While most Realtors only work with Buyers that are Pre-Approved or fully Approved with an “A” Paper Lender, situations do come up when even an “A” Paper Buyer might need a Private Equity Loan in order to “close the Deal”.
We have seen instance after instance where due to a small insignificant matter led an “A” Paper loan going down the drain. In such a situation time might not be available to close escrow with another “A” Paper Lender in the time agreed to in the Purchase Contract with the Seller. Or in the case of a simple refinance where the Borrower plans to obtain the funds for a down payment a Private Equity Loan can provide a Realtor’s Buyer the down payment funds they need when the “A” Paper Lender proves difficult.
When might a Buyer Need a Private Equity Loan?
Following are the most common situations where a Realtor should suggest a Private Equity Loan to their Buyers:
The Borrower has Credit Issues:
- Current and past delinquent mortgages and consumer credit that are not acceptable to the big banks and other institutional lenders.
The Borrower has Income Issues:
- This covers everything from limited income documentation to no income documentation whatsoever, either way the big banks aren’t accepting the income documentation
There are Property Condition Issues:
- Deferred maintenance and contemplated property additions not allowed with traditional bank financing
In additional there are numerous types of properties that the big banks and institutional lenders will not often fund, some of which are:
- Gas Stations
- Auto Repair Facilities
- Fix & Flip Transactions
- Vacant Land
- Unpermitted property additions
The Borrower Needs the money FAST:
When money is needed faster than the big banks or institutional lenders can provide
A Realtor that offers a Private Equity Loan to their Buyers can prove be a good business decision for both the Realtor and their Buyers.
Realtors should ALWAYS inform their Buyers that anytime a Private Equity Loan is obtained that a plan should be put in place to pay the loan off, by either refinancing when credit, income and the property is acceptable to an institutional lender or by simply selling the property.
Often times Buyers contact our company directly or through their Realtor to obtain funds for a GOOD business or investment deal that would not remain available when allowing for Institutional Lender’s loan processing time frames. We always suggest a plan to pay the loan off, whether that plan includes credit repair, income documentation matters or necessary improvements to the property’s condition. Often times income documentation is a much harder challenge, since the underwriting requirements of institutional lenders often demand two years’ documentation of business income and often the same time frame for employed Borrowers.
Many Realtors generate additional income by also participating in loan originating for their Buyers. This type of situation provides an opportunity for Realtors to earn a commission from originating the Private Equity Loan and later another commission from originating the institutional refinance.
We’re currently offering Private Equity Financing at interest rates that range from 9% to 12%, with most of the loans our company funds having an interest rate of approximately 10%.
Whenever a Realtor has a Buyer who might need or benefit from obtaining a Private Equity Loan all the Realtor needs to do is provide us with the address and the “Deal Points” and our company is usually able to make a lending decision, which includes a proposed interest rate, loan terms together points and closing costs.
Submitting the Buyer’s information to our company can be done over the phone or through our company’s secure website.
We always provide a preliminary underwriting response the day a Realtor submits the Buyers information to our company.
Private Equity Loans are very much like institutional loans but with only a few differences. The primary differences being the approval requirements and the funding speed. Private Equity Loans are much easier to get approved when credit or the condition of the property is an issue.
The typical time frame from Realtor loan submission to funding in typically “1” to “2” weeks. There are instances when it takes longer but that is usually associated with title matters or matters not disclosed by the Borrower that later pop up at the last minute that requires additional time to resolve.
Our company has a convenient online loan submission portal on our company’s website that makes it convenient to obtain a loan quote on a potential loan or to get a formal loan approval on a loan in process. Our website is fully secure and is an accredited SSL domain.
If you are a Realtor and would like to obtain additional information on how a Private Equity Loan can be a valuable choice for both you and your Buyer, then please call our company toll free at (888) 797-7970.