Frequently Asked Questions
- What is the difference between a hard money lender and a private lender?
Flexibility is the key distinction between hard money lenders and private lenders like ENK Capital. Typically, hard money lenders impose strict criteria that borrowers must satisfy concerning asset value and equity. In contrast, private lenders tend to be smaller and more agile, allowing for greater negotiation regarding terms and interest rates. While hard money lenders often adopt a stringent approach towards repayments and maximizing returns, private lenders, such as ENK Capital, prioritize developing long-term, mutually advantageous relationships. We believe that a successful flip results in a satisfied borrower, leading to more lucrative transactions in the future. Our efforts are dedicated to fostering partnerships that benefit all parties involved, ensuring the success and profitability of those with whom we cooperate.
- Can I get a loan for my current home?
Due to law and regulation, our loans are not available for primary residence; most private lenders won’t even finance individuals. Instead, you’ll need to secure financing through an entity like a registered LLC.
- Does credit matter?
While it isn’t the dealbreaker it can be with traditional mortgages, we will pull a credit report during underwriting. Instead of focusing on the number, though, the emphasis is on trendlines.
For example, if you previously self-financed Fix & Flips, you’d expect to see intermittent dips and valleys in your credit history as you took on consumer debt to fund a project. This would be followed by a peak as the project closed, and you returned capital.
Even with adverse events in the past, we can look past some negatives if your recent history is clean.
- What is the typical length of your loans?
Our loans tend to have a 12–18 months maturity date, though we can extend it slightly if circumstances warrant it. On the flip side, we don’t punish you for pre-payment, so you’re free to pay down the debt early as your project progresses. Likewise, hitting a 12-month maturity, even for short projects, builds valuable flexibility, especially when you’re free to pay it off early.
- What kind of interest and points are involved?
You’ll generally see 0 – 3 origination points and rates between 9% and 14%. However, note that (typically) loan payments are interest-only until maturity, letting you maximize cash flow mid-project.
- Will the loan cover repairs if I am trying to fix and flip a property?
Not only will our loan cover a fix and flip, but many of ENK Capital’s loans are almost exclusively fix and flip properties. Buying a distressed property, cleaning it up, and selling for a profit is one of the most popular real estate investment strategies. We offer up to 92% of the purchase price and 100% of the rehab costs.
- Do I need to bring my own money to the table?
We require borrowers to stake 8% — 30% of the deal cost out of pocket depending on certain variables. Doing so helps keep our interests aligned and focused on the goal of executing a successful real estate investment project or cycle. Doing so also helps you look at your own capital to begin planning for unexpected contingencies and building out a separate project emergency fund.
- Do you care about the project’s specifics?
We finance projects, but we’re also industry experts and will closely examine your plan and strategy. Underwriters and loan officers will look through the specifics with you, so be sure to have a well-developed plan addressing friction points. We’ll help clarify or refine things as we go if needed, but starting from a solid foundation goes a long way toward fast funding.
- How much money can I get from a loan?
This varies based on the project and your circumstances; however, our current programs start at $100,000 and may go as high as $5,000,000 for eligible borrowers.
- What is the process to apply for a loan?
The first step is to apply for instant online approval. We will do a soft pull of your credit, review your experience, and review the basic deal economics and see if your project is a good fit for us. From there, you’ll provide basic documentation like purchase contracts, scope of work for rehab, and the like. We will also appraise the property during this period. Later, loan underwriters collect additional information about you (as the borrower), like cash reserves, entity information, and insurance. Once ready (depending on the loan type), the loan closes, and you’re funded.
Did we miss any questions? If you have more questions or want to see if we’re a good partner for your next project, give us a call at 888.351.8958.
Ready to get your project funded?