Cogo Capital Private Money FAQs
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!
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.
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.
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!
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.
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.
Yes! We love flippers! If the deal makes sense, we will help you get it done. Speak to a loan officer for more details.
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.
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!
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.
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.
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!)
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.
Yes, if you create an LLC, a corporation, an IRA, or a trust before the close of escrow.
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.
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.
- Licensed contractor makes sure that the project is done systematically.
- All requirements of the city and government will be met.
- Licensed and bonded contractor gives you insurance. Should any damage happen during the renovation or construction, you are assured that your contractor will take the responsibility for it. And that responsibility is not just for damage to your house, but also for any injury that might occur during construction.
Bid needs to be correct from the start. The bid is used by appraiser to get the rehab valuation for the appraised property. Bids are used as the base of the rehab loan and used for the cost breakdown for the draws.
It’s a very fine line. The appraiser based the valuation off that initial bid and those are the area’s that are expected to be completed. The bid could be changed within the dollar amount but the line item itself can not be changed. We do not allow work order changes.
YES! Contractors should have their own contingency above the one that Cogo adds for any construction incidentals. Or will need to come out of clients own pocket.
- Company letter head
- Contractors Business Name
- Contractor or General Contractor Name
- Phone Number
- Must include Clients Name
- Must include Clients Property Address where the work will be done.
- Must include the words bid or estimate and Labor and Materials
- Must have a detailed explanation per line item of the scope of work. It must include the total cost of that line item next to it for the entire project. (not by room or piece)
- Terms of the contract – What is required upfront to get project started – per draw – final payment
- Must be signed by the contractor
Draws are only reimbursements. You do the work first then we reimburse you. If any permits are issued you will need to send a copy of the permit with your lien waiver.
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.
Additional inspections or draws above the initial that was paid at closing will need to be paid through Lake City Servicing at 800-630-9252 before inspection is ordered at a cost of $295 or will be taken out of contingency. Addition wires cost $200.
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.
You will need to pay for those items out of your own pocket. Once the project is completed the draw dept will release the contingency you can use those funds to cover those additional expenses. We do not allow work order changes.
Cogo requires 10% of the total rehab funds. This is referred to as the “Contingency.” The contingency is for Cogo’s protection. If something goes wrong we use those funds to help finish the project. Once project is complete, marketable without repair and a certificate of occupancy in hand (if required), those funds will be released usually on last draw.
First, you need to fill out a lien waver and 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 in draw dept. 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.
Address ALL requests to [email protected]. The subject line should say “Request for Inspection – Loan #” and in the the body of the email: “Last Name – Property Address – Contact Name – Contact Number – what was completed.” If you need to speak to someone, you can call a draw specialist at 800-473-6051 ext 1341.
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], Draw dept tries to reply with a copy of the order.
Please note that the inspection company that our company 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.
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 our company accepts no responsibility for any scheduling.
Inspection reports are generally submitted to Draw Dept 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 draw dept.
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 draw dept 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.
Once Draw Dept 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.
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.