Questions about hard money lending or real estate investing?

What is a hard money loan?

A hard money loan refers to a loan that is secured by a tangible or "hard" asset (i.e. real estate). They are most commonly used to acquire and repair distressed properties in order to either sell them for a profit or keep them as a rental property. Real estate investors regularly use hard money loans to leverage their own capital and flip a greater number of properties.

What is a hard money lender?

A hard money lender is an individual or company that provides loans secured by an investment property to real estate investors and developers. These lenders make their money back via monthly interest payments and a loan payoff after the property has been sold or refinanced.

How does a hard money loan work?

1. An investor approaches a hard money lender with a potential investment property deal
2. The lender will "underwrite" (analyze) the deal - checking the numbers for the purchase price, construction budget, and after repair value of the property based off of comparables
3. If the numbers check out, the lender will provide the investor with their down payment amount, rates, and terms for a hard money loan
4. Once the lender and investor reach an agreement, the lender provides a Lender Letter or a Proof of Funds letter so that they can get the property under contract
5. Once the property is under contract, the lender will begin collecting the documents needed for closing on the property
6. Once all documents are collected and the property title is clear, the investor can close on the property
7. Each month, investors will make interest-only payments on their loan
8. If the loan includes a construction budget, construction draws will be released to the investor as they reach milestones throughout their rehab process (i.e. trashout/demo, framing/MEP, drywall/paint, tiling/flooring, finishes)
9. Once the property is completed and sold, the investor pays back the lender

For more info, check out the How Hard Money Loans Work Infographic!

How do I get a hard money loan?

Securing a hard money loan is relatively simple - it starts with a potential investment property. Once you have selected a property that you would like to purchase, rehab, and sell for profit, contact a lender and supply them with the following:

• Property Address
• Purchase Price
• Estimated Construction Costs
• After Repair Value (ARV)

The lender will underwrite the property deal, meaning they will confirm the ARV using comps, analyze the numbers, and evaluate your unique situation as a borrower. If the deal makes sense they will then provide you with a loan breakdown including your down payment, interest rates, and terms. Once you reach an agreement with the lender you are ready to close your loan secure your investment property.

What are points on a hard money loan?

"Points" refer to percentage points of a total loan amount that are paid up front by a borrower to a hard money lender. Nearly all hard money lenders charge points at the closing of a loan, as their interest rates often times do not generate significant revenue for the company. In a competitive market, lenders will offer the lowest rates possible to win clients, so points are where they can make money on each loan. These points often range anywhere from 2 - 6 percentage points depending on a borrower's level of investing experience, and the property deal itself.

How do I get a Proof of Funds Letter?

Simply contact our sales team today with a specific property in mind and within 20 minutes we’ll send you a signed letter on WCP letterhead that you can submit with your offer.

How do I get a loan breakdown?

All we need is the property address, offer/contract price, estimated renovation costs, and ARV (After Repair Value). With this information, we can underwrite the deal and can provide you with a loan breakdown, with rates, in as little as 20-30 minutes.

Do you lend on primary residences?

No, WCP does not offer mortgages on primary residences. We finance investment properties via commercial loans.

Do I need to use my own capital?

Yes, we require a down payment that fits into our financing metrics. How much money you will need to bring to the table will depend on the deal itself as well as your specific financial scenario.

Can I purchase a property under my personal name?

No, WCP lends only to business entities (LLC’s, C Corps, etc.). Registering a business entity is easier than many think, and the process can often be started online through your state government.

Do you offer discounts for repeat borrowers?

At WCP we pride ourselves on building long-term relationships, and are always open to discussing lower rates for our repeat clients.

Do you require a certain credit score?

We prefer to see credit scores of 600+, however, a lower credit score will not necessarily prevent a borrower from securing a loan. In certain cases, a lower credit score may simply affect the loan's interest rate or down payment amount.

Does WCP perform a credit check?

Yes, WCP will perform a credit check after receiving a loan application.

How do I start the process to obtain a hard money loan?

Getting started is easy, you can submit a quick online application, call us at 703.348.0549, or email us at info@wcp.team to speak with our team of lending experts today!

How fast can I get a commitment?

We can provide a Proof of Funds letter in as little as 30 minutes.

How fast can I get a construction draw?

The key to fast draws is providing our inspector access to the property. If the property is on a lockbox and our inspector has immediate access, the draw can be processed ASAP.

How fast can you close?

We can close 48 hours after property title is clear and all documents have been received.

How will funds be transferred to my account?

WCP typically uses ACH transfers to send the funds to our clients, as there are no associated fees. We can also use bank wires at the request of our clients.

What do I need to start the loan process?

To start, you will need an investment property address, an offer/purchase price, estimated renovation costs, and ARV (After Repair Value).

What does LTC stand for?

LTC stands for “Loan to Cost” and is a lending metric based off of the total project cost (purchase price + construction costs) of a property.

What does LTV stand for?

LTV stands for “Loan to Value" and is a lending metric based off of the ARV of a property.

What documents do I need to close a loan?

• Signed Term Sheet
• Commitment Fee Payment – Our commitment fee varies from deal to deal but is typically around $1,400. This covers the attorney fees and appraisal fees.
• Borrower Information- Full Name, Address, Birthdate, SSN (of all LLC members), Purchase and Sale Agreement
• W-9 for Purchasing LLC
• Employer Identification Number (EIN) for Purchasing LLC
• Articles of Organization for Purchasing LLC
• Hazard/Liability Insurance Certificate – This is required for all our deals. If the property is undergoing renovation, then there needs to be a builder’s policy in place.
• Bank Account Information
• Access for our inspector to take pictures of the interior and exterior of the property
• Two of your most recent Tax Returns (i.e. 2016, 2017)

What kind of insurance is required for your hard money loans?

If you’re seeking a loan from us that includes any construction draws, you will need to acquire a builder’s risk policy. This typically covers the loan amount. If you’re refinancing through WCP with no intention of undergoing any renovations, then a simple homeowner’s policy is sufficient.

What is the process for construction draws?

The process is as follows:

• A client notifies us when they have completed a specific milestone of their construction draw schedule and submits a draw request to their Sales Executive for review
• Upon approval, our in-house inspector will visit the property to confirm the completion of repairs
• After approval of the draw request, funds will be sent to the client’s account via ACH and should appear the next day

What type of fees does WCP have?

There is one pre-settlement fee (typically $1,400) that covers attorney fees and an appraisal. We refer to this as the “Commitment Fee.” Our only other standard fee is a Payoff Fee of $50 per Payoff Request and $90 for an Expedited Payoff Request. Those are the only standard fees you have to worry about as a borrow since we don’t believe in “junk fees” such as draw/inspection fees.

Does WCP have prepayment penalties?

No, WCP does not assess pre-payment penalties. Our clients are more than welcome to pay off their loan before it matures.

Does WCP provide auto-debit?

To provide exceptional customer service, we provide our clients with the ability to use auto-debit. This provides peace of mind to our clients that they will never make a late payment.

How do I get a payoff request?

For all loan payoff-related requests and inquiries, please call Hailey at (202) 930-7851. Please keep in mind that each Payoff Request comes with a $50 fee, and Expedited Payoffs are $90.

Where do I mail payments to?

2815 Hartland Road, Suite 200, Falls Church, VA 22043

Who do I make payments/checks out to?

Please make all payments/checks payable to WCP Servicing LLC.

How much will WCP lend on a property?

We use either LTV (Loan to Value) or LTC (Loan to Cost) to determine how much we will lend on a property. For LTV, we will lend up to 65% of the ARV (After Repair Value). For LTC, we will lend up to 80% of the purchase price plus construction costs. After calculating both, we will lend on the lower of these two metrics.

What form of payments does WCP accept?

We accept payment via bank wire, ACH, auto-debit, and checks. We do not accept credit cards.