. Closing date:
6. How many properties do you have that are currently under renovation?
7. How many  successfully flips have you sold in the last 3 years?
8. How many rentals you or own or have owned in the last 3 years?

9. Best contact number for you:

10. Best email address for you:

11. As is value:

12.Exit Strategy:

13. Time projected to finish the deal:

14. Scope of Work:

15.Credit / Fico Score: Get your free credit report @  https://www.freecreditreport.com/

16- Do you have a signed contract?

What other questions will your HML ask.

 

Borrower Information:

  • Full name of Guarantor:
  • Date of birth:
  • Contact phone number:
  • Email address:
  • Home address:
  • Rent / Own:
  • Number of Years living on the property:
  • Condo/ apartment, suite, Single family house:
  • Previous address:
  • Contact phone number:  
  • Contact email address:
  • Credit score: 
  • get your free credit report @ https://www.freecreditreport.com/
  • Fico Score: 

 

Co-Applicant if any:

  • Full name:
  • Date of birth:
  • Contact phone number:
  • Email address:
  • Home address:
  • Rent / Own:
  • Number of Years living on property:
  • Condo/ apartment, suite, Single family house:
  • Previous address:
  • Contact phone number:  
  • Contact email address:
  • Credit score: 
  • get your free credit report @ https://www.freecreditreport.com/
  • Fico Score: 

A HARD MONEY LENDER is someone who is in the business of Lending money to Investors, (secured by a Real Estate hard assets) Hard money loans are a 1st lien position to guarantee the HML that when the  Real Estate asset is sold the get paid first. Every HML has their set of criteria, and so long as the terms and conditions are acceptable to both parties they make the loan.

 

A  PRIVATE MONEY LENDER is someone ~ who as the name implies ~ is someone who is privately  funding Real Estate deals using their own private funds ether using their sell directed IRA, solo 401k or savings. They can also lend  money from a  family member, a friend, a local acquaintance. Other people do not have access to that person or funds, and they (lend PRIVATE LY ) themselves are not  necessarily looking to meet other investors and they are only interested in lending to you exclusively.

 

A rule of thumb to determine a property’s As-Is value

 

As-Is = ARV – (Rehab x 1.1)

 

Caps used by lenders to determine the maximum loan amount:

 

  • ARV – After Repair Value
  • LTC – Loan to Cost (Purchase + Rehab)
  • LTV – Loan to Value (As-Is)

When lenders provide a loan, they provide a percentage of the Purchase Price, a percentage of the Rehab Cost or 100% of the Rehab Cost. Depending on the relationship of the Purchase Price with the Rehab Cost, the exact percentage of the first position loan changes with every deal, and this leads to the following question.

 

What percentage of the deal is the first position loan?

 

To calculate, it takes a little bit of math with the following formula.

[(Purchase Price Amount * Percent of Purchase Price) + (Rehab Cost Amount * Percent of Rehab Cost)] / (Purchase Price Amount + Rehab Cost Amount)

 

If the Purchase Price is $100,000, and the lender is providing 80% ($100,000 * .80); they’re providing $80,000. If the Rehab Cost is $50,000, and the lender is providing 100% ($50,000 * 1.00), they’re providing $50,000. The total being provided is $130,000, which is 86.66% (.8666) of the total project cost ($130,000 / $150,000).

The GAP is a percentage of the Purchase Price (10% – 20%), which the borrower provides at the time of purchasing the property.

 

Why?

 

When a lender makes a secured loan for a fix and flip project, they typically lend up to the value of the security/collateral. Up to the value of the collateral, MINUS two very important pieces.

 

1. The cost of foreclosing on, and liquidating, the collateral to recover the funds loaned out.

 

2. Enough “skin in the game” from the borrower, to make sure that they don’t abandon the project if the going gets tough.

 

What is the difference between Private Money and Hard Money?

There isn’t one because money is money, the only difference is in the terms and conditions for each individual lender.

 

What Questions should you ask your Lender?

 

When borrowing money, there are terms and conditions for obtaining it, and  there are terms  and conditions for repaying it.

 

What information and documentation will be required from you to that lender?

 

What fees will you have to paid to get your deal funded?

 

What security will be in place for the duration of the loan? Personal? The Real Estate Asset?

 

What happens in the event the funds are not paid back?

 

What compensation, Points and Interest will the Lender ask  in return for letting you borrow his funds?

 

How soon will you have to repay the funds?

 

What penalties will be set in place if you don’t repay the funds?

 

What happens if you deal goes south?

 

What should you evaluate when considering a HML?

 

Some lenders charge a higher interest rate, others charge points.

 

Some lenders charge points and interest.

 

Some care about credit scores, others don’t.

 

Some care about experience, others lend to first time investors.

 

Some lend at a higher interest and points to inexperienced investors?

 

Some lend 100% and charge 50% of the deal and manage the project themselves from start to finish.

 

Some lenders will lend 70% to 90% while others will only lend a piece of the purchase.

 

Some lenders will only  lend first position, while others are willing to take  the risk of lending in a a second position.

 

What are costs are involved when asking for a loan?  Every lender has different fees.

 

What other things are involved in the process of getting a Hard Money Loan?

 

Inspection criteria, application fees, underwriting fees, personal guarantees, closing costs, monthly or accrued interest payments…all of these are specific to the individual lender you are working with, and some may be negotiated.

 

 

Lenders base their loans on the (ARV) After Repair Value, and rely on appraisals for the ARV. Appraiser are trained on market conditions, (COMPS ) and compare properties sold on the MLS in the past 6 months, within 1/2 a mile from the subject property, not crossing over major roads, bodies of water or neighborhoods. Appraisers use the As-Is value, and the value of the work / improvements to be done on the subject property, to calculate the ARV.

The work to be done is provided by the borrower in the  form of a Repair Estimator / Rehab List / Scope Of Work (line items should include labor and materials).

 

Things considered on when appraising a property.

 

  • Adding Square footage
  • Bedrooms being added.
  • Bathrooms being added.
  • Finishes used when rehabbing the property.
  • Kitchens
  • Change in use.
  • Any significant changes which will result in added value to the subject property.
  •  

The appraiser does not know what the borrower / investor is planning to do, and since the appraiser cannot value what they don’t know about, the more information you provide in your SOW the better  understanding the appraiser will have to ensure an appraisal for the highest ARV.

 

  • Lenders charge an upfront fee called points? Lenders charge Because they can…is what most would like to believe. In reality it is to pay for the upfront work done to issue the loan. All the work necessary before the closing; from taking in the lead, to sending the funds. Of course investors don’t know any of this and only care about their ROI.
  • What’s work is involved when processing a loan?
  • Someone contacts the client and exchanges information (Marketing) 
  • Someone takes in the application, reviews the loan request, collects the necessary documents and information.
  • Someone underwrites the loan (does the due diligence on the loan), and moves the funds. Not to mention the cost of office space, utilities, salaries, and other overhead.
  • Some contact the Real estate agents involved in the closing to coordinate.
  • Some contact the Title company / lawyers involved in the closing to coordinate.
  • With a high enough loan amount, a high enough interest rate, high enough cash reserves, and a prior relationship with the borrower (that’s a lot of pre-requisites). Some lenders may be willing to add the points to the loan, to receive that compensation over the duration of the loan, or to waive them completely.
  • For the borrower this arrangement lowers the entry amount while increasing the monthly payments.
  • For the lender it increases the total earn, but delays being paid for work done. Not so good for the lender as it delays being paid for work already done, and in case of a default they are also faced with legal fees, more paperwork and the added risk of losing compensation for that already done work.
  • Why do lenders charge points? Lenders charge to pay for taking the risk of lending money to a complete stranger hoping that stranger knows what he or she is doing and at the end the property is sold for the projected ARV and lets not forget about the work of processing and issuing the loan.

Why don’t lenders want to use the appraisal provided to them by Investors (and already paid for), and instead want to order a new one? To prevent fraud.

 

Unfortunately PDF documents can be edited and information adjusted, without the appraiser or lender knowing about it. This is why lenders work with companies such as Appraisal Nation to order an appraisal, which goes directly from the appraiser to Appraisal Nation, and then to the lender, without a chance for tampering.

 

Appraisal management companies such as Appraisal Nation make it a 3rd party appraisal, with no bias for the borrower or the lender, based on recent sold comps in the direct vicinity.

 

Additionally some appraisals may be ordered without, and as a result be missing, necessary information such as the As-Is value and flood certification.

 

Some lenders don’t lend on  properties considered rural. Comps may be very difficult to pull, the buyer pool is smaller, holding times are longer…whatever the reason they just don’t.

 

Determining if a property is rural helps save time by working with the appropriate lender.

 

One tool to use to determine if a property is rural is the Consumer Financial Protection Bureau’s – Rural and underserved areas tool.

Lenders are not appraisers. Lenders use a 3rd party appraisers to perform an appraisal, and to provide an independent (unbiased) opinion of the property’s value. Lenders rely on the appraisal for many things) like the as-is value, the subject to renovations,  After Repair Value (ARV), and flood certification.

 

Lenders do not change appraisals to suit their needs (at least they shouldn’t), they use them to verify the numbers provided by the investor / borrower, and lend based on those numbers. When capping at X% of the ARV, the appraisal (among other possible sources such as Broker Price Opinions, and Realtor comps) is where the lender obtains the ARV.

 

When the appraisal comes in at the projected value, or higher, the project proceeds as planned.

 

When the appraisal comes in below the projected value the loan parameters may adjust, or the project may be cancelled.

 

It could be possible that the appraiser is incorrect and the appraisal may need to be disputed, this is something for the investor to review and discuss with the  appraiser and the lender. One thing to have in mind is that appraisers are licensed and rely on the etiquette on conduct which includes having a strong moral code of conduct when performing their duty and appraising a property. Not following the rules will get them, fine, suspended and  potentially have their licenses revoked.

 

Whatever the scenario once the appraisal comes in, the lender is using the appraisal to verify the values, not adjust them to fit their needs. That is the purpose of the independent appraiser and their appraisal; an honest, unbiased, neutral party’s educated and trained opinion of the value.

 

Underwriting

Why does it feel as though lenders are changing loan terms, and coming up with unreasonable and strange requests at the last minute? 

 

NOT AT ALL.

 

In the loan process there is something called underwriting, the review of all loan documents, and verification of the deal information; the lender’s due diligence. Rates and terms are quoted based on provided information, it is only after underwriting that firm commitments and contracts are issued. This is similar to making an offer after walking a property, and then adjusting the offer, or keeping it, based on the home inspections.

 

This is the last step before closing is scheduled, the property is purchased, and the loan is closed, but it does not begin until the appraisal is received by the lender; one to two weeks after the loan process was started and the appraisal was ordered. When the appraisal comes in is when underwriting begins, even though the loan application and documents may have been submitted weeks prior.

 

As the loan is reviewed, based on the available information, changes may be required and requested by the underwriter. Because of the truncated schedule investors operate on, this underwriting is happening days before the scheduled closing. As a result any changes, justified as they may be, feel like they are being made and requested unfairly, at the last minute.

 

Providing all requested documentation promptly, and allowing a few extra days for underwriting prior to closing, makes the process smoother and easier for all. It may feel like so much time has passed, and if there were issues with the loan something should have been mentioned, but in reality until all information is available the loan file just waits. And all information is usually available with the closing only days away, and no time to spare.

 

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