Hard Money is commonly known by several other names, including private loans, rehab loans, bridge loans and construction loans. Hard Money is a form of financing available to purchase property that does not conform to conventional underwriting standards. Hard money loans are used to purchase and rehab distressed properties.
Fill out the contact form on our website to get started. We will go over the process with you, invite you to fill‐out a Hard Money Loan application, and answer any of your questions.
Most of our loans are for 12‐month terms with two possible extensions available, subject to a successful review of the original terms. Additional costs may be incurred when extending the life of the loan.
Once you have found an investment property, you should forward the executed contract to us. After we receive it, we will send you an email to describe the next steps to get your loan started. Generally, we like at least 5 business days from receipt of contract to closing.
- Retail Centers
- Urban Land for Development
Your credit score is reviewed, but it is not the only thing we consider. We look at the value of the property and the loan to value ratio. Your ability to repay the loan and getting our investors paid back is what we will focus on to ensure our mutual success.
Currently, loans are only available in Texas. We focus on the following metro areas: Austin, Dallas, Fort Worth, San Antonio and Houston.
Yes. Thrive Lending will order all inspections. These will include an appraisal, survey, pest inspection and home inspection. The borrower will not be responsible for providing any reports and Thrive Lending will not accept any submitted reports if the borrower does order one of the above.
A hard money loan typically takes 5‐10 business days from when appraisal is received.
We determine loan amount by appraisal. The appraisal is based on the scope of work and what the borrower plans to do to rehab the property. The appraiser will assign an “after repair value” to the property (ARV). In most cases, Thrive Lending will loan up to 70% of the ARV.
The draws are dispersed based on completed work. Thrive Lending does not issue forward draws.
There is an initial rehab inspection to determine the scope of work, and subsequent inspections when draws are requested to determine if the appropriate work has been completed.
Yes, the same inspector will follow the property from the initial rehab inspection to the final draw inspection.
Each loan is different. The number of draws is determined by requests from the borrower. Most clients take two to five draws. Some borrowers will take more draws if the project is large, whereas some will only take one at the end of the rehab.
A draw request is a six‐day process. Within three days, there will be an inspection and three days after the inspection, the borrower should receive a check via registered mail.
There is a set of underwriting guidelines that mirror what Fannie Mae requires. Thrive Lending underwriting decisions are based on the qualifications for a conventional mortgage, regardless of the strategy for the property (flip or rent). Thrive Lending wants to ensure that the borrower has options for getting out of the loan should something not go according to plan. The borrower’s assets play a large role in qualifying.
No, a borrower can still qualify with credit issues, as their assets play a large factor in the qualification process.
Yes, Thrive Lending lends to self‐employed borrowers.
The largest factors are the quality and loan to value of the asset for which you are seeking a loan.
Documentation includes bank statements for the last 30 days, pay stubs for the last 30 days, and complete tax returns (all pages and all schedules) for the past two years.
The minimum that Thrive Lending will lend is $200,000.
We don’t have a minimum credit score.
Yes, a borrower can close in a LLC.
No, a notary can bring the appropriate documents to you.
Although third party closing fees traditional to real estate transactions can be expected, Thrive Lending only collects two fees for closing a loan. The first is a loan origination fee, which is a flat percentage of the loan amount. The second is a processing fee for all of the documentation and administration work involved to close the loan. These fees may differ based on the type of loan you are requesting.
The advantage of using hard money over conventional bank financing is the amount and type of properties it allows you to purchase. Most conventional lenders will not lend money on a distressed property. Whereas hard money is meant to lend on distressed properties and includes money to repair them. The other main advantage is that it takes much less cash to close on a hard money loan versus a conventional loan.
Using financing to invest in any industry comes with inherent risks. The biggest risk when using hard money would be that you cannot pay the money back and your property is foreclosed on. We will do everything to help you succeed and only use foreclosure as a last resort.
Thrive Lending does not report their loans to the credit bureaus; however, using hard money will affect your credit when we pull your credit report. This is considered a “hard inquiry”. Also, Thrive Lending will report a foreclosure to the credit bureaus.
You will be asked to provide current and updated financial documents with every loan. This is to ensure that you will be successful and limit any unnecessary risk.
Is a hard money loan considered “same as cash”, and what does that mean for buying distressed as‐is properties?
When using hard money, most sellers will consider it the same as cash. Hard money does not have any financing contingencies unlike conventional bank financing. This allows you to purchase foreclosures, short sales, and any distressed property that is sold as‐is requiring a cash purchase. Conventional financing doesn’t allow the purchase of distressed properties without repairs being made prior to closing, and most distressed sellers will not perform any repairs.
Leverage is utilizing smaller amounts of capital in order to increase your buying power. Yes, there are fees involved when using hard money but many investors find that it is a small price to pay for the ability to make more money in a shorter time frame.
Each situation is different. There are many factors that will determine how much leverage you can use. The biggest of these factors is the amount of assets that can be converted into cash quickly.
The only things that will prevent a borrower from qualifying are federal tax liens or judgments, and if there is a borrower who simply doesn’t have the appropriate amount of assets. The reason why tax liens and judgments disqualify every borrower is that those liens can be attached to the property’s title and they supersede the lender’s lien.
An appraisal is a licensed appraiser’s opinion of the value of the subject property based on recent properties that are similar in area, size, location, school districts, features and quality, which have sold within the last three to six months.
Thrive Lending will use a rotation of licensed, qualified and independent appraisers based on availability. These appraisers are experienced and qualified to do a “subject to repairs” appraisal. Unlike a typical appraisal, the appraiser must adjust the value based on repairs planned, not just current condition.
The appraiser will use the planned repair budget and rehab inspection to determine the property’s potential value, based on what similar homes in that area have sold for in the last three to six months.
The appraisal will be sent to Thrive Lending and to the investor. If the investor plans to refinance into a long‐term landlord loan, the appraisal will also be used in underwriting to justify the value of the property at refinance.
Thrive Lending will loan a percentage of the “after repair” value. The ARV (or after repair value) is determined by the “subject to repairs” appraisal. The LTV (or loan to value) percentage is determined by the borrower’s qualifications. The amount of money lent to an investor is determined by both of these numbers.
No, Thrive Lending will only lend hard money on properties that are to be rehabbed, not demolished.
Thrive Lending only has pre‐payment penalties on our three‐month loan; however, this penalty is waived if you choose to refinance with Thrive Lending.
What is unique about Thrive Lending is that we specialize in working with real estate investors and we have some of the latest tools available for our clients to ensure that they have the best chances of success on every deal. Contact us for hands‐on help to estimate your down payment, monthly payment, cash flow, net profit, and total return on investment. We will help you to maximize your chance of success.