Yes. We pull a tri-merge credit report with scores on each borrower and guarantor. However, we are not credit score sensitive, don’t require a minimum and non-traditional credit is considered.
There is no formal rate matrix since each loan scenario is unique. Rates vary based on a number of factors most notably the loan-to-value, property type, property location, and term.
This is determined on a case-by-case basis. Most borrowers should expect to do an initial loan to establish a relationship.
Yes. An appraisal is part of Hanover MC’s underwriting and due diligence process and is necessary on all transactions. If an appraisal has already been completed providing a copy for our review may fulfill the need and save time.
Yes! Our hard money underwriting guidelines focus primarily on equity, not borrower credit. We have accepted borrowers with low credit scores, prior bankruptcies, and foreclosures. We also make loans to foreign nationals and entities with no credit history.
We start with looking at your qualifications. We seek to partner with professional redevelopers who have a track record of success. You should have 3+ projects under your belt and a network of contractors, legal professionals and real estate agents who help you achieve your goals. Once you are prequalified we look at each project on a case-by-case basis. Each project is different but in general here is what we are looking for:
- How much of your own equity is in the project? We required you to invest at least 20% of the purchase price into each project.
- Loan to Value should be less than 65% of the After Repair Value (ARV) of the property.
- ARV should be supported by a thorough analysis of sales data from comparable properties. This should be further supported by an appraisal and/or Broker Price Opinion (BPO). We will likely order our own BPO and appraisal to verify your analysis.
- You should supply us with a detailed statement of work with line item costs of all the repairs you plan to make. This should be supplemented with a home inspection report which we may confirm with our own inspection.
- You should outline your exit strategy. Do you plan to sell this to an owner occupier or an investor who will rent it out? Maybe you plan on refinancing the property with a traditional mortgage and holding it as a rental. Let us know as this can impact the market risk of the project.
- Send us pictures of the property which show its current state and key areas of the home that you plan on improving.
More is better when it comes to how much information you share. We make it easy on you by allowing you to submit all relevant information on our platform.
We do have the capability to fund 100% of the construction costs. Similar to other funding mechanisms, we’ll likely hold a percentage of these construction funds in escrow and release them as project milestones are met, subject to inspection.
We require that you bring at least 20% of the purchase price to the closing table. Depending on the scope of the rehab and your experience, we may ask for a greater percentage. Our investors like to know that you are committed to each project and the best way to do this is require you to have some “skin in the game”. This also signals to investors that you are serious about seeing the project through to success.
We can get loans funded in as little as 8 days. It’s best to set up your profile and get pre-approved by prior to having a project ready for funding. This will allow us to move directly to underwriting the project. This allows for you to get the capital you need in a timely manner.
No. We handle all of the details for you. We’ll present you with a transaction synopsis and TD Investment packet with the information you need to make a decision. Should you and/or others commit to invest in a loan, we’ll coordinate the appropriate paperwork and create the trust deed that secures that loan.
This depends on the investment itself and whether we divide or “fractionalize” as it is called, the loan among two or more investors. On the lending side of the equation, our minimum loan amount is $35,000. However, the average size of our “smaller balanced” loans is $100,000, while the average size of our medium sized loans is $300,000. Although most of our loans are funded by a single investor, on multiple investor loans, the investors typically have at least $100,000 in any one investment. We can offer an opportunity to someone with less to begin investing in Trust Deeds, but lower initial investments generally take longer to place or must be fractionalized. There is no maximum investment amount.