Blog

Read our most recent blog posts for information and updates on private money investing, hard money financing, the housing market and everything in between.

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Can You Trust Investing in Trust Deeds? The Pros and Cons

Investing can be tricky, no matter how financially savvy you are. With the current state of flux in the real estate market, it is no wonder people have questions about whether it's smart to invest in trust deeds. Here's the low down.

What Is Trust Deed Investing?

When someone loans money to someone else (generally called the "Borrower") and the Borrower puts up real estate as collateral, its a trust deed investment. The real estate could be practically any property the Borrower owns, whether it's vacant, residential, commercial, or has tenants. When you invest in a trust deed, you...

Hard Money and Private Money Rental Property Loans

Do you want to invest in the rental property market? Your timing couldn't be better. While the mild lull in the property market continues, now's the time to invest in low-cost properties with the aim of making a neat monthly profit. Before you do, however, you need to consider which form of financing you'll choose. More and more real estate investors are using hard money and private money rental property loans. If you find that traditional finance gives you a headache, it's worth seeing whether they'll work for you too.

What is a private money rental property loan?

In many...

How to Know When to Switch Loan Providers

If you've been involved in the property market for a while, you may have stuck with the same lender through thick and thin. While there's something to be said for loyalty, at the end of the day you need make sure you are looking after your own interests by knowing when it's the right time to switch loan providers. Whether it's expanded loan product offerings, faster loan approval, or increased speed of closing, choosing a new lender can ultimately help you increase your return on investment for your real estate projects.

Are your needs being met? Do you have access...

Hard Money and Private Money Blanket Loans

Although owning and investing in multiple properties is a smart move, it can also feel like an administrative headache. One of the biggest sources of frustration you may encounter is juggling your financial commitments. Obtaining several sources of financing and repaying them all individually can make accounting difficult. As you may already know, failing to streamline your accounts is a fast track to reducing your profits.

As an alternative to achieving several funding sources, you may want to consider a blanket loan. Knowing more about what they are, how you’ll benefit from using one, and ways to obtain a...

Hard Money and Private Money Bridge Loans

Like many people, you probably find the world of investment properties exhilarating. At the same time, you probably experience a lot of the frustrations that come with financing your prospective properties. As the real estate market continues to thrive, there’s a lot of scope for buying fixer uppers and flipping them for a profit. If you want to seize on your latest opportunity quickly, but you feel as though securing finance could cause a delay, you may want to consider a hard money or private money bridge loan.

What Are Hard Money and Private Money Bridge Loans?

Hard money...

Hard Money and Private Money Fix & Flip Loans

If you’re eyeballing a prospective investment property to rehab and you need to finance it quickly, you might want to consider a fix and flip loan. As an investment financing option that’s best secured through a broker, this type of loan is excellent if you’re keen to revamp your property portfolio.

What Is a Fix & Flip Loan and When Will You Need to Use One?

Hard money fix and flip loans allow those who are renovating properties to finance their purchase using existing equity. Said equity usually comes in the form of a property, allowing you to secure...

Hard Money and Private Money Ground-Up Construction Loans

If you’re working in the construction industry, you’re probably already aware that private money lenders have a longstanding history with developers. While banks may sometimes see your efforts as carrying too much risk, new construction loans come with the potential for private lenders. Since the recession, those offering private money construction loans have begun to exercise a little more caution, but they still remain as a viable option.

What is a hard money new construction loan?

A hard money construction loan is a form of finance provided to those who are planning a new residential or commercial building project....

Private Money 101: A Basic Guide to Understanding Hard Money Loans

Hard money loans are often misunderstood, in part because of shady lenders who tainted this type of loan's reputation by providing risky loans that left real estate investors dry with no property to show for it. Now it’s time to dispel the myths and talk about what hard money lending is really all about. This article will provide you with some basic information to get you started.

What Is a Hard Money Loan?

A hard money loan is a short-term loan secured by real estate and funded by private investors as opposed to conventional lenders such as credit unions or...

Get Started in Trust Deed Investing: Why Should I Use a Broker?

Trust Deed Investing Overview

Private money investing and hard money lending go hand-in-hand as inverse functions. Private money lending is different from a traditional bank loan. Borrowers receive funds from private individuals or groups who are looking to invest money on a relatively short-term basis.

The terms hard money lending and private money lending are often used interchangeably. Hard money loans are often used to finance real estate projects. Private investors often lend money based on the value of the property in question, which is called asset-based lending. Lenders can be individuals, small mortgage brokers familiar with real estate investments,...

Hard Money and Private Money Commercial Loans

Where there’s commercial real estate, there’s usually money. While most people associate buying and selling property to make a profit with the residential market, it’s not unusual to take the same approach to commercial properties. If you’re seeking a commercial loan and you’re coming up against barriers, you might find that hard money financing is an ideal option. Choosing a private commercial real estate loan is an excellent way to secure cash quickly. If you’re ready to transform the way you approach commercial finance, let’s explore the world of private lending together.

What is a hard money commercial loan?

Overall,...

Hard Money & Private Money Hotel Financing

Over the past few years, we’ve received dozens of hard money and private money hotel financing requests from existing owners doing a major overhaul as well as buyers seeking acquisition funds to stabilize a property before taking out a long-term bank loan. This blog post outlines a recent competitively priced private money hotel acquisition loan for an experienced operator that we believe would benefit many other hotel owners.

As mentioned above, the buyer was an experienced hotel operator, owning several brands in Northern and Central California. Upon acquisition of the hotel, the new owner would convert the property...

5 to 7-Year Residential 1-4 Unit Rental Property Loan

We’ve started working with a new lender that has a niche 5 to 7-Year Residential 1-4 Unit Rental Property Loan program intended for the investor borrower who cannot quite qualify for a conventional loan but is stronger and warrants better loan pricing than traditional hard money offers.

There could be several reasons that a borrower wouldn’t qualify for conventional financing (Fannie Mae/Freddie Mac), including:

Office Building Private Money Loan Financing

Most every blog and portfolio post on this site have been written about loans that we successfully closed. Not this one. Today we talk about a nearly $11,000,000 office building private money loan financing scenario that we lost out on by 25 basis points.

The buyers were seeking 24- to 36-month private money financing to acquire an office building in Southern California that was being renovated from a unique configuration designed for the seller’s business into a standard office building. Construction was scheduled to take another 5-6 months, possibly longer, as new tenants would require specific arrangements for...

Financing Options for California Cannabis Landlords

Throughout the past year, I received dozens of calls from commercial property owners who rent a portion or all their building out to cannabis-related businesses. They are seeking information about what kind of loan they’ll be able to refinance into after their existing bank loan matures and comes due in the near future.

First, a little background on real estate lending to cannabis businesses:

At present, and probably for the foreseeable future thanks to United States Attorney General Jeff Sessions’ recent public statements, banks cannot lend directly to a cannabis-related business for real estate purposes. Banks also cannot accept...

Hard Money Business Purpose HELOC

Believe it or not, there is such a thing as a hard money business purpose home equity line of credit (HELOC) available in California for residential and commercial properties. At First Capital Trust Deeds, we have closed a few of these loans over the past couple of months and continue receiving inquiries from self-employed real estate investors every month for the program.

The hard money HELOC program works just like a bank HELOC in that borrowers are able to draw upon the line of credit and pay down the balance at any time during the duration of the...

The Downside of House Flipping

In our business of originating hard money fix and flip financing on renovation projects, we frequently see some ugly houses that are either outdated or have been neglected for many years. However, it’s not often that we see some really, really bad cases in house flipping where the former homeowner lived for many years in a house infested with black mold and rats living in plain sight.

Recently we had a loan scenario in Oregon come to us where the former homeowner had been incapable of maintaining the home for many years and the living situation got out of control....

8 Things to Know About Owner Occupied Private Money Loans

A portion of our business at First Capital Trust Deeds comes from home buyers who need to use owner occupied private money loans to close on the acquisition of a new property. Most of the time, since we provide private money loans and hard money loans, we are the loan option of last resort since most home buyers prefer the ultra-low interest rates and favorable terms of conventional financing.

If you cannot qualify for a conventional loan but have 30-40% down payment, FCTD may be able to provide an owner occupied private money loan as a short-term solution to...

Portland Home Prices Going Nuts – But for How Long?

Portland home prices rose 11.80% over the past Year-Over-Year (YOY) period from January 2015 to January 2016, which is starting to put a lot of pressure on buyers who are seeing the bidding wars escalate on starter homes all the way up into the higher-end market.  Below is a chart of the top twenty metropolitan markets and the home price appreciation figures with Portland leading the way nationally:

Why is Portland leading the United States in home price appreciation over the past year?

There are several reasons which aren't especially unique to Portland, but...

Know Your Exit Strategy Before Taking Out a Hard Money Loan

Having a definitive exit strategy is one of the most important things to determine for a borrower who utilizes private money or hard money financing to acquire real estate. Hard money loans are usually short-term in duration and more expensive in comparison to traditional bank financing, with terms ranging anywhere from nine months to three years and interest rates starting around 7.99% to 12.00%. Therefore, it's best that potential hard money borrowers know what they are getting into and how they will get out of the loan before...

What Are the Costs of a Hard Money Loan?

We receive several dozen hard money loan inquiries each week and nearly 100% of the time the first question we're asked is, "What are the costs of a hard money loan?" And then it goes to, "How many points?  Are there any other fees?  What's the interest rate of the hard money loan?  Is there a prepayment penalty?"

If someone isn't asking about price/costs/points/fees/rates/prepayment penalties on a hard money loan, or doesn't have a slight degree of sticker shock, then it leads us to believe that something's up.

For...

Lack of Affordable Housing Supply Keeps Driving Home Prices Up

Business Insider had an excellent article posted on Yahoo Finance about the current housing crisis that many local markets are facing - limited affordable housing supply.

The next housing crisis is here.

And this time the crisis is all about one thing: supply.

Following the mid-aughts housing bubble that saw homeowners across the country get themselves upside down in homes and mortgages they couldn't ever afford to repay—a crisis that was as much about too much supply as it was about too much bad financing—the market has gone...

Do 3.0-4.0% Hard Money Loan Actually Exist?

Sorry to ruin the suspense but 3.00% to 4.00% rates on hard money loans don’t exist. Yet, that doesn’t keep prospective borrowers and other mortgage brokers from requesting hard money loans priced at these interest rates every month.

I completely understand the “If you don’t ask for it, you won’t get it” concept. As a customer of any product or service, you should ask for the best pricing or a discount or even an added bonus offer like infomercials give us in the, “Oh but wait, there’s more!” offer.

But asking for 3.00% to 4.00% financing at 75% LTV on...

Lenders Becoming More Cautious on Cash-Out Refinances

Over the past two weeks, we’ve had three different lenders (one investment fund, one family office, and one individual), tell us that they’re limiting the Loan-To-Value (LTV) they’re giving on hard money cash-out refinances.

The primary reason each cited for cutting back was that the majority of the defaults in their loan portfolio are from cash-out refinances on loans originated 3-12 months ago. Another reason is that they believe that the market, namely the current 12-month fix and flip private money lending cycle, may be reaching its final phase and they’d like to limit their exposure to potential problematic cash-out...

How Business Purpose Loans Become Consumer Purpose

Every month or so, we’ll receive an application for a 12-month business purpose hard money loan on an investment property with plenty of equity to come in below the 65% LTV threshold.  Yet during the process of underwriting the loan, we realize that what looked like a straight forward business purpose bridge loan on an investment property has now become a consumer purpose hard money loan.

This may not seem like a big deal to most people but in the hard money and private money lending world, where many of the investment funds and family offices lend for business purpose...

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