Frequently Asked Questions for Borrowers
Below are some of the most frequently asked questions we get about Private Money loans at Verdeo Capital. You may also find our Private Money informational videos helpful to understand how we operate.
What is a Private Money loan?
Private Money is the term used for loans funded by private parties who want a safe and high return. Verdeo Capital is a broker who arranges loans for private investors. We work directly with Real Estate Investors, Mortgage Brokers, and Realtors who use these funds to purchase properties.
Real estate investors use Private Money when they are unable to or do not have time to obtain financing from more conventional sources.
There are many types of Private Money loans. Verdeo Capital specializes in purchase money first trust deeds to investors who purchase homes at a substantial discount. Verdeo Capital will do loans on units. Construction loans will be considered based on the individual deal and existing market conditions.
Do I have to pre-qualify?
Preferably, yes. It saves you time when you have deal ready to go.
How do I get pre-qualified for a Private Money loan with Verdeo Capital?
It’s really simple. All you have to do is click on Loan Application.
Fill out the required information completely including approximate credit score and funds available. Available funds may include cash on-hand, credit lines, maturing CDs, and stock accounts with borrowing power. Not included would be small balance credit cards, IRAs or retirement accounts.
If you have a specific property for which you are interested in obtaining a loan, make sure to answer “yes” to the question “Is the property in escrow?” Doing so takes you through a different process which gives us the information we need to act quickly.
Once you submit an application, you’ll be given instruction via email and on the site for next steps. Upon approval, you will be given a “Pre-Approval Letter.” This letter in most cases will be treated the same as cash.
What is Verdeo Capital looking for when considering my application?
Verdeo Capital first and foremost wants to make sure you have a positive outcome on your transaction. We will review your ability to repay, credit-to-debt ratio, cash reserves, the area in which you plan to invest, and also your experience level.
Larger cash reserves can overcome lesser credit and lack of steady income but not vise-versa. Experience is good but not necessary. Verdeo Capital is constantly finding and helping new clients.
First time investors encouraged to apply!
Do you provide a “Pre-Approval Letter”?
Yes! Upon review of the application, a general letter of credit will be issued to those who qualify. However, this is not a commitment to fund any transaction at any certain amount. Nor is it a “proof of funds” letter.
Amount of the letter of credit will usually range between $50,000 and $1.5 million dollars. Amount will be based on experience, ability to make monthly payments, and in a large part, on the client’s cash reserves.
People who do not qualify will be contacted and suggestions made on possible solutions to various issues.
If you do not hear back from someone within 48 to 72 hours please feel free to call the office at (916) 580-1240.
What States do you fund in?
We only provide Private Money loans in California.
How long does it take to close the loan?
Our average closing is under 10 business days. However, if we have all the documentation, such as appraisal, escrow instructions, proof of insurance, and a clean preliminary title report, we can close in as little as 3 days. Each transaction is handled on a case by case scenario. If there is a special requirement, we may be able to accommodate you. It is extremely important we have escrow instructions as quickly as possible and all documents signed and returned in a timely fashion. Speed for your transaction is very dependent on your response time.
What types of property do you fund?
Verdeo Capital specializes in purchase money first trust deeds to investors who purchase homes at a substantial discount with the intent to repair and resell the property.
Verdeo Capital does not do owner-occupied or commercial loans at this time. Construction loans will be considered based on the individual deal, investor experience, and existing market conditions.
What if I have a bad credit score?
If you have a low FICO score, Verdeo Capital may still fund your loan but may need you to come up with more cash down to lower our loan to value.
Will you roll costs into your loan?
Verdeo Capital may roll some of the repair and loan costs into the loan if the LTV remains under 65%. In today’s volatile market, borrowers will have approximately 35% in the deal by way of down payment and fees associated with the loan. If the loan is a construction loan, the borrower will own the lot free and clear as well as have plans and permits approved and completed.
All loans are subject to change as the market shifts. It is our goal to make both the private lender and borrower successful in every transaction. Our reputation of accomplishing this goal has allowed to continually grow, even in tough markets.
Do you fund auction purchases? How does it work?
Yes we do! This should not be confused with trustee sale financing which we do not fund directly, only refinance.
For standard auctions like REDC, Williams and Williams, and Hudson and Marshall, Verdeo Capital CANNOT GUARANTEE FUNDING FOR YOUR PURCHASE. It’s best to submit an online loan application before you go to the auction to make sure your thought process for determining property value is in line with Verdeo Capital s and that you have a pre-approval letter in hand.
Every auction company is a little different, and you will need to find out what each individual auction company requires. Requirements and procedures, including deposits, working with Brokers/Realtors, and percentage at closing, can change from auction to auction and even within the same company. Always read the website or auction catalog before attending.
Most auctions will require a deposit in the form of a cashier s check ($2,500-$5,000) to bid. If you are the winning bidder, you will be required to put up money up to 5% of the purchase price. Again, this will vary per auction and will vary depending on the number of properties you purchase.
You will be responsible for the deposit to bid at auction and the down payment at the auction. Once you have purchased, typically you will have 30 days to close the transaction. Verdeo Capital can perform much faster than required in this scenario as long as we’re informed immediately of the intent to fund.
If you have made a marginal deal where we believe you are in jeopardy of losing money or our investors money would be at risk, Verdeo Capital will recommend you find another Private Money lender, or in the worst case scenario, even suggest you walk away from your down payment.
It is extremely important to do your due diligence when purchasing at auction as your down payment will almost ALWAYS be at risk if you decide not to make the purchase.
Can I live in the house during the course of the loan?
No. Verdeo Capital only funds on non-owner occupied inventory.
Are there prepayment penalties?
No. That’s one of the main reasons investors work with Private Money lenders.
Can Verdeo Capital value a property for me?
No. The amount of inquires we receive on a daily basis prevents us from processing these requests. Shad will be glad to talk to you about how you arrived at your value. However, property value and repair estimates are the sole responsibility of the investor. Knowing how to estimate properly is a critical skill for investors.
Once you have a deal under contract, we will quickly comp out the property for value before turning it over to our appraiser. If at any time we feel your value is incorrect, we will advise you to drop out of the transaction.
Will auctions and REO agents know what Private Money is and accept Verdeo Capital’s letter? What if they say no?
Most REO agents and auction companies are familiar with letters of credit from Private Money lenders. If for some reason you have trouble, have the agent or auction company call our office during regular business hours. Shad has had this particular conversation many times and usually the agent feels much better after they call.
What if I have a foreclosure on my record?
Much like credit score issues, your foreclosure record alone will not dictate your application approval. The number one reason people are denied is lack of cash reserves. If this is the case, seek out a partner who may have the cash reserves but not the time or energy to find the deals. When a money partner is involved, Verdeo Capital will require proof of funds and a 35% down payment on the transaction. Continue to educate yourself and network.
I’ve been DENIED! What now?
In certain cases, especially in a down market, Verdeo Capital will have to err on the side of caution for our private money investor. Poor credit score, lack of experience, no past relationship, and/or marginal real estate deals may hinder us from offering a proof of funds letter.
If this is the case, we highly recommend several things:
Cash is king in a down market. While lack of cash is part of the reason an investor needs access to Private Money, Verdeo Capital must consider an investor’s liquidity and ability to pay as promised. At the end of the day, we are responsible for our private investors’ money, and we do everything in our power to keep both sides as safe and as profitable as possible. An investor can increase liquidity and cash availability via partnerships, credit lines, or simply saving.
Fix that credit score! No excuses! We all hit bumps in the road, but this will continue to hinder your future investing endeavors if you do not address this problem. We highly recommend our good friend Philip Tirone at www.7stepsto720.com for insights into this matter.
Do your homework. Why make costly mistakes when you can learn from those with experience and who have already made the mistakes? Talk to other successful investors in your area and see how they learned the tools of the trade.
Find a partner. If you find yourself in the position where money will take a while to raise or you lack experience, look for other investors who might be able to use a skill that you can currently provide.
Get involved. Check out your local investment club and stay up-to-date on trends and the current market. Investment clubs are invaluable for networking and are an unbeatable source of information.
Do you do broker referrals?
No.
Do you fund trustee sales?
Verdeo Capital does fund trustee sale by way of refinance. Leverage is a great way to increase your buying power.
Verdeo Capital does not give investors money to purchase at the court house steps. Instead, once an investor is the winning bidder on a property at trustee sale, the investor should place a complete loan application in on our website immediately. This allows us to open escrow so when the trustee’s deed is obtained by the investor, funding happens in a few business day.