Remington Capital – Brad Sweet

In any construction or rehab project it’s important to have a good detailed pro forma. A pro forma can basically be thought of as a time-line for your project. It’s a scheduled use of funds and it also associates dates with them. The money borrower in a construction project works like a line of credit, interest is only paid upon money that is borrowed. So you don’t want to borrower more money than you need at any given time. This also let’s the lender know what to expect out of your project and when. If you are expecting to have 3 units complete every 6 months and after half a year the lender sees you have just finished your first, the project is obviously behind schedule and the lender may decide to stop funding. That’s why it’s important to use conservative figures when creating the pro forma and use experts if necessary.

A lot has changed since 2005 and 2006 in the lending world. Before any investor, private institution or bank finances a transaction, they now perform incredibly stringent analytical work and due-diligence on the property. This is true for residential homes as well as commercial property. There is no stone that goes unturned when a lender is about to make an investment into a deal. I would be weary of anybody telling you they can get you a two week close or even a 30 day close any more. For the cleanest transactions a 45 day close can be realistic but 60-90 days has become the norm. For agency loans (SBA, HUD, etc.) 120+ days is more realistic. The times have changed and the last thing any investor wants to do is lend into a cloudy or unfamiliar situation.

We are trying to create a good slogan for our new Property Recovery Option. This is a program created out of market necessity and the rising foreclosures. Learn more about it at the link below and comment with any ideas for a slogan…so far we have “when it’s time to refinance, it’s time to call Remington”.

http://remingtoncapitalinc.com/financial-programs/debt-refinancing/

Lenders look for something called “skin-in-the-game” when making loans on houses, businesses, developments, or even auto loans. This term refers to the borrower’s equity contributed towards a project and tells the lender that the individual has something to lose if the project fails.

When a borrower does not have the necessary liquidity that traditional sources require all may not be lost. At Remington we deal with capital sources that can finance up to 100% for qualifying deals.

In exchange for the increased risk the take on the front end, they typically require a share in the profits on the back end of the deal, typically between 15-50% ownership can be exchanged for the down-payment or skin-in-the-game.

Taking on a partner is not always the most attractive offer, but it can be crucial in getting deals done when the borrower does not have enough money to make it work on his own.