Empowering Entrepreneurs

What kind of loans do you offer?

We handle all types of loans, ranging from hard money loans, private money loans, to private equity capital infusions, and more. We look at each deal individually, and invest based on the merits of the case. We act as a direct hard money lender, but can – in select situations – bring in additional investors in order to help you get the funding you need for your business opportunity.

How fast can Delancey Street provide a hard money loan?

We’re partners first – hard money lenders second. We treat you how we’d want to be treated as your partner. We’re not going to make fake guarantees just to sell you. Here’s the honest answer: we’ll do it as quickly as possible. We won’t play games, and we don’t intentionally delay the process. We use a very sophisticated deal processing system which enables us to give answers quicker than other hard money lenders. The faster you send us your information, the quicker we can provide an evaluation. If we have follow up questions, we’ll send you them.

What credit score do I need to qualify for a hard money loan?

When it comes to hard money loans / private money loans, we don’t look at your credit score. Our primary focus is the potential opportunity in question. We focus exclusively on the LTV, and other facts pertinent to the deal itself. We are more concerned about the viability of the project, than your past history. It’s that simple.

What does Delancey Street do besides hard money loans?

Delancey Street’s primary focus is providing financial solutions. We engineer creative financing methodologies to help entrepreneurs achieve their goals. For example, we offer loans against Bitcoins – where the coins are used as collateral for fiat currency loans. In addition, we conduct transactions like reverse mergers – where we help take companies public. These additional services are part of our core philosophy of handling complex transactions, and coming up with cohesive strategies that accomplish the goals of the entrepreneur.

What are your fees for hard money loans?

Every single loan is different. In some cases, we may charge points upfront. In some cases, we may choose not to. We typically charge interest rates between 8-12%. In some of the more unregulated industries such as Cannabis, we charge higher interest rates due to the increased risk associated with these industries. What we can assure you of is the fact we’ll always be transparent and straight forward.

How can I get pre-approved for a hard money loan?

Every single hard money loan is different. In some cases, we may charge points upfront. In some cases, we may choose not to. We typically charge interest rates between 8-12%. In some of the more unregulated industries such as Cannabis, we charge higher interest rates due to the increased risk associated with these industries. What we can assure you of is the fact we’ll always be transparent and straight forward.

Are there any hard money loan application fees or anything?

Absolutely not. We don’t believe in hard money loan application fees at all. We want you to tell us about your opportunity. We’re thrilled to be able to help you. With that being said, the first step is to fill out our contact us page, or visit our loan application form. We also have live chat for any questions you have. Bottom line, we’re transparent – we’re here to stay.

What differentiates hard money lenders from bank lenders?

Hard money lenders are different because they fund more quickly, and have less requirements. Lenders are called “asset based lenders,” because they only focus on the collateral of the loan. Traditional banks focus on strong collateral, excellent credit, and cash flow. Hard Money Lenders will foreclose on your property and take it back if needed to satisfy the hard money loan. Bank lenders don’t like doing this, and thus look at your ability to repay the loan. Hard money lenders are ok with factoring in the future proceeds of a sale when looking at your ability to repay the loan.

Can you transition from a hard money loan to a bank loan?

Yes, it’s possible. This can happen if the borrower is able to rectify the original reason why the bank refused them the loan. For example, if you improve your credit – then you might be able to get a loan as a result.

Does credit score matter for a hard money loan?

No. Not really. We really don’t look at your credit score. Our main focus is the investment property. We look at the specs of your deal.

Pitfalls of hard money loans

Hard money loans can provide a lot of benefits. Here are some of the downsides of them.

• High interest rates. Interest rates for hard money loans regularly go into the double digits. For example, if you take out a $100,000 30 year mortgage, at 7% APR, you’d pay $77,854 more in interest payments than a conventional mortgage which has a 3.5% APR interest over the duration of the loan. Most hard money loans are made over  3-24 month period, as opposed to traditional loans which are paid off over 30 years.
• Lack of regulations. Compared to traditional mortgages, there is very little regulation of hard money loans. It’s critical to know what you’re doing, and who you’re dealing with.
• High fees. Hard money loans have high interest rates, in addition to a wide array of fees such as origination fees, underwriting fees, early payment penalties, etc.
• Term. Hard money loans are paid over a shorter period of time, such as 1-2 years. You need to have the money to repay the loan, or apply for an extension, or refinance, to pay back the hard money loan. Some hard money lenders may allow you more time, but will increase the interest rate.
• Harder to refinance. Some traditional lenders require you to own the property for a certain minimum length before they’ll refinance your property. This can cause issues if your hard money loan is due before you are able to refinance the loan.

When to consider getting a hard money loan

Hard money loans are used as investment tools by investors. They are useful in a few situations, such as:

• Unable to get financing elsewhere. Funding real estate investments is tricky. Traditional mortgages are difficult to get under normal situations. Banks are very cautious of making loans for investments, as opposed to loans for residences. As a result, if you’re looking for investment funds – then get a hard money loan.
• You have a poor credit history. Hard money loans are based off the collateral of the investment, not your ability to repay. Loans made to consumers – as opposed to lenders – are based off your ability to repay the loan. This means if you have a poor credit history, or no stable income – then you might not get approved for a loan.
• You need money. Hard money loans are great so you can get money ASAP. Traditional loans take time. Hard money is very fast. If you need to capitalize on an opportunity immediately, then you can get a hard money loan. If you can wait several weeks, then it’s better to get a hard money loan.

When to avoid hard money loans

Hard money loans open doors, and can close doors too. Here are situations where you should avoid these types of loans.

• You are in a buyers market. If you want to sell the home after fixing it up, and homes aren’t selling well – then you might fail. If your hard money loan is due before you sell it, then you’ll need to refinance, or be foreclosed upon by the hard money lender.
• You don’t have a refinancing plan in place. Unless you sell your home before the loan comes due, you will have to refinance the hard money loan. You should have a plan in place to refinance the loan, and know what the requirements are to conduct a refinance of the property.
• Other options are available. Hard money loans are expensive. Make sure you look into other options always.

What are the benefits of hard money loans

Hard money loans come many benefits. The biggest benefit is the fact that borrowers can borrow money without going through conventional financing institutions. Due to the fact hard money loan come private lenders, there are different guidelines.

Emergency situations: Hard money loans can be tapped for emergency situations. This is because hard money lenders only focus on the value of the collateral. Traditional lenders however focus on your ability to repay the loan. This is a huge difference, because it changes how the deal is evaluated. Once you’ve developed a good relationship with a hard money lender, it’s likely you can have your hard money loans approved within hours. This makes these types of loans convenient for people looking for bridge lending/emergency loans, without having to go through the length institutional process.

Flexible: It’s a fact – hard money loans are more flexible compared to traditional loans. Hard money lenders do not subject you to rigid procedures and guidelines, unlike traditional banks. Hard money lenders are giving you money because they’ve assessed your collateral – and have made a determination that its value is enough to justify the loan. Hard money lenders will look at the value of the property, and determine if by selling it – they can recoup their investment. If the answer is yes, then you get the loan! Because they are distill the issue to this one basic question – they are able to offer loans fast. In some cases, approval can take a few hours unlike loans from institutions.

Why might you not want hard money loan?

There’s some reasons why a hard money loan is a bad idea. For example, they often come with high interest rates. This is because a hard money lender is taking on substantial risk, and wants to be compensated for that risk. The high interest rates might make a hard money loan unattractive as a source of financing. Moreover, hard money lenders have shorter terms than traditional lenders. For example, institutional banks might offer 30 year loans – whereas hard money lenders only offer a 1-2 year term.

With Interest Rates So Low, Why Use Hard Money?

With interest rates so low, anyone looking to invest has to wonder: why should I use hard money, instead of traditional loans?

Here’s the reality – if you’re looking to buy real estate for investment purposes, you might not be able to use bank financing. The meltdown of 2008 was in part, due to a lot of people using bank financing for investment purposes in real estate. When the crash happened – banks were stuck holding all of that bad debt. Banks have so much business when it comes to consumer home loans, and refinances, they don’t care for the extra investment business. Second, even if they choose to help you with your investment property – they take too long.

Most real estate investors don’t have 45-60 days to close a deal. Deals go to investors who can close in 10-12 days. This is why you might turn to hard money. Hard money lenders can help you acquire property fast. At Delancey Street, we can fund loans in 5-10 business days. In addition, we can waive things like appraisals, and reports on the property, and other underwriting guidelines. Moreover, we’re not FICO driven – so we don’t waste time.

In today’s competitive market, you need to be nimble as a real estate investor. Opportunities are tight, and few, so you need to be able to capitalize on them SAP. Moreover, you need a partner who understand the needs of a real estate investor. Having a good hard money broker can be the difference between making millions, and sitting on the sidelines.

How do hard money loans work

These types of loans aren’t available to simply everyone. Most hard money lenders do not give out hard loans for non-investment reasons. If your planning to use loans to fund your own private home, then that’s unlikely. Some hard money lenders might make loans to consumers, but this can result in numerous problems. Loans are only given for a short period of time – usually 4-24 months. Most hard money loans only require you to make interest payments, or in some cases – no payment at all. Rather than making payments each month towards the principal and interest – loans give you more flexibility. Hard money loans carry many perks, which hold appeal to investors: you get quick financing, short loan term lengths, and an easy application process.

It’s very common for hard money loans to expect you to bring some of your own money to the deal. Each hard money lender requires a certain amount of money based on the loan to value ratio, or the after repair value ratio of the property. For example, if a hard money lender will give you a loan based on 80% off the LTV ratio, and you want to purchase a house worth $100,000 – then you need to have $20,000 of your own cash.

Hard money loans versus traditional bank loans

Hard money and traditional bank loan are different. They are tools for buying property, but that’s where similarities end. Loans are given out by private individuals and companies. Each hard money loan can carry different terms, – not only from another loan, but also from a traditional bank loan. Some have short repayment periods, some have high interest rates. Compared with conventional loans, they are much easier to qualify for and be approved for. The underwriting standards for consumer loans are similar to traditional mortgages.

– Hard money lenders ignore bad credit, foreclosures, or bankruptcies, or other issues that prevent you from getting a traditional mortgage.

– Hard money lenders focus on the value of your real estate which serves as collateral for the hard money loan, and they care about your loan to value ratio.

– Regular banks focus on the borrower’s credit rating and income.

Most hard money lenders will not give you money to purchase your primary residence, because hard money lenders will have to abide by Dodd-Frank regulation, which requires them to verify a borrower’s capability to repay the loan. Lenders will have to analyze the person’s income, and expenses, in order to make sure the debt to income ratio isn’t too high. Additionally, if a hard money lender loans to private individuals, they are required to undergo licensing requirements with the National Multistate Licensing System and Registry. The requires both federal test and licensing, and a state test – so it’s a very expensive process. It’s a reason why most hard money lenders don’t lend to owner occupied homes.

Are hard money loans only for distressed borrowers?

Not at all. While it is true, some borrowers are in distress when looking for hard money – in many cases it’s investors who turn to hard money.

Do you lend on owner-occupied properties?

Delancey Street only provides financing for investment properties. It means the borrower cannot live on the property at any time during the loan. This is due to complications arising from the Dodd-Frank laws.

Are there any state-specific limitations?

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How much do hard money lenders typically charge?

Typically, hard money lenders will charge interest rates in anywhere from 7% – 12%. They may also charge origination fees, which range from 1-3. It’s not uncommon for hard money lenders to include pre-payment penalties which are used to guarantee the hard money lender a specific profit.

What’s the maximum loan to cost for hard money lenders?

Hard money lenders look at two different measures when looking at deals. They look at LOAN TO COST, and LOAN TO VALUE. Most hard money lenders won’t exceed a loan to cost ratio of 75%. Most hard money lenders will keep their loan to value ratio around 60-65%. Hard money lenders may use the lesser of the LTC or LTV, to assess the risk of a loan.

Why does the hard money lender need title insurance

Title insurance is critical because it helps protect both the borrower and hard money lender. In the event there are issues during the property sale, and there is a competing claim of ownership – then the title insurance company is responsible for paying any fees necessary to the claimant.

What documents do I need for a hard money loan

Typical documents you’ll need are a Note, and a Deed of Trust. Depending on the value of the asset, the hard money lender might ask for documentation such as a personal guarantee from the borrower, past tax returns, proof of income, and assurances that the borrower has access to cash to perform whatever renovation the borrower is intending on doing.

Should you use a hard money loan?

There are many benefits of hard money loans. The term “hard,” in is a misnomer. These loan types provide a simple way for real estate investors to get funding.

• Get quick money. Instead of spending weeks/months to to get a hard money loan – a real estate investor can get  in a week, or less.
• Lenient. Regular mortgages have stringent standards. But hard money lenders focus on the collateral used for the loan.
• Flexible terms. You’re working with private individuals and firms – not massive banks. This means hard money lenders are more likely to create custom loans, tailor made, to your situation.
• Increased opportunities. We provide you with large amounts of fast cash. It can mean the difference between missing a deal, or not.

Why do hard money lenders exist?

These hard money lenders exist because many investors need a quick loan when looking for a real estate loan. Banks and other lenders offer low interest rates because they care immensely about your ability to repay the loan.