Q: CAN I USE MY FREE AND CLEAR PROPERTY TO FUND FUTURE NON-OWNER OCCUPIED INVESTMENTS?
A: Yes! It may be used as cross-collateral or used for a cash-out refinance. That is a great strategy! If you have properties that are completely paid for with no liens against them, we can do a cash-out refinance to provide funds for other non-owner occupied investments. You can also use them as cross-collateral for your real estate investing. We use both your subject property and your free and clear property as security for the loan. In doing that, we can lend up to 65% of the as-is combined value of the two properties. That is often enough to purchase your subject property and rehab it. If you have free and clear properties, mention that on your next deal!
Q: HOW DOES COGO CAPITAL DECIDE HOW MUCH TO LEND?
A: Our decision is based on the property, the type of transaction, and your membership in any of our special programs. For most transactions we will lend up to 90% of the purchase price or 65% of the as-is or after-repair appraised value, whichever is less. Ask a loan officer about the special terms available through our membership programs and special purpose loans.
Q: I NEED 100% FINANCING. CAN YOU DO THAT?
A: Yes! Ask a loan officer for more details. If you provide more than one property as security (as described above in regard to cross-collateral) we can provide 100% financing. If you don’t have free and clear property, find a partner that does! Sharing half of a nice profit beats not being able to do the deal! Many of our investors also use seller-carryback to do the same thing. We recommend finding deals and purchasing property below appraised value as the best way to secure 100% financing.
Q: WHERE CAN I FIND A GOOD DEAL?
A: Look for people that have a need to sell and get to them before your competitors do. The simple answer is: wherever you have the least competition. The harder they are to find, the less competition you will have, and the better your chances for a good price. It requires work, but it is work that can end in a deal with profit as opposed to work that spins wheels but never gets a profitable deal. For instance: talk to probate or divorce attorneys, find ugly houses, contact out-of-state owners, etc. Be creative!
Q: WILL YOU LEND FOR BOTH THE PURCHASE AND THE REPAIRS?
A: Yes, for the right deals. If the numbers work and we think the deal will be profitable, we will loan on the After Repair Value (ARV). We recommend you have solid experience doing or managing such repair work. You will need to supply licensed contractor bids as well as meet certain other requirements. Bring us the deal and let’s discuss it.
Q: HOW CAN I DO DEALS WITH MY IRA?
A: By using a true self-directed IRA and making all legal payments from it and depositing all complying profits into it. You should seek legal and financial advice first. You must have a true self-directed IRA. There are many IRA administrators that offer such accounts. Then you buy the property in the name of the IRA, furnish the earnest money from the IRA, apply for the loan in the name of the IRA, pay all costs from the IRA, and put all the profit back into the IRA. This is a topic that requires much more detail than we have room for here. Please contact your legal or financial advisor for the details. Also search online for self-directed IRA custodians to learn more about your options.
Q: I WANT TO BORROW MONEY BASED ON THE ARV OF THE INVESTMENT PROPERTY I’M PURCHASING OR OWN. IS THIS SOMETHING YOU ALLOW?
A: Yes! We love flippers! If the deal makes sense, we will help you get it done. Speak to a loan officer for more details.
Q: WHY DO I NEED TO BUY AN APPRAISAL WHEN I ALREADY HAVE A CMA OR EXISTING APPRAISAL?
A: Cogo Capital requires a recent (less than 90 days old), independent, standards-based, third party, as-is evaluation of every property used as security. BPOs, CMAs, or outside appraisals do not generally satisfy all those requirements. Your best bet: Go with ours. They are performed by local appraisers in your market, working at competitive rates, and doing the appraisal the way we need it to be done. The appraisal report will come to us and you will receive a copy.
Q: WHAT ARE YOUR RATES AND LOAN ORIGINATION FEES?
A: Our loans are asset-based and our decisions are logic-based. That means we base our decisions about funding and rates on the perceived risk associated with the property. If you have a property under contract, submit it. Our rates are competitive in the private money market but we save our best rates for our best clients. Get started today to become one of those repeat, best clients! Get a property under contract and submit it!
Q: WHY WON’T YOU LEND ON OWNER-OCCUPIED PROPERTIES?
A: Legal and regulatory reasons. Our current business model is to provide bridge loans to real estate investors for terms ranging from three to 24 months. As a result, it is not cost-effective for us to implement the complex and restrictive processes and rules required by regulatory agencies to do business with owner-occupants.
Q: IS CREDIT THE DECIDING FACTOR IN COGO’S DECISION?
A: No. Our loans are asset-based. We base our loans on the value of the asset, not on your credit score, income, or the size of your debts. However, a high credit score can potentially get you our better rates.
Q: HOW LONG DOES IT TAKE TO CLOSE A TRANSACTION FROM START TO FINISH?
A: Three to four days after we receive all required documentation, which can often take three to four weeks. Though we can do it faster, a good estimate would be three to four weeks after we receive the basic application package. The key factor is the amount of time it takes you and your team to supply all the supporting documentation. We can do our part in 3-4 days, but first-time borrowers rarely get us the documents quickly enough and complete enough to meet that. Go for 30 days or more whenever you can. Remember: if time to close is a factor, you probably have competition. Competition does not usually translate into a good deal. Forget such a deal and go find a good one! (Admittedly, sometimes other factors dictate closing time. If that’s the case, bring us the deal and let’s discuss it!)
Q: HOW MUCH DOES THE APPRAISAL COST?
A: Rates are determined by the going rates for appraisals in your market. This could vary between $300 and $600 (or more). The appraisal price also depends on the property type and location. A typical single family residence, condo, townhouse, or manufactured home may cost between $395 and $575. Multi-family units may cost between $550 and $645. If the property is in a rural area, it may cost more because of added drive time or appraiser availability.
Q: I’M A SOLE PROPRIETOR. CAN I STILL GET A LOAN?
A: Yes, if you create an LLC, a corporation, an IRA, or a trust before the close of escrow.
Q: I AM SEEING A LOT OF GOOD DEALS ON AUCTION SITES AND AT LIVE AUCTIONS. HOW CAN I PROCURE FUNDS TO HAVE CASHIER’S CHECKS READY TO PAY FOR THE PROPERTY AT THE AUCTION?
A: Our funding is solely based on properties you already control via ownership or contract. We cannot provide cash in advance for auctions that require immediate payment. Since all loans are asset-based, we must have a lien as security on property you own. The primary way to procure funding prior to getting a property under contract is to have another property that is free and clear and take out a loan against it. Alternatively, you can find a professional auction bidder who will supply the bidding presence and the purchase cash in exchange for a fee (often $5-10 thousand or a percentage) with the rest of the funds paid later at close of escrow.
Q: I ATTENDED A SEMINAR THIS WEEKEND SPONSORED BY ANOTHER COMPANY. THEY DESCRIBED TERMS AND CONDITIONS I LIKED, BUT YOUR WEBSITE DOES NOT INCLUDE THEM. PLEASE HELP ME WITH THIS CONFUSION.
A: We are aware that has happened on occasion. We work closely with other companies to assure accurate descriptions, but misunderstandings sometimes occur. That is possible. We have seen others who are not a part of our company describe a specific detail that is inconsistent with our lending guidelines. As one of the nation’s most reliable lenders that can be counted on to have the funds to do their students’ deals, many real estate investment gurus have chosen us as their preferred lending source. After we train their trainers, they train someone else, who trains someone else. It is not surprising that slight discrepancies may creep in, even with the best intentions. Chances are pretty good they got most of it right. Please ask them to contact us, or provide us their name so we can clarify the details they share with future students.
Q: HOW MANY DRAWS SHOULD BE REQUESTED BEFORE CLOSING?
A: The total cost of the rehab and the Borrower’s cash flow should be considered to determine the appropriate number of draws. For example, if the budget is $75,000 and the Borrower requests 3 draws, then the Borrower would need to provide approximately $25,000 prior to requesting reimbursement. However, if the Borrower requests 5 draws, then the Borrower would only need to provide approximately $15,000 prior to requesting reimbursement. The fees and costs for inspections and disbursement are collected at closing. Any additional inspections and disbursements above and beyond those prepaid at closing would be a cost to the Borrower to be paid at the time of the inspection.
Q: WHAT IS THE COST IF I NEED MORE DRAWS THAN I INITIALLY PAID FOR?
A: Any additional inspections or draws above the initial paid draws will need to be paid through Lake City Servicing before the inspection at a cost of $295 each. If you need to fix minor things after your final draw, the cost is $200 and you will need to provide photos of the things you were required to fix. Call Lake City Servicing at 800-630-9252 to pay for additional inspections or draw requests.
Q: WHAT IF I FAIL TO MEET THE INSPECTOR?
A: Upon the Borrower’s request for an inspection, the Inspector will contact the Borrower and/or their designee to set an appointment for a site visit. Failure to meet the Inspector at the set time will result in a $45 travel fee charged to the Borrower.
Q: WHAT I HAVE HAVE UNEXPECTED REPAIRS?
A: You will have to pay for those items out of your own pocket. Once the project is completed, Cogo Capital will release the contingency funds that were held back for incidentals.
Q: WHAT IS A CONTINGENCY AND WHY DO I NEED TO HAVE ADDITIONAL FUNDS FOR IT? HOW DO I GET IT BACK?
A: Cogo requires a minimum contingency allowance of 10%. As such, the total amount held in escrow will be, at minimum, 110% of the project budget. This is referred to as the “contingency.” This contingency is designed to cover cost overruns and/or unanticipated costs incurred in the rehab process.
The contingency is only released upon the completion of the project.
Q: HOW AM I REIMBURSED AND WHAT IS THE TIME FRAME?
A: First, you need to fill out a wire transfer form that you will get in an email after your loan closes. It is VERY important that you take the form to your bank and have THEM fill out the correct information, or be VERY careful filling it out yourself not to impose numbers. Wrong information causes delays and extra costs to you to re-wire. Borrower must provide the bank’s name, address, telephone, account holder name and account number, and bank’s wire routing number.
Draw requests are processed in the order in which they are received by Cogo. The anticipated turn-around time for payment to be released after receiving the inspection report is 36-48 business hours. Disbursements are paid, via wire transfer, from Escrow directly to the Borrower’s bank account. We do reserve the right to pay contractors and subcontractors directly.
Q: WHO DO I CONTACT ABOUT DRAWS AND INSPECTIONS?
A: Address ALL requests to [email protected]. The subject line should say “Request for Inspection – (Last Name and Property Address).” If you need to speak to someone, you can call a draw specialist at 800-473-6051 ext 1341.
Q: WHAT IS LAKE CITY SERVICING’S PROCEDURE FOR CONTACTING THE INSPECTOR AFTER I REQUEST AN INSPECTION FOR THE DRAW?
A: Only the draw specialist can order an inspection. This is done through the inspection website, usually within a couple of hours of getting the request. If you have sent the draw specialist a written request through an email at [email protected], LCS tries to reply with a copy of the order.
Please note that the inspection company that Lake City Servicing uses is in the Eastern Time Zone and there is a three hour difference, so any request after 2:00pm Pacific Time will not be received by our inspection company until the next business day.
Q: WHAT IS THE PROCEDURE FOR THE ACTUAL APPOINTMENT? WHEN WILL THE INSPECTOR COME TO THE SITE?
A: Once the request is submitted, the third party inspection company has 24-48 business hours to set up an appointment for an inspection. From that point on, the time frame of the actual inspection is up to you and the inspector and Lake City Servicing accepts no responsibility for any scheduling.
Q: HOW LONG DOES IT TAKE TO GET THE REPORT BACK TO LAKE CITY SERVICING?
A: Inspection reports are generally submitted to LCS 24-48 hours after the inspector has been to the site, but this is entirely up to the inspector.
The inspector needs to compile the report then it goes through their review process and if all requirements are met they send the report to LCS.
Q: WHAT IS THE PROCESS AFTER LAKE CITY SERVICING GETS THE REPORT BACK?
A: The draw specialist compiles the information from the inspection report and puts it into a spread sheet. This creates a check and balance process. The draw specialist then makes sure that you have paid for enough draws and keeps track of what has been paid out and what is left in the escrow account. The spread sheet is then sent to a department manager who double checks the work of the inspector and the draw specialist. If Lake City Servicing determines that the inspection report is inaccurate, we reserve the right to adjust it.
The inspector does not make the final determination of what will be disbursed.
Q: HOW DO I KNOW HOW MUCH WILL BE PAID OUT? WHEN DOES LAKE CITY SERVICING SEND THE WIRES OUT?
A: Once Lake City Servicing is satisfied that the paperwork is in order, our department manager will send for approval with the lender. Once the lender approves, the department manager will inform you how much we can release. The department manager will email you a lien waiver that needs to be signed by your contractor with the exact amount that our department manager told you. That waiver must then be emailed back to [email protected] so the wire can be released.
The draw specialist, department manager, and lender must complete all of their responsibilities before 12:00pm Pacific Time (the cut off time for wires to go out). The wire is processed and then sent out of our office by 1:00pm Pacific Time.
This usually happens within a 24 hour period, but it can take 36 hours if the 12pm Pacific Time deadline is missed.
Q: WHO RECEIVES THE MONEY ONCE IT IS RELEASED?
A: Lake City Servicing only wires to the client. LCS does not have anything to do with your contractor. That is up to you and your business. Please note that if you do not pay your contractor, they can put a mechanic’s lien on your home. You would then be in default and LCS will call the loan due.
It is very important that all the info on the wire transfer sheet is correct. Please contact your bank or credit union for the correct wire routing number.
Having issues accessing or navigating your Liquid Logics Borrower portal? We’ve created a walk through video showing the step-by-step process to fill out the quick app, access your dashboard, upload documents, and much more. Watch the video below.