Real Estate Lending with John Femenia

Hard money loans have become a popular financing option for real estate investors looking to fund their projects quickly and efficiently. Unlike traditional bank loans, hard money loans are typically provided by private lenders or investor groups and are secured by the property itself. This article aims to provide a comprehensive guide on how to effectively use hard money loans to invest in real estate. 1. Identify the Right Opportunity: Before seeking a hard money loan, it is crucial to identify a viable real estate investment opportunity. Conduct thorough market research, analyze property values, and assess potential returns. Look for properties that have the potential for appreciation or can generate positive cash flow. 2. Find a Reputable Hard Money Lender: Research and identify reputable hard money lenders who specialize in real estate investments. Look for lenders with a track record of successful deals, transparent terms, and competitive interest rates. Seek recommendations from...

We recently closed a $4.3 million fix and flip loan for a property in Sands Point, NY.   This was one of our larger loans for single family residences (SFR).   Typically, our fix and flip loans for SFRs are capped at $2 million, although lending in high price cities has lead us to increase our loan limit for SFRs recently. What made this deal different?  There were a few things.  First off, this was a unique property.  This property was situated on 7.5 acres in prime Gold Coast waterfront property.  For those of you who don't know, the Gold Coast of Long Island the North Shore of Nassau County.  This area was made famous in F. Scott Fitzgerald's  The Great Gatsby.   The combination of the area's beauty and it's close proximity to NYC makes it a very attractive place to live.  The median income in the area ranks amongst the highest in the nation.   We were quickly able to get comfortable with value given the properties...

We recently funded a fix and flip deal from a "new investor."  In the fix and flip lending world, a new investor is someone that has not completed (bought or sold) a deal in the last 36 months.  Now this definition can be a bit frustrating at times for borrowers.   We constantly get calls from borrowers that say, "I've flipped 30 homes, but nothing in the past few years because of the pandemic," or we get someone that says "I've built 20 ground up homes in the past for clients, but I wasn’t on title for any of them."  And then we have to gently explain to the borrower that they're considered a "new investor" because they don’t have any recent deals in their name, and we have to lower our loan amounts.  It's a hard conversion to have, because most of the time, we know that this borrower is very capable, but we just can't get them the best rates or leverage because they just don't meet the "experience investor" def...

  John Femenia , found of Source Realty Capital , recently closed a 10-property portfolio deal in Hollywood, Florida for one of John’s repeat borrowers.  The borrower came to SRC after another lender wasn’t able to close the deal. This left us a limited amount of time to get the deal done, as the borrower had over $500,000 deposit on down on the property that had already gone hard. Deal Overview The borrower was purchasing a 10-property deal consisting of nine properties that ranged from 2-4 families, and one 6-family property.   The total unit count of the deal was 36 units.    The deal was split up on two different contracts.   Each contract was for $2.6 million, for a total of $5.2 million.   The  borrower put down 10% on each contract, for a total of $520,000.   The properties were 100% leased.   The cap rate for this deal was 6.5%.   Timing The borrower came to John Femenia in mid-December looking to close this deal....

We recently closed a cash-out refinance (DSCR Loan) for one of our more experienced borrowers in Crown Heights, Brooklyn, NY.   This particular borrower focuses on 3-4 family properties in up-and-coming areas of Brooklyn.  They focus on properties with a close commuting proximity to Manhattan. Additionally, our borrower only buys properties where outdoor space can be added. Once the renovation is finished and the property is leased-up, our borrower's property generates significant cashflow, allowing them to pull cash out of the property and move on to their next deal.  This is a classic example BRRR ( Buy, Rehab, Rent, Refinance, Repeat ), method that has allowed countless real estate investors to build wealth.   Let's take a closer look at this deal. Our borrower purchased this property in November 2021 for $999,999.   As you can see in the images below, the property needed significant renovations.   Everything needed replacing- the kitchens, ...

  We all know that in the long-term real estate is a good investment.  But what about right now?  In the past 12 months, the federal reserve has increased rates at the fastest pace in the past few decades. Inflation is running at the highest rate in 40 years.  Home prices are up over 10-15% from last year.  Will real estate prices continue to increase?   Before we answer the question of where prices are going, we first need to go back to see what got us to this point.  In the past three years, mainly since the pandemic, the housing market was fueled with cheap money (low mortgage rates) and a huge increase of activity from people wanting to relocate.  There was also a large period of under building new housing inventory for the years leading up to the pandemic.  Most builders thought that millennials would not want to move to the suburbs, and thus did not invest heavily in new single-family construction.  This proved to be incorrec...