Civic Financial Services

05May

Technology Innovations in Private Lending

May 5, 2021 Civic Financial Services

One of the greatest benefits of private money loans is speed. However, with that faster processing window comes the increased demand for real-time information. Enter: Origin8® — the cornerstone of innovation for Civic Financial Services, delivering an exceptional, private-labeled experience for today’s broker and your customers.

Origin8 is one of the first secure cloud-based online portals for private residential lending, designed for ease, flexibility, and transparency – but also designed with your wholesale business in mind. Bells and whistles aside (we’ll get to those shortly), what makes this truly unique is the power it gives you to brand your client’s experience to your business instead of the lender’s. Because, let’s be honest, you want your hard-earned clientele to be constantly reminded of the white-glove service you’re providing, and not the financial transaction alone.

Today’s real estate investor wants to conduct their business just as any other customer does — fast, simple and at their convenience. For some brokers, depending on the systems and resources available, streamlining a process with numerous moving parts can be quite challenging — especially with multiple clients and properties. As the relationship manager and main point of contact for your clients throughout the lending process, Origin8 is completely customized to you and your business.

The technology delivers a seamless digital lending experience that can be white labeled to your business, starting with a personalized website to direct borrowers to, enabling your customers to request a “quick quote”, check rates, submit an online application, upload documents and check loan status online, from any device, 24/7. It is packed with features that include real-time pipeline views which display loan status and outstanding underwriting conditions, and a document management interface to allow uploaded documents to satisfy conditions immediately. But wait – it gets better…

Emails generated throughout the process display your logo with no mention of CIVIC, you can choose from six different color themes for your personalized website, and you can quickly generate an LOI with your logo on it. Have a support team? No problem. With its seamless digital broker approval process you’re granted the ability to independently manage your users and your customers, making it easy to add internal team members to access the platform, such as LOs and processors.

Ordinarily, customers would have to get in touch with you during business hours to run through a scenario to even get an idea of pricing. Now, with Origin8, they have pricing available at their fingertips 24/7, and you keep control of the process. Hundreds of quotes are being run through broker Origin8 websites by customers who have no human interaction with anyone, and that is a key indicator of the success and demand for a fast, easy, digital resource. Consider this:

Sales Superpower: Origin8 is the Superpower sidekick you’ve been waiting for. It allows you to focus more time on finding new clients and nurturing your existing ones.

Smooth Operations: Automate manual steps, eliminate redundancies, consolidate documentation, and streamline communication to expedite the loan process and ensure an on-time closing.

The Need for Speed: Time is money. Origin8 dramatically reduces closing time, getting your customers from quote to closing with speed and simplicity.

Increased Accuracy: With no need for handwritten applications, documentation accuracy is improved and human errors are reduced in the process.

A True Digital Package: More than just an online application, Origin8 is the most robust lending platform in the private lending industry. It enables you to conduct business with your clients at the speed and transparency they desire and enables white labeling so the innovative closing process can be done digitally under your own brand.

Juggling multiple loans simultaneously just got easier, and the customer experience for your savvy real estate investor clients just got better. As an institutional private lender, CIVIC developed Origin8 not only to simplify and expedite the lending process, but to help you provide borrowers with the level of transparency they demand. The platform, personalized with your name and branding, has improved conversion from quick quote to application, and from application through funding. CIVIC understands the needs of our broker partners and is committed to investing in innovations and technology that enhances the efficiency and transparency of our broker platform.

06Mar

Access to Capital is Key to Real Estate Investment Success

March 6, 2021 Civic Financial Services

By William J. Tessar, President and CEO of Civic Financial Services, a premier institutional private money lender for real estate investment financing. With more than 30-years of experience in the mortgage and lending space, he is also host of Industry Insights the monthly show featuring expert advice and discussion on the real estate investment market.

The most important aspect of success in real estate investing is having ready-access to capital when you need it, so you can seize opportunities in today’s dynamic real estate market. In fact, many investors will wait for the right opportunity to roll along only to see it vanish because they didn’t plan ahead and have capital partners with different financing options all lined up and ready to go.

If you’re only looking for capital when you need it, 99 times out of 100 you’re not going to make the best decision—only the fastest. The better strategy is to cultivate your real estate financing sources first, beginning with understanding the different options that are available and what lenders are looking for. Each option has different requirements and parameters, which we explored in our recent Industry Insights show.

Understanding the Differences

“One common option for investors is conventional real estate financing, which is based not only on the property, but primarily on the warm body behind it,” said Robert Kang, relationships manager at First Republic Bank. When working with real estate investors, Kang looks at where the borrower’s income is coming from, their ability to pay off the loan and whether the investor has a second source of repayment if things go south.

Kang also looks at whether the capital will help the investor achieve their goals or actually hinder them. “We’re taking a snapshot of what their life looks like at a certain point,” he says. “That’s why we love to build relationships and get to know the individual investor, where they are today, and where they are going.”

Hard money and private money lenders each look at residential investment property financing opportunities with a different set of optics. “We don’t have set guidelines,” says Kevin Guisnow, a senior loan officer with PCL Group, a true hard money lender. “Each deal is individual and we look at it with an open mind.”

Guisnow says he likes to get to know investors, their passion for their project, their exit strategy and how they plan to repay. However, he adds that the property itself comes first, because if the investor defaults, Guisnow has to determine whether he can take it back and sell it to recoup his investment.

Institutional private money lenders like CIVIC, are a kind of hybrid capital partner. They have access to capital from institutional partners like banks and from Wall Street. They can operate more quickly and have more flexibility than conventional lenders, but also have stricter underwriting guidelines than a pure hard money lender.

Investors who need a steady stream of accessible capital can also get residential financing from a private money lender or a correspondent lender to access ‘warehouse lines’ of credit. These are lines of credit that, once established, can be used to finance properties that meet certain guidelines established by the lender. While having ready access to affordable capital is hugely advantageous, there are often barriers such as volume commitments that may create barriers for typical investors or small brokers.

“Some warehouse financing vehicles can be complicated, while others are fairly straightforward,” says Vinnie Ciardullo, senior vice president of capital markets for CIVIC Financial. He adds that the longer that a warehouse lender holds real estate assets, the greater amount of due diligence it requires from the lender.

Speed to Close

In addition to greater flexibility, another big benefit of hard money lenders is that they can usually close loans much faster than other sources. For example, conventional financing typically takes 45 days, while private money lenders like CIVIC typically take one or two weeks. If the deal is right, hard money lenders like PCL Group can get them done in a few days.

For example, Guisnow recently had an investor who was buying an unhabitable historic landmark with no comparables within five miles—and she had to close in seven days. Guisnow was able to qualify the investor based on her tax returns and her 70 percent loan-to-value (LTV) position. “After getting her on the phone and hearing her passion and vision, I got past the valuation part of it,” he said. “I got the feeling this is going to be a good loan, and to this date, so far, so good.”

With hard money lenders like PCL Group, there is no minimum or maximum financing, although they may not look at deals less than $400,000. The money can be used for anything from single-family properties to apartment buildings, even ground-up construction, but not for buying land.

Conventional lenders will typically provide financing for owner-occupied homes, therefore it is generally challenging for non-owner-occupied properties. The DTI, Income qualification and LTV requirements are usually more stringent as well. Kang said most of his investment financing deals are around 60 percent LTV, but says he’s gone way above that many times when “it made sense.” For true hard money lenders like PCL Group, the LTV ratios are generally between 70 and 80 percent, but other private money lenders like CIVIC can go as high as the low 90s.

Prepayment penalties are another factor to consider. For a conventional lender like First Republic Bank, paying off a loan in less than three years will cost the borrower just $500, no matter the loan size, Kang said. For a hard money lender like PCL Group, there may be a guaranteed interest involved if the investor plans to pay back the loan within a few months. For CIVIC, there is no prepayment penalty, however, there may be early termination fees when financing involves using warehouse lines of credit.

Tips for First-Time Investors

Most seasoned real estate investors are familiar with the different types of financing options and understand the process. But those relatively new to the game, it can be daunting. What can they expect?

Kang says to be prepared for lots of questions. As a conventional lender, he’s focused on how the money will be used and how the investor plans to pay it back. “We work with the deal from start to finish, so we have to understand every little piece of that deal,” he said.

Ciardullo adds that investors should consider how easy it is to work with a particular lender, noting that a lender with a low rate but is hard to deal with may not be worth it. “Even if you’re sacrificing cost, finding a partner that’s easy to deal with and gives you quick access to your capital is going to help you tremendously in the long run,” he said.

Guisnow says investors should understand the financing terms, do their own due diligence on the property, and be truthful with their lender. “Show us everything, because we’re going to find it, and if you don’t disclose it, your odds of getting a loan from me are slim and none,” he said. “Be upfront and be prepared, and you’ll have a better result.”

About Civic Financial Services

CIVIC is one of the nation’s leading institutional private money lenders, having funded more than 10,000 private loans totaling over $4.5B. For more information on our short term bridge loans or long term rental loans, call CIVIC at 877-472-4842 or visit www.civicfs.com

You can also access our Capital Strategies Guide @ https://www.civicfs.com/ThinkRealty

Join Industry Insights every month for real talk on real estate investing. Join live, or on demand.

© 2021 Civic Financial Services, LLC. All Rights Reserved. This is not a commitment to lend. All offers of credit are subject to credit approval. Restrictions may apply. All loans are made in compliance with Federal, State, and Local laws. Civic Financial Services, LLC is a California Finance Lender under NMLS 1099109. Loans made or arranged pursuant to a California Finance Lenders Law License 603L321. Civic Financial Services, LLC is an Equal Housing Lender. For complete licensing information, please visit https://www.civicfs.com/Licensing

08Jan

Grow Your Business with a Real Estate Investor Channel

January 8, 2021 Civic Financial Services

The mortgage world is a feast or famine business. And with today’s refi boom most originators’ bellies are full. But if you’re looking ahead at what your next big opportunity is in 2021, you don’t have to look further than an investment real estate channel.

15 to 20 percent of a typical originator’s prospect database is a potential investor who may need a private money loan to buy an investment property as a rental or fix and flip a property in today’s hot market. Also, investors are often real estate agents, which makes them a great source for future business.

Why Private Money Lending?

Make no mistake, interest in private money loans – once considered ‘hard money’ loans – is growing.

The private lending industry currently accounts for $50 to 60 billion in originations and growing. Institutional capital from Wall Street is pouring into this space, making it very lucrative due to it’s high yield and measured risk. Conventional lenders and mortgage brokers are aligning themselves with trusted private money lending partners because they understand the value of serving investors.

The average borrower on a primary residence gets a new mortgage every four years and refi’s a time or two. The average real estate investor, finances four or more properties every year. More experienced investors purchase a dozen or more annually.

Because they are based on the “hard” asset, rather than the borrower’s qualifications, a key benefit of private money loans is that they are considered “business purpose loans”. There’s no TRID or difficult consumer regulations, so they typically close in 7-10 days, enabling borrowers to compete with cash buyers on lucrative deals or in competitive markets.

Best of all, it’s easy to add private money loan options to your current lending portfolio as they are much less complex and challenging than conventional mortgages. Even those brokers with no experience with private money loans can learn to qualify customers in no time.

How to Select a Private Lender

When surveying the market of private money lenders to partner with, it’s important to know how strong and stable their business is. The pandemic shook up the private money industry significantly. At the onset, many lenders were over-leveraged, and when warehouse lines dried up and institutional investors paused, margin calls ensued. Many private lenders paused or shuttered entirely. Only the strongest, best-capitalized lenders continued lending uninterrupted and prevailed.

To protect yourself and your clients, identify your private lender’s capital source. Are they lending their own money, using bank lines or brokering? Ensure they have an uninterrupted track record of funding loans as well as the strength and capacity to meet financial commitments and adapt to change.

Check out their loan product offerings and ensure their loan options and pricing is clear. To succeed in this space, you will need products for short term Bridge loans, long term loans for rental properties and financing solutions to cover full rehab and construction costs. Credible lenders understand each unique scenario and offer loan options to meet individual needs. True capital partners are problem solvers.

Your Trusted Lending Partner™

CIVIC Financial Services is a leading institutional private lender. With CIVIC as your capital partner, you can serve grow your business and serve customers throughout their entire real estate journey – purchase, refi, fix and flip or long-term rental.

In 2020, CIVIC onboarded more than 600 Brokers to its Wholesale Channel and added several Correspondent Partners. In spite of the pandemic challenges, CIVIC funded more than $1B in loans in 2020, bringing funding volume since their founding in 2014 to more than 10,000 loans and over $4.3B

To be sure, the mortgage business is a feast or famine market, and this certainly isn’t the time to take up golf. For opportunistic originators, there is always more on the menu than there appears – and a Private Money Lending partner might be the most rewarding meal of all.

Check out this video interview with CIVIC’s president William Tessar and download CIVIC’s free guide ‘Keys to Success in a Post Refi World’ at https://www.civicfs.com/cmba