A Hard Money Loan is a short-term asset-based loan secured by real estate. The loan is funded through a group of investors instead of a bank.
Asset-based means that the loan is secured by an asset or property. This is usually the asset or property that is being purchased by the borrower, but can also be other assets or properties that are owned free and clear by the borrower.
Single Family Homes, Multifamily Homes, Condos, and New Construction.
The loan amount is determined by the total cost (acquisition + rehab) and the ARV (After Repair Value) of the property. Loan to Cost (LTC) is the ratio of the total loan amount to the total cost of the project.
The As-Is Value and the After Repair Value (ARV) of the property are determined by an independent, third party appraisal company.
The After Repair Value (ARV) is the future value of the property after rehab has concluded. The appraiser will use comparable properties in the area along with a detailed scope of work provided by the borrower's general contractor and/or architect in order to determine the property's ARV.
PHML will fund up to 90% LTC and 70% ARV. PHML will provide 100% of the rehab costs in draws as work is completed.
The rehab portion of the loan is released in draws as work is completed/reimbursed to the investor. The completed work is inspected by myself (photos taken) and the draw is released upon approval.
Our loan terms are 12 months (extension options available), with interest-only payments, and no prepayment penalties. Our Interest Rate starts at 10% and is determined by the risk of the deal, the experience and knowledge of the borrower in real estate investing, development, building, and/or contracting, as well as the borrower’s available capital for the deal. Our loans range from $50K to $5 million.
Loan amounts of $83,334 or more carry a 2-3% Origination Fee at Closing. Loan amounts ranging from $50,000 to $83,333 carry a $2500 flat Origination Fee at Closing.
The borrower is responsible for a $1500 due diligence deposit (based on the deal), after signing the term sheet, in order to move the deal forward.
The $1500 deposit is credited back to the borrower on the HUD at closing and is used towards the borrower’s closing costs (appraisal, title, and legal fees). This is NOT an extra fee and is refundable if the deal were to fall through (minus any due diligence already performed).
The borrower is responsible for a $495 processing fee at closing.
We reserve the right to perform a soft credit check on a case by case basis. Borrower’s credit score is not a determining factor in loan approval in most cases, if the borrower meets our pre-qualification criteria.
No, we do not. We strictly lend on investment properties.
Yes, the loan must be closed in an LLC or Corporation and cannot be closed under an individual.