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Credit score is not the sole determining factor when originating a hard money loan. GMC is more concerned with why the sponsor's credit score is where it's at, as opposed to the actual numerical value itself. Exit strategy is always taken into consideration when reviewing credit history. We'd put much less weight on credit history for a sponsor looking to sell the property before the balloon comes due, as compared to one looking to refinance.

We'll consider any loan amounts greater than one million ($1m) in our hard money fund and consider deals as large as twenty million or more. LTVs are capped at 65%, though certain property types and locations may be capped at lower levels. Each deal, to an extent, is taken on a case-by-case basis, though $1m+ and 65% LTV or less are great rules of thumb to use as a starting point.

Typically loans are structured as a one year balloon, though we do have the ability to add extension clauses stretching the deal out as far a two to three years. There is typically a cost associated with a greater than twelve month duration, resulting in either a higher rate or additional fees during/at the time of the extension.

All of our loans a required to be in first lien position, with 2nd mortgages severely frowned upon. We are able to, in certain circumstances, encumber additional properties (blanket) and add partial/early release clauses if absolutely necessary or the deal calls for it.

All deals are structured without a prepayment penalty, though most carry a six month lockout clause (can be waived on a case-by-case basis). We want to assure the borrower that these are short term deals in nature and not penalize them for either sale of the property, or refinance into more cost effective terms.

A huge advantage of our hard money program is our ability to create an escrow, or reserve, account for any numbers of expense items for the property. Such items include: Interest, Insurance, Tax, HOA Dues, Construction Completion, and other expenses. We like to create escrows on an as-needed basis only, and create financial models to determine what % of future expenses property cash flow can carry, and what should be escrowed at closing.

Preference is for solid, cash-flowing properties such as, but not limited to:

Like any deals we originate, value is considered based upon actual, current Net Operating Income. Any commercial property, in the eyes of GMC, is worth the cash that it's generating at the present point in time. Unfortunately we're unable to take into consideration any after-rehab/repair value, land value, going concern value, hopeful-increase in occupancy, or market area improvement projects. Amortization and depreciation are both eligible to be added back into NOI, as are any one-time or non-recurring expense items - though we must see management fee, capital reserve account, and accurate tax line items on all P&Ls. Seasoning is not important, as we're able to take a snapshot look at occupancy, though we will make comparison of fair market rent/sqft. vs. actual rents being charged. Cap rates vary by property type, though 8-10 caps are representative of our average historical calculations.

Our deals typically carry interest rates which range between 12% and 15% and fees at closing between 3% and 5% of the loan amount. All of the payments are interest only and are due the first of each month and considered late as of the 15th. We allow very little margin for error with respect to late payments, as we do everything we can to set the sponsor and property up for a successful exit strategy and any variation from that plan is seriously looked down upon.

Typical documentation required for an LOI include (but might not be limited to):