FAQ
Why VestCap?
- Flexible – Our guidelines are just that guidelines, everything is negotiable.
- Fast – We understand delays kill deals and have the ability to U/W and fund within 48 hours.
- Local – We crafted these programs from years of experience in the southern CA market.
We are local and can understand local market conditions.
What is hard money? Who uses it, and Why?
The What
Simply put, hard money loans are funded by private investors. VestCap has a pool of private investors that we originate and underwrite for. Hard money loans are primarily short term bridge loans used for acquiring properties that require cash to close.
The Who
Primarily, Real Estate Investors that are flipping rehab properties would most benefit from the program. They can truly leverage opportunities with minimal personal investment, thus maximizing their overall Return on Investment.
The Why
Hard money Loans are easier to qualify for because they are asset based and rely less on credit. With current lending restrictions the uses for hard money has expanded into many different applications.
Investors commonly use this type of short term financing for acquiring both residential and commercial properties that are in need of repair at a deep discount and do not qualify for conventional financing. This is very common in residential REO purchases. VestCap we will finance up to 100% of the purchase price and repairs.
This allows the “Flipping” investor to leverage his capital and capture more opportunities.
- The After Repair Value is considered in the transaction where conventional loans merely use the purchase price when calculating LTV ratios.
- Credit is not considered for approval.
- Poor credit Okay!!!
- Prior BK or FC is okay!
- Programs designed for Investors and Flippers.
- Common sense underwriting.
- Close Quickly (usually within 10 days)
- Leverage your capital to do more deals simultaneously.
- Will fund into an LLC or Corp.
- Properties with “functional obsolescence” are welcome.
- Make all CASH offers with confidence, allowing you to get lower offers accepted.
- Win over REO Agents who will know you close when you say you are going to close.
- Get motivated sellers excited to be dealing with someone who can close quickly.
- Assignments are okay
Q: What is a REHAB property?
REHAB is short for rehabilitation. These are properties that are purchased with the intent of selling for profit after the improvements or rehabilitation has been completed.
There are many kinds of REHAB properties. Some properties my only need some cosmetic work. These properties can be ready for resale with just some simple paint, new carpet or perhaps new fixtures.
Other types of REHAB require a little more work. Some properties may be damaged by, fire, flood, poor upkeep or even the prior homeowner creating functional obsolescence. These properties are more labor intensive. Some activities may include new kitchens, bathrooms, roofing, and plumbing.
Q: What type of properties are good rehab properties?
Depending on your exit strategy, we have found single family residences priced less than $365,000 resell quickly and are some of the best properties to rehab. VestCap will also finance the rehabilitation of multifamily dwellings, apartments and commercial. Call or email us if you have questions regarding property type.
Q: How much financing can I receive for my REHAB project?
It depends on the ARV when completed. Our LTV is calculated using the future rehabbed value of the property as if it were repaired today. We typically lend up to 65% of the after repair value.
Q: What is “Loan-to-Value (LTV)?”
Loan-to-value is calculated when you take the loan amount and divide it by the value of the property. For example, if you have a project that has a future value of $320,000 and you need a loan for $208,000 to complete the project, your loan to value would be 65%.
$208,000 / $320,000 = 65% LTV
Q: How fast can I obtain financing for my Flip project?
The application process takes 24-48 hours after we have received:
- Completed and signed application.
- Executive summary including rehab worksheet.
- Verification of funds. Minimum 10%.
- Purchase Agreement and or escrow instructions
- Prelim title
- Appraisal
Q: What are VestCap’s Appraisal Requirements?
We require appraisals to be less than 30 days old and can be assigned. Properties valued over $1,000,000.00 require two appraisals. Unless ordered by VestCap all appraisals will be reviewed.
Q: Can the seller pay or contribute Closing Cost?
We prefer you to lower the purchase price, in cases where money will be left on the table we will allow seller to credit back.
Q: How many projects can I do at once?
We want you to start with one or two projects. As you get familiar with our lending practices and have a proven track record. We can increase the amount of projects we will finance on a case by case basis.
Q: Can I do my own renovations?
Yes, there is a lot of work you can do yourself or with the help of a friend or two. However, make sure you follow all local laws and regulations, including getting permits, have progress inspections as needed and getting a certificate of occupancy. In many cases, you will be better off hiring qualified contractors to do the work that you don’t have experience with or that which requires a licensed professional (electrical work and plumbing are items you most often will need a contractor’s help with).
Q: How do I choose a contractor and what do I ask?
There are many ways to choose your contractor, and many questions to ask. In our experience, word of mouth works the best, because in most cases you know the person that referred the contractor to you, and you can probably go and see the work that was done first hand.
If you use the phonebook, web or an ad to select your contractor, you should always select at least two contractors and get a minimum of two quotes. The first 3 things you want to ask a contractor are:
- Are you licensed?
- Do you have any Employees?
- Do you carry Insurance?
The types of insurance a contractor needs are General Liability and Workers Compensation Insurance (if the contractor answers yes to the employee question). Ask for proof of current license and declaration page of insurance to work in the county/state where your property is located. Some counties do not require licensing for all trades, but most electrical, plumbing, and HVAC contractors will need some form of a license. If your potential contractor is a sole proprietor with no employees, he only needs to carry General Liability Insurance.
Make sure your contractor pulls a certificate of insurance for your project with the project address written on it and that he names you as an additional loss payee. Make sure that any employee is covered by the contractor’s insurance or, if he is not an employee but a subcontractor, make sure that he has his own insurance. DO NOT LET ANYONE START WORK ON YOUR PROJECT UNLESS HE/SHE HAS INSURANCE!
Ask for at least 3 references (names and phone numbers) that your prospective contractor has worked for in the last 30-90 days. Be sure your contractor has completed the type of work you are hiring him for. Your contractor should be able to supply these references on the spot, during your initial interview. Be sure that your contractor supplies you with a complete, written, detailed contract for the work he is being considered for. Be sure that the contract states clearly that there will be no additional charges without a written additional work order signed by both the parties to the contract. Always remember that you are in control, you are hiring them.
Take a few minutes and do a little research on the Internet - Google his name or company and see what you can dig up on them, and also check with the Better Business Bureau. Your contractor may request a check for materials. It is a good idea to try and pay the supplier directly. We may be able to disperse to them directly through escrow.
More questions? Please use or contact form to submit questions you don’t see here.