29 Jul 2013
Sherman Bridge Lending provides investors with capital to acquire distressed single-family properties. They provide acquisition funds, repair funds and even a 30-year loan to open the door to heavy cash flow.
Business Name: Sherman Bridge Lending
CEO: Kurt Carlton
Geographical Location: Throughout Texas
What are some examples of the kind of real estate deals you primarily lend to?
We lend on single-family homes and small multi-family buildings. We have a fix-and-flip loan product and even a Self-Directed IRA non-recourse loan. Our specialty is our “total landlord solution” where we assist a landlord in developing a finance strategy. We lend the money to acquire the homes, fix them up, as well as 30 year fixed rate financing that opens the door to heavy long-term cash flow.
Do you have a minimum or maximum loan size?
Loans range from $50,000 to $1,000,0000.
What is your typical loan period?
Our loans range from 3-month construction loans to 30-year landlord loans.
What kind of investors are you looking to do business with?
We like to work with people who can drastically improve their ROIs on a property, especially during the summer months when single-family real estate is usually at its annual peak. As for landlord borrowers we like to see good credit, decent cash reserves, and documented income. These always play a huge factor in their success. If we don’t believe the investor will be successful we will pass on the deal.
What criteria do you use to assess a loan?
Open collections, history of fraud, open IRS liens, no cash reserves, or if we flat out think the investor will not be successful. I have bought and sold more than 1,000 homes and have experienced 100’s of millions in investment real estate transactions. We have a good idea of what will work and what will not. Because of this we have less than a 0.2% default rate.
What are the main reasons you would decline a loan?
We do not lend money to first time homebuyers. If we don’t believe the investor will be successful we will pass on the deal. We are very specific with the type of investor we are looking to work with. Our most successful buy-fix-sell borrowers are individuals who know how to manage multiple projects and they are able to leverage our money into multiple projects at once.
What are your typical terms, rates and fees?
Current rates are approx. 4% for 30 year fixed investment loans. The construction phase is an interest only rate of 9.99% and we charge 2-4 points at origination.
We provide acquisition funds, repair funds, and even a 30-year loan to open the door to heavy cash flow.
Why should an investor consider lending from you?
We’re much more affordable than other hard money lenders. Investors can buy a house for about 30% of the cash investment banks require, which allows them to buy more houses and gain 3 times the equity, 3 times the cash flow, and 3 times the debt reduction and appreciation.
But I believe the greatest benefit we offer is that we are a success based lender verses an asset based one. A great deal of our underwriting is committed to whether the investor will have success. That’s why our default is one 10th of the industry standard.
Why would an investor go to a hard money lender instead of a bank?
A bank usually requires 20-30% down plus closing costs. Additional repairs are generally not included. With hard money, your down payment is tied to how deep of a discount you were able to procure the property for.
Generally we see about 70% less out of pocket for our deals. This translates into the ability for our investors to purchase more properties, which can equal much more wealth when you’re buying at a deep discount and picking up 20-30% in sweat equity on each deal.
What should investors look out for in a hard money lender?
If a lender says things like “I don’t even pull credit” then it should be a red flag. This means they are only interested in the property and the success of the investor means very little to them.
In the long run they will often lend far less against an asset, which will translate into more money out of pocket for the investor. This can often happen the day before or the day of closing, when they know you are past the point of pulling out of the deal.
If there is a problem once you’re in the loan, they are more interested in the property than helping you get through the project successfully. However, if the lender is interested in your personal qualifications it’s usually a good sign. It means they are looking for a partner verses a property.
Not sure what a hard money loan is? Read our article When hard money loans make sense to learn more!