Cogo Capital Private Money FAQs

Can I Use My Free And Clear Property To Fund Future Non-Owner Occupied Investments?2020-01-07T19:22:03-08:00

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!

How Does Cogo Capital Decide How Much To Lend?2020-01-07T19:21:05-08:00

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.

I Need 100% Financing. Can You Do That?2020-01-07T19:20:22-08:00

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.

Where Can I Find A Good Deal?2020-01-07T19:19:38-08:00

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!

Will You Lend For Both The Purchase And The Repairs?2020-01-07T19:18:36-08:00

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.

How Can I Do Deals With My IRA?2020-01-07T19:17:54-08:00

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.

I Want To Borrow Money Based On The ARV Of The Investment Property I’m Purchasing Or Own. Is This Something You Allow?2020-01-07T19:17:16-08:00

Yes! We love flippers! If the deal makes sense, we will help you get it done. Speak to a loan officer for more details.

Why Do I Need To Buy An Appraisal When I Already Have A CMA Or Existing Appraisal?2020-01-07T19:16:15-08:00

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.

What Are Your Rates And Loan Origination Fees?2020-01-07T19:15:15-08:00

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!

Why Won’t You Lend On Owner-Occupied Properties?2020-01-07T19:14:31-08:00

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.

Is Credit The Deciding Factor In Cogo’s Decision?2020-01-07T19:13:39-08:00

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.

How Long Does It Take To Close A Transaction From Start To Finish?2020-01-07T19:12:58-08:00

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!)

How Much Does The Appraisal Cost?2020-01-07T19:11:44-08:00

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.

I’m A Sole Proprietor. Can I Still Get A Loan?2020-01-07T19:11:07-08:00

Yes, if you create an LLC, a corporation, an IRA, or a trust before the close of escrow.

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?2020-01-07T19:10:12-08:00

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.

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.2020-01-07T19:08:31-08:00

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.

Can We Use Dealio’s Hammer Point To Submit The Bid Instead Of A Contractors Bid?2022-05-23T13:44:38-07:00

No, that is only a tool to give you an idea of what the rehab cost could look like. We need an actual 3rd party licensed and bonded contractors bid to get the loan started.

Why Is It Important To Have A Licensed & Bonded Contractor?2022-05-23T13:45:16-07:00

Licensed and bonded contractors give you the 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. They need to have general liability insurance and workers compensation insurance

General liability insurance protects the homeowner against damages such as the contractor collapsing your sewer line or flooding in your basement due to a bad plumbing fix or scratching up your beautiful hardwood floors with their heavy equipment.

Workers compensation insurance protects any employee injured on the job by that insurance.  However, if the company is not insured, you, the homeowner, could be open to being sued by the injured employee. 

What Does It Mean When A Company Is BONDED?2022-05-23T13:52:48-07:00

A surety bond is all about a company’s reputation to follow through. A surety bond is a promise and a guarantee that they will complete the work they agreed to do. It’s a promise that they will follow the rules and regulations of their particular trade. If a company fails to meet their obligations, the customer can make a claim against the bond.

Ask them to provide proof for each of the 3 items make copies and confirm they are current and up to date. 

What Is An Itemized Bid?2022-05-23T13:53:25-07:00

It’s a bid that is broken down into categories. But make sure you don’t just say paint. Is paint interior or exterior? Is Plumbing finished or rough? Cabinets don’t include counter tops so make sure you split those items up. Don’t be so general by saying bedrooms, bathrooms, kitchen. I need those things broken down by flooring, lights, closets, tubs, toilets, sinks, etc. Do not do it by room do it by category. Use the cost breakdown sheet to make things easier on you. Look under FORMS.   

Why Are Itemized Bids So Important?2022-05-23T13:54:05-07:00
  • The bid follows the loan from start to finish.
  • The appraiser bases the valuation off that initial bid and so those items are expected to be completed. When you deviate from that initial bid it messes with the AR value that the appraiser initial gave.
  • The loan officer based the loan off that initial bid.
  • That bid is used to do the cost breakdown for the draws.
What Is Required On An Itemized Bid?2022-05-23T13:54:31-07:00
  • Company letter head
  • Contractors Business Name
  • Contractor or General Contractor Name
  • Address of Contractors business 
  • Phone Number of Contractor
  • Email address of the contractor or company
  • If you change contractors, we need the above information sent to us ASAP. 
  • 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 category item of the scope of work. It must include the total cost of that line item next to it for the entire project. (Itemize by category not by room or piece)
  • Terms of the contract – What is required upfront to get project started – per draw – final payment. Any milestones, reports, deliverables, and end products that are expected to be provided by the performing party.
  • Must be signed by the contractor
Can An Itemized Bid Be Changed After The Loan Has Closed?2022-05-23T13:55:14-07:00

That’s a very fine line. The appraiser based the evaluation on that initial bid. Those are the items that are expected to be completed. The bid could be changed within the dollar amount but the line item itself cannot be changed. Therefore, we do not allow work order changes.

Should An Itemized Bid Contain Its Own Contractors Contingency?2022-05-23T13:55:49-07:00

Yes, any seasoned contractor knows there are always incidentals. If they have not put in a contingency, all overages on rehab will need to come out of client’s own pocket.

What If I Have Unexpected Repairs?2022-05-23T13:56:59-07:00

We do not do change orders. Unexpected repairs will need to come out of the client’s own pocket or contractor’s contingency. If Cogo holds a contingency and the contractors needs to use that, the contractor needs to write a statement to the lender as to why they need to access those funds. It will be up to the lender to say yes or no of releasing those funds. 

We do not do change orders!

You and your contractor need to think about the unexpected cost that always comes up in renovating that might happen. Make sure to have a contractors contingence set aside for those unexpected cost and do not count on change orders.  

Reasons for change orders

  • Haste or inadequate planning in preparing the initial contract.
  • A poorly defined scope of work.
  • Compressed project schedules.
  • Unrealistic cost constraints.
  • Time and material changes; and
  • Owner-directed acceleration.

In my experience, contractors just want the bid, so they don’t put in that contractor’s contingence which in turn, hurts our clients in the long run. So, if you are getting multiple bids and a bid is higher because of a contingency, I would go with that contractor because they know the reality of rehab.

Forms & Videos

Cost Breakdown – CLICK HERE

Sample Cost Breakdown – CLICK HERE

Banking Info Sheet – CLICK HERE

Lien Waiver – CLICK HERE

Sample Bid – CLICK HERE

Cogo 3rd Party Authorization Form –CLICK HERE

How Does The Reimbursement Draw Process Work?2022-05-23T15:18:34-07:00

The reimbursement is the money that is paid back to borrower out of the rehab escrow funds for repayment of rehab expense paid to the contractor for the work that was completed and paid for.

  • Pay the contractor’s their initial starting funds. (Down payment) When they get to their 1st milestone or need more money, request a draw and inspection for reimbursement of funds you gave to your contractor to start the project and have them sign a lien waiver.
  • Repeat step 1 of the process until the rehab is completed. 
How Many Draws Should I Initially Request?2022-05-23T15:20:59-07:00
  • Typically, 1 draw per $10,000 in rehab or whatever you can afford for your upfront cost to start your rehab. Remember, this is a reimbursement of funds. You need to determine what your cash flow looks like. If your budget is $75,000 and you ask for 3 draws be prepared that your initial out of pocket cost will be $25,000 and you will keep using that $25,000 throughout the entire rehab. Again, figure out what you can afford to pay upfront and base that on how many draws you are going to need.
  • The costs for the inspection and disbursement are collected upfront at $400 per draw at closing. If you don’t plan for enough inspections up front you will need to pay for them as you go before you can get your reimbursement. 
How And When Do I Order A Draw / Inspection?2022-05-23T15:23:26-07:00

You can order your 1st inspection 5 days after closing. But you must have an inspection withing the 1st 90 days of closing and within 90 days of every inspection. 

  • Send an email to draws@cogocapital.com
  • In subject line: Request for inspection and loan number
  • Body of email:
  • Client’s last name
  • Client’s rehab address
  • Contact person for inspector
  • Contact phone number
  • Contractor’s email
  • Items that are completed
What Is The Cost If I Need More Draws Than I Initially Paid For?2022-05-23T15:24:12-07:00

For any additional inspection or disbursements that are needed above and beyond those that were initially prepaid for, the fee will come out of the reimbursement draw. If you don’t have a reimbursement coming back, you will need to pay out of pocket before the inspection is ordered. Inspections Fees are $150 and the wire fees are $250. Call Lake City Servicing at 800-630-9252 to pay for those fees. 

What If I Have Unexpected Repairs?2022-05-23T15:27:31-07:00

We do not do change orders. Unexpected repairs will need to come out of the client’s own pocket. If Cogo held a contingency, that contingency would not be able to be released until rehab is 100% completed. Then you would be able to use those funds.

We do not do change orders!

You and your contractor need to think about the unexpected cost that always comes up in renovating that might happen. Make sure to have a contractors contingence set aside for those unexpected cost and do not count on change orders.  

Reasons for change orders

  • Haste or inadequate planning in preparing the initial contract.
  • A poorly defined scope of work.
  • Compressed project schedules.
  • Unrealistic cost constraints.
  • Time and material changes; and
  • Owner-directed acceleration.

In my experience, contractors just want the bid, so they don’t put in that contractor’s contingence which in turn, hurts our clients in the long run. So, if you are getting multiple bids and a bid is higher because of a contingency, I would go with that contractor because they know the reality of rehab.

What Is A Contingency And Why Do I Need To Have Additional Funds For It? How Do I Get It Back?2022-05-23T15:31:45-07:00

A contingency is money set aside to reduce the impact of unexpected events and repairs. If your contractor is a smart, well-seasoned contractor, then they know to plan for the unexpected. 

If your contractor has a contingency in your budget and you need to access those funds you will need to produce a paid receipt for those items that were not in your original budget or for those items that cost, you more than you had budgeted for. 

You will also need a letter of explanation of why you need those contingency funds. If you don’t use those funds during the rehab, those funds will be released on the last disbursement when the rehab is completed. 

How Am I Reimbursed And What Is The Time Frame?2022-05-23T15:34:38-07:00

To get your reimbursement funds you will need to first have an inspection. The inspector needs to prove through photos the items you are requesting reimbursement for is completed. Next you will need to fill out a lien waiver and a banking information sheet. It is important that you carefully fill out the banking information sheet. We don’t want the wire to end up in someone else’s account. We only wire to the borrowers account please do not use any other account. But we do reserve the right to pay a contractor or subcontractor directly if there are issues. 

What Will Stop Me From Receiving A Draw?2022-06-13T09:38:30-07:00
  • Monthly payments not made – It takes 3-5 business days for payments to clear before the wire can be released. Best to make your loan payments by the 1st
  • NSF payments – takes 5 days to clear payments after an NFS payment is made
  • Outstanding fees owed
  • The maturity date expired with no extension
  • Taxes and/or Insurance lapsed
What Is The Cut-Off Time That I Need To Have My Paperwork In For A Wire To Go Out?2022-05-23T16:03:02-07:00

We need all paperwork into our office by 11:00 am Pacific time if you want your wire to go out the same day. Paperwork would be:

  1. Lien Waiver
  2. Banking Info Sheet
  3. Permits
  4. Paid Receipts and/or invoices
What Time Do Wires Go Out?2022-05-23T16:03:50-07:00

Wires go out daily between 1:00 & 2:00 pm Pacific Time – It is up to your bank when it gets released. Some banks release immediately, others release next day. We have no control over your bank and what their processes are.

What Is The Process To Order An Inspection?2022-05-23T14:57:18-07:00
  • Email draws@cogocapital.com
  • Make sure that the loan number is in the subject line
  • Last name of Client:
  • Rehab Address:
  • Contact Name of who will meet inspector at rehab:
  • Contact’s Phone:
  • Contractor’s email:
  • Items that are completed for inspector to look at:
  • Once draws gets the above email they will order inspection with NVMS and send you back a confirmation number.
  • 2 days later the inspector will contact you to set up the appointment.
  • Once inspector comes out it could take up to 2 days for the report to come back
  • The draw department will work up the draw and send you an email with a copy of the draw, inspection report, a lien waiver to be filled out and the banking info sheet to be filled out.
  • Send lien waiver, banking info sheet, permits and paid receipts back to the draw department before 11:00 am pacific time. Wires go out by 2:00 pacific time daily.
  • The inspection company we use is back East so if you send request for inspections after 1:00 pacific time your order will not be accepted through their system until the next business day. 

Turnaround time is usually 5 business days unless it’s over the weekend which could take up to 7 days. 

What If I Don’t Get Contacted By The Inspector Within 48 Hours After Requesting An Inspection?2022-05-23T14:54:53-07:00

First question that you should ask yourself is….. did I receive a confirmation email? If you did not, the email might not have been seen. Resend the email and call the draw department. 800-630-9252

If you did, call the draw department, and ask if they can request the inspector’s information from NVMS. The draw dept. will get the inspectors information and send you an email with the inspector’s information so that you can contact the inspector. 

What Is The Procedure For The Actual Appointment?2022-05-23T14:55:30-07:00

Inspector will call you and set up a time to come out to the rehab. Make sure that someone is there or that the inspector can get into the home. I highly recommend that you have a piece of paper with your name, the rehab address and all the work that you feel is completed and hand that paper to the inspector so they know what they should be looking for. Point out things that are completed and make sure they are taking photos of those items. 

What If I Miss The Scheduled Appointment Of Meeting The Inspector?2022-05-23T14:55:59-07:00

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 $55 – $105 travel fee charged to the Borrower. No excuses. 

How Do I Know How Much I Will Be Reimbursed From The Inspection?2022-05-23T14:56:19-07:00

Once the inspector sends the report to the draw department with the evaluation the draw department will determine if they agree with the inspector’s evaluation or not. They will put together an excel spreadsheet which is called a draw and the draw department will send that along with the inspection report to you of how much they are able to release at that time. 

What Day And Time Do The Wires Go Out?2022-05-23T14:56:35-07:00

Wires go out daily by 2:00 pm Pacific time. You need to have your paperwork into the draw department by 11:00 am Pacific time. 

Who Can Receive The Wire?2022-05-23T14:56:55-07:00

ONLY the Borrower/client can receive the wire, we do not pay contractors but reserve the right if we feel it’s necessary. DO NOT put a contractor’s info on the bank form. If you change contractors, you run the chance of your wire going to the wrong person and it could take up to a month to get the wire back and that is IF the wrong person is honest and sends it back. It is not our responsibility for incorrect wire information. 

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 wiring information and routing number.

How Often Do I Need An Inspection?2022-05-23T14:57:05-07:00

You must have an inspection within the first 90 days after closing then one within every 90 days thereafter. If it goes to day 91 you will be charged a force place inspection of $100.00 and you are now in default of your loan.