Below, you will find a list of the questions we are most frequently asked and their answers. If you have any other questions, please don’t hesitate to contact us.
What is a hard money loan?
A hard money loan is a loan financed by private investors or organizations and which are secured by assets, typically real estate.
Do you provide loans to residential, owner occupied properties?
Generally no. Our loans are for investment properties. We have found that owner occupied rental properties are often personal use properties and funds used for personal purposes. While an owner occupied property is not an absolute bar to financing, it raises additional questions regarding the true purpose of the loan request.
Is a hard money loan the same thing as a private money loan?
Yes. Our hard money loans are financed by private funds. At NPA Equity Investments, LLC, we are self-funded, meaning, we evaluate the request and make the decision. We are not bound by a loan committee or other group determining whether funding is appropriate.
How do your interest rates compare to bank interest?
Our interest rates are typically higher than those given by banks for conventional commercial or residential property loans. Our documentation requirements are generally less than what a bank will require and our our decisions are generally based on the property value and not the creditworthiness of the individual. To compensate for the excess risk, our rates are higher and typically range from 9% to 14%.
Do you approve interest only loans?
Yes. Many of our borrowers need funds for the short term. They seek to minimize monthly payments to free up capital for the investment they are considering. To accommodate this, we offer interest only loans with terms ranging from 12 to 36 months.
What factors determine loan approval?
We do not have a set formula for determining loan approval. The most important factor in any decision, however is value of the collateral. Prior to establishing the final loan amount, we make an assessment of property value, taking into account factors such as (a) condition of the property, (b) appraisal, (c) the area where the property is located and (d) market conditions.
In addition to collateral value, we do examine the borrower’s financial capacity. We want to make sure that the funds we loan will be repaid and that there will be few complications to repayment.
Finally, we examine the deal itself. We look at the reason for the loan, loan term and past loan history. For construction or rehab loans, we take into account the borrower’s experience in similar transactions.
Our overall goal is to enter into transactions that are realistic and make sense for the parties involved.