Q. I want to borrow money based on the After Repair Value (ARV) of the investment property I'm purchasing or one that I own. Is this something you allow?
A. Yes! We love flippers! If the deal makes sense, we will help get it done. Speak to a loan officer for more details.
Q. How do you decide the amount to lend?
A. It is based on the property, the type of transaction, and your membership in any of our special programs. For most transactions, we lend up to 80% of the purchase price or 65% of the as-is, or after-repair appraised value (whichever is less). Ask a loan officer about the special terms available through our membership programs and special purpose loans.
Q. Can I use my free and clear property to do more investing?
A. Yes. It may be used as cross-collateral or used for a cash-out refinance. That is a great strategy! If you have properties that are completely paid for with no liens against them, we can do a cash-out refinance to provide funds for other investments. You can also use them as cross-collateral for your real estate investing. We use both your subject property and your free and clear property as security for the loan. In doing that, we can lend up to 65% of the as-is combined value of the two properties. That is often enough to purchase your subject property and rehab it. If you have free and clear properties, mention that on your next deal!
Q. I need 100% financing. Can you do that?
A. Yes. Ask a loan officer for more details. If you provide more than one property as security, as described above in regard to cross-collateral, we can indeed provide 100% financing. If you don't have free and clear property, find a partner who does! Sharing half of a nice profit beats not being able to seal the deal! Many of our investors also use seller-carryback to do the same thing. We recommend finding deals and purchasing a property below appraised value as the best way to secure 100% financing.
Q. Will you lend for both the purchase and the repairs?
A. Yes, for the right deals. If the numbers work and we expect you to be able to make a profit, we will loan on ARV. We recommend you have solid experience doing or managing such repair work. You will need to supply licensed contractor bids as well as meet certain other requirements. Bring us the deal and let's discuss it.
Q. How can I do deals in my IRA?
A. You should seek legal and financial advice first, as you must have a true, self-directed IRA. There are many IRA administrators that offer such accounts. You will then buy the property, furnish the earnest money, apply for the loan, and pay costs, all in the name of the IRA. All profit is also put back into the IRA. Please contact your legal or financial advisor for details, or search self-directed IRA custodians online to learn more about your options.
Q. What are your rates and loan origination fees?
A. Our loans are asset-based, and our decisions are logic based. That means we base our decisions about funding and rates on the perceived risk associated with the property. If you have a property under contract, submit it. Our rates are competitive in the private money market, but we save our best rates for our safest clients. Get a property under contract and submit it to become one of our repeat clients!
Q. Why won't you lend on owner-occupied properties?
A. Legal and regulatory reasons. Our current business model is to provide bridge loans to real estate investors for terms ranging from 3 to 24 months. Almost no homeowners need such a short loan. As a result, it is not cost-effective for us to implement the complex and restrictive processes and rules required by regulatory agencies to do business with owner-occupants.
Q. How long does it take to close a transaction start to finish?
A. Three to four days after we receive all required documentation, which can take three to four weeks. The key factor is the amount of time it takes you and your team to supply all the supporting documentation. We can do our part in three to four days, but first-time borrowers rarely get us the documents quickly enough and complete enough to meet that. Aim for 30 days or more whenever you can. Remember: If the amount of time needed to close is a factor, you probably have competition, and competition rarely translates into a good deal. Bring your deal in to discuss it with us.
Q. Is credit the deciding factor in Buster's Capital LLC's decision?
A. Our loans are asset-based so, we base our loans on the value of the asset. However, we do require a credit report to view your payment history. Please don't be afraid to submit an application. If you tell us the story of what is going on, we will listen.
Q. How much does the appraisal cost?
A. They are done by local appraisers charging the going rate for your specific market, varying between $300 and $600. The appraisal price is also going to depend on the property type and its location. A typical single-family residence, condo, townhouse or manufactured home may cost between $395 and $575. Meanwhile, multi-family units may cost between $550 and $645. A rural location may also increase the cost due to added drive time or appraiser availability.
Q. I am a sole proprietor. Can I still get a loan?
A. Yes, if you create an LLC, a corporation, an IRA, or a trust before the close of escrow.
Q. I am seeing a lot of good deals on auction sites and at live auctions. How can I procure funds to have cashier's checks ready to pay for the property at the auction?
A. Our funding is solely based on properties you already control via ownership or contract. We cannot provide cash in advance for auctions that require immediate payment. Since all loans are asset-based, we must have a lien as security on the property you own. The primary ways to do what you ask are for you to have another property that is free and clear and you take out a loan against it. Alternatively, you can find a professional auction bidder who will supply the bidding presence and the purchase cash in exchange for a fee (often $5,000 to $10,000 or a percentage) with the rest of the funds paid later at the close of escrow.
Q. Why do I need to buy an appraisal when I have a CMA or an existing appraisal?
A. Buster's Capital LLC requires a recent (less than 90 days), independent, standards-based, third-party, as-is evaluation of every property used as security. BPOs, CMAs, or outside appraisals do not generally satisfy all those requirements. If you have a recent as-is appraisal, you can pay for one of our appraisers to do a desk review instead. Your best bet is to go with our appraisers. They are local to your market, work at competitive rates, and do the appraisal the way we need it to be done. The appraisal report will come to us and you will receive a copy.