Hard Money is a term that has been used to describe a loan made on the raw equity of real property. In other words, hard money loans are made with the assumption that the liquidation of the property will be the primary means of loan repayment in the event of default.

Hard money lenders are in the business of providing financing for real estate investment, using the value of the property as the basis for their loans. Hard money lenders can often provide real estate investment loans in situations where traditional banks won’t lend.

There are many reasons to use LoanSum…here are just three:

LEVERAGE: LoanSum will finance up to 100% of the purchase price and loan fees (excluding closing costs and insurance).

FAST: LoanSum closes loans fast!  Closing can take place when LoanSum receives a title commitment showing the property has a clear and unencumbered title.  We generally can close within 2 to 10 business days after receiving all required documentation.

EXPERIENCE: LoanSum’s management team has over 40 combined years of lending experience, and we process hundreds of transactions every year.  We are committed to providing you the support you need to complete a profitable transaction.

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LoanSum will consider any loan size on a case by case basis.

LoanSum loans are based on the investment property value, your experience, liquidity (how much cash you have), exit strategy, and past payment history.  You will be required to provide us with an account application. See our Privacy Policy here.

LoanSum requires the following:

• An approved LoanSum account (complete the application). Check out our Privacy Policy.
• Submitted online loan request (loan request forms available once account is established)
• Sales contract signed by all parties
• Lockbox or Access information
• Itemized construction bid from your contractor (If necessary)
• Completed Property Analysis Spreadsheet (available to download once account is established)
• Account statements for all liquid assets for the last 3 months
• If taking title to the property in a corporate name, corporate documents (Articles of Organization, Operating Agreement or Bylaws, Tax ID#, and Certificate of Good Standing).  All members, officers and their spouses, of a corporation must sign all documents at closing

LoanSum typically only finances the acquisition cost (excluding closing costs and insurance).  LoanSum will only consider funding construction costs for previous borrowers with a proven track record or for new borrowers if additional collateral is provided.

ARV is an acronym for “After Repair Value.” This describes the value of a property once the proposed repairs have been completed and the property is ready for the retail market.  Valuation or “After Repair Value” of the property is “subject to” the completion of the construction.

Loan to Value or LTV is the ratio of the principal loan balance to the After Repair Value of the property, expressed as a percentage.  Lenders use the LTV ratio to determine the risk for the lender and the profitability for the borrower.  LoanSum will generally lend up to 100% of the purchase price and the loan fee as long as the borrower’s total investment is no more than 75% of the ARV.

The following example will show how to calculate loan to value

Borrower’s total investment is calculated by adding purchase price ($70,000) plus loan fee ($2,800) plus construction costs ($30,000), which equals $102,800, and then dividing this sum by the property ARV ($150,000), which equals 0.6853.  Multiplying 0.6853 by 100 will give you the borrower’s total investment percentage, which is 68.53%.  Since 68.53% is under LoanSum’s maximum ratio of 75%, and if the borrower has sufficient capital to fund construction, and if the property ARV meets LoanSum’s internal market valuation, then LoanSum would lend up to $72,800 (purchase price plus loan fee).

LoanSum uses this form of calculation to determine the risk in the event the borrower defaults. Using this example, if this loan were to go into default prior to any work being completed, LoanSum would still need to complete the rehab to obtain the full retail price.  By limiting the risk to less than 75% of the ARV, LoanSum can ensure quick liquidation of the property without losses.

LoanSum offers financing to investors based on the requested loan amount and the risk associated with the transaction.  Typical origination charges are 4 points with a $2,000 minimum.  If construction funds are approved, an additional fee of 1 point (with a $500 minimum) will be assessed for administrative costs.  LoanSum will charge you for the following closing costs; Application Fee $350, Wiring Fee $20, Flood Certificate $15, and Court Filing $100.  Annual percentage rates range from 15% to 18% of the amount borrowed.

LoanSum Flex loans have a 360-day term if needed.  Flex loans have an initial 120-day term, approximately 4 months.  If the loan is not paid in full at the end of the 120 days, the loan will automatically be renewed for an additional 60-day period (approximately 2 months).  You may have up to 4 renewals per loan for a loan term of 360 days or one year.  By structuring your loan this way, you only pay fees for the time that you need the money, thereby lowering your cost of capital.

LoanSum provides business loans for the following types of properties; single and multi-family residential, commercial warehouse, office, retail and vacant land. LoanSum does not provide consumer loans and will not finance owner occupied properties.

Yes. Your loan will automatically renew up to four times if the unpaid principal balance is not paid in full by the end of the initial term or subsequent renewal term. A minimum fee of 2% or $1,000, whichever is greater, will be charged for each 60-day extension. The renewal fee will be added to your loan and becomes payable when you sell the property.

You must submit a draw request through the members section of our website.  Once the draw request is received, a LoanSum representative will inspect the property and all lien waivers and receipts will be compared to the actual work that has been completed on the property.  LoanSum will assess a $175 fee for each draw request inspection. Based on the inspection and the document review, LoanSum will approve or deny the request.  If approved, a deposit is made directly into your checking account via an electronic funds transfer.  Therefore, there is no delay in receiving repair funds from LoanSum.  If denied, you will need to remedy the issues and re-submit the request.  Before your draw can be approved, you will be required to submit signed and notarized lien waivers from all individuals and companies providing labor or materials on the property.   Please note that if any permits are required on your property, LoanSum will require copies of final inspection certificates to be emailed or faxed to our office prior to receiving a final construction draw.

Yes, we allow borrowers to take title in their LLC or corporate name.  LoanSum requires that all members, members’ spouses, and/or officers/managers of an LLC or corporation sign all closing documents.  Taking title in a corporate name still requires a personal guarantee from all of the members, members’ spouses and/or officers/managers of the LLC or corporation.

LoanSum can approve your account within one business day, which will give you access to the members section of the website.  Once a loan has been submitted to LoanSum, assuming all required documents have been provided and we receive a title commitment showing the property has a clear and unencumbered title, your loan could be ready to close within 2-10 business days.

LoanSum loans are available in the following areas: St. Louis City, St Louis County, St. Charles County, and Jefferson County. All other areas will be considered on a case by case basis.

You may purchase your insurance policy from an insurance company and agent licensed in the State of Missouri.  Before your closing date, LoanSum must receive your Declaration Page with the following mortgagee’s clause:

LoanSum, LLC ISAOA
150 Weldon Parkway, Suite 103
Maryland Heights, MO 63043

LoanSum will not fund properties that are owner-occupied at the time of purchase or at anytime during the loan term.  In addition, due to insurance restrictions, LoanSum will not finance an occupied property that needs extensive renovation.

Your loan may be paid at any time with no pre-payment penalty.  The faster you rehab a property and/or refinance it, the more profit you make.

Yes, you will need to have a contract signed by all parties before submitting the online loan request.  Note: you will need to create an account before you can submit loan requests and funding letter requests.

Transactional funding is short-term funding, also known as same-day funds or flip-funding, frequently used to fund same day purchase/sale transactions.

LoanSum will fund your transaction up to  7 days for 3% of your advanced funds, with a minimum charge of $2,000.00.  There is no interest due, no processing or additional LoanSum fees.  Customary title fees will apply.

If full payoff is not received within 7 days, loan will transition to LoanSum’s standard Flex-Loan.