General
Q1. What is a hard money loan?
A short-term, flexible real estate loan for investors purchasing properties in less than 30 days, want funding for purchase and rehab, and/or want to pay less cash out of pocket at closing.
Q2. How can I get a hard money loan?
Talk with a Park Place team member, then fill out an application. We will ask you to send proof of funds and discuss what projects you're looking at before approving you for a loan.
Q3. How is hard money different than a conventional loan?
A conventional loan is typically 80% of the purchase price. Park Place provides 70% - 75% of the after repair value with no minimum down payment, providing funds for the purchase and rehab.
Q4. What types of properties do you lend on?
Park Place provides loans for single family residences, duplexes, triplexes and quadplexes in Central Texas.
Q5. What geographic areas does Park Place lend in?
Park Place provides loans in all major Texas markets in Central Texas and the surrounding areas -- San Antonio, Austin, Dallas, etc.
Q6. What is a pre-approval letter?
A pre-approval letter is a form of proof of funds to submit with purchase offers, showing the buyer is approved for a loan to purchase the property. The first step to get a pre-approval letter is to fill out our loan application.
Q7. Should I always use hard money?
An investor is best suited to use hard money when they want to bring less cash to closing, close in less than 30 days, want funds for the purchase price and repairs, and/or need a bridge loan to refinance or sell the property. We encourage borrowers to explore all opportunities available.
Q8. Will Park Place lend to my entity?
We will lend to entities (ex- LLC's, incorporated, etc.) with the managing member or equivalent as the guarantor. The borrower will owe an additional $350 at closing to pay for an attorney to review the entity documents, but this is a one-time fee for the entity's first loan with Park Place.
Q9. Can I extend my loan if I need more time?
Park Place Funding grants extensions on a case by case basis and does not have an established extension program. Since our loans are 12 months, we do prefer for all borrowers to pay off the loan at the end of the 12 months. To request an extension, please contact our office for an extension request form.
Costs
Q1. How is my loan amount calculated?
Your loan amount is calculated as a percentage of the After Repair Value of the property, which is determined by a certified appraiser.
Q2. What does my loan pay for?
Your loan covers the majority (sometimes all!) of the purchase price and the rehab budget.
Q3. Do I get the repair funds at closing?
No. Repair funds are disbursed through our draw process, and each draw is $150. You can request as many or as few draws as you need, with no restrictions on the amount or frequency.
Q4. What is your minimum down payment?
We do not have a minimum down payment amount. The down payment is a function of the deal you are getting, so buying a property at a greater discount to market value meams less cash at closing! However, our rental property borrowers will need to bring some cash to closing.
Q5. Does Park Place require a deposit to process a loan?
We do not require an up-front deposit. You will not pay any fees to Park Place until closing. If we find the deal is not a good invetment for you during processing, we will voice our concerns immediately.
Q6. Why is the interest rate so high?
Park Place's interest rates are higher than a conventional lender since we base the loan on a future value of the property, instead of the as-is value. You are paying a higher rate in exchange for more funding in less time compared to traditional funding options.
Q7. What am I paying for at closing?
The borrower will be responsible for the difference between the purchase price and the loan amount Park Place is funding at closing. We determine this amount by subtracting the rehab budget amount from the total loan amount. The borrower is also responsible for any realtor, title company, and extraneous fees at closing listed on the settlement statement.
All fees will be disbursed to Park Place Funding by the title company.
Q8. What are my monthly costs?
The borrower will receive a monthly payment statement and is responsible for remitting a payment to Park Place on the 1st of every month. All funds held in escrow that are not used to renew an insurance policy or pay for property taxes during the loan term are refunded to the borrower immediately after the loan is paid off.