Private money lenders in real estate servicing California for over 30 years

Wikipedia defines a private money loan as, “lending money to a company or individual by a private individual or organization.”1  Essentially, private money loans are loans made by individuals or groups of individuals to a borrower.
Private money loans differ from conventional loans because there is an elevated risk for the investor.  Typically, borrowers use private money when a conventional loan is unobtainable or conventional lenders are moving too slowly.  Because of the increased risk and the need for quick funding, the rate of return for the investor, and, consequently, the interest rate for the borrower are somewhat higher than conventional loans.

There are a number of reasons why borrowers use private money. Typically, it comes down to one of two (or both) factors:

1) The borrower cannot obtain a conventional bank loan:

• Self-Employed

• Have loans on other properties
• Below average or no credit
• Recent short sale (4 year waiting period for conventional loan)
• Recent bankruptcy (7 year waiting period for conventional loan)
• Recent foreclosure (4 year waiting period for conventional loan
• Borrower desires to hold title in a LLC, Corporation or Trust entity.

2) The borrower needs funds quickly:

• Institutional lender is taking too long to underwrite: fear of losing the deal/property
• Needs cash to move quickly on a foreclosure or short sale
• Limited window or short escrow; not enough time to deal with conventional lender timelines

Can you drive by a stock?  Do you have collateral if a stock stops providing a return on investment?  The answer is no, and the key word is protection. In the event of a foreclosure, the worst that can happen is that you end up owning the property.
Deed of Trust provides an 8% or more return on investment paid out monthly, with a balloon payment of the initial investment due on the maturity date specified in the note.  They provide a steady stream of income with the asset as collateral to protect your initial investment. In addition, a performing trust deed can be sold with relative ease, providing liquidity, if necessary.

We only lend on real property. We lend on raw land, commercial property, residential properties for investment, residential properties that are owner occupied and construction loans.

Our loan size is typically in the range of $100K to $3M.

Loan terms range in duration from one to five years.

As a borrower, your loan will be evaluated quickly (usually within a matter of hours).  We do our own underwriting. We have no upfront fees, can close in as little as 3 days (our strong investor core allows us to be quick and decisive), require minimal documentation, have no prepayment penalties on owner occupied properties, offer flexible and creative loan structures (i.e., using other real property as collateral to bring your loan-­‐to value ratio in line, and can work with a variety of legal entities (individuals, trusts, corporations, partnerships, foreign entities, etc.).

As an investor, your security and a steady stream of income are our top priorities. We are extremely proud of our strong core of investors.  We value properties on the conservative side. In today's age, property value information is very available i.e., Redfin or Zillow for you to use in checking a value of a property.

Our loans are all secured by first Deeds of Trust. There are a variety of variables (loan-­to-­value ratio, credit of the borrower, location of the property, etc.) that play a role in determining the interest rate an investor will require to fund a private money loan.  Typically, we see interest rates in the neighborhood of 8%.

Yes.  These are paid by the borrower at the time of closing. Typically, the origination fee is two (2) % of the loan amount.

We usually require a LTV of under 70% of the property value.
LTV is the single most important factor in determining whether we can or cannot fund a loan. The lower the LTV, the more the borrower has invested. The more “skin in the game” the borrower has, the more comfortable the investor feels that his or her investment is secure.

An appraisal is not always necessary.  We use comparable properties in the area, pictures and a drive by to determine what we believe is the value. We are Real Estate Brokers with over 30 years experience and belong to multiple listing services and title company customer service organizations.

We expect our lenders to also be comfortable with real estate investments and do their own due diligence checking property values using web Real Estate sites such as Zillow or Redfin to make sure they are comfortable with the loan amount because in the worst case possible scenario you could own the property for your loan amount.