Holland & Hodge Capital Partners - Borrower Presentation
Published on Jun 08, 2016
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PRESENTATION OUTLINE
Hard Asset Lending Solutions
What is Hard Asset Lending?
- Hard Asset lending provides short term financing alternatives for small businesses, developers, contractors and real estate investors, allowing them to use existing assets as loan collateral
Hard Asset Lending allows businesses, developers, contractors and real estate investors to leverage their existing hard assets as collateral in order to obtain a loan. For example, if a real estate investor purchased a property to fix/flip, they would pledge the real estate as collateral in order to obtain a short term loan. This is simply one example. So similar to when a buyer secures a mortgage. The difference is a mortgage through a bank is what we consider conventional financing. This is long term financing. Hard Asset Financing is alternative financing needed on a short term basis. This is why you often here it referred as Bridge Financing.
o an asset-based loan is a commercial loan that is structured so that the credit extended to the borrower is monitored in relation to the collateral that has been pledged to support the credit . . . [these loans] are underwritten primarily as revolving credit facilities with borrowings limited by specific advance rates against the underlying collateral that generally consists of ever changing pools of assets such as receivables and inventory.
o an asset-based loan is a commercial loan that is structured so that the credit extended to the borrower is monitored in relation to the collateral that has been pledged to support the credit . . . [these loans] are underwritten primarily as revolving credit facilities with borrowings limited by specific advance rates against the underlying collateral that generally consists of ever changing pools of assets such as receivables and inventory.
Photo by Vanishing STL
What Are the benefits ?
- Access to Capital Quickly
- Quick Close
- Less Paperwork
- No Hidden Fees
- Ease of Doing Business
- make more money - capital leverage
- flexible payments
• Why Is Hard Asset Financing Used? Benefits?
o Access to Funding/Cash quickly - Access to money quickly – you can act fast, stay competitive in today’s marketplace
♣ securing a conventional loan can take up to 120 days. It can be a very slow process, endless paperwork, no guarantees on securing the loan
o Collateral Not Credit Focused – Easier/Faster Approval Process
♣ businesses can be asset rich but cash poor
• They may have strong liquid assets ranging from cash, accounts receivable, inventory, equipment, real estate but little cash flow
♣ they may have poor credit
o Ease of Doing Business - Our safeguard is the quality of the asset/collateral – more important than other metrics used by banks to underwrite. We work with you and your business to overcome hurdles and succeed
o Less Paperwork Required
o Interest Rate Only Payment
o Flexible Payments
o Lower Monthly Cash Outlay
o Quick Close
o Leverage Multiple Deals At the same time
o No hidden fees
o Banks don’t like gut rehabs
o Access to Funding/Cash quickly - Access to money quickly – you can act fast, stay competitive in today’s marketplace
♣ securing a conventional loan can take up to 120 days. It can be a very slow process, endless paperwork, no guarantees on securing the loan
o Collateral Not Credit Focused – Easier/Faster Approval Process
♣ businesses can be asset rich but cash poor
• They may have strong liquid assets ranging from cash, accounts receivable, inventory, equipment, real estate but little cash flow
♣ they may have poor credit
o Ease of Doing Business - Our safeguard is the quality of the asset/collateral – more important than other metrics used by banks to underwrite. We work with you and your business to overcome hurdles and succeed
o Less Paperwork Required
o Interest Rate Only Payment
o Flexible Payments
o Lower Monthly Cash Outlay
o Quick Close
o Leverage Multiple Deals At the same time
o No hidden fees
o Banks don’t like gut rehabs
Photo by Great Valley Center
Loan Programs
- Fix /Flip
- New Residential Construction SFH & 1-4 Units
- Refinance/Cash Out
- Commercial W/ Residential Component
- Mix Use
- All Programs are investment properties - no homeowner occupancy
- Investment Properties - Income Generating Properties
- Ask About our Luxury Hard Assets We Accept!
Photo by sherwoodrealestate
Fix/Flip Scenario 1 - HarD asset lending
- purchase price $235K
- Rehab Costs - $35K
- ARV - $385K
- Loan - $200K
- Borrower Investment (equity) $70K
- Equity Created $115K
- Profit: $65K
- Annualized ROI 279%
- Project Time 4 months
Investor Equity:
20% down = $40,000
3 points = $6000
Title = $4000
Loan Processing Costs =$1800
Lawyer = $600
Application = $500
Appraisal = $500
Escrow = $200
Insurance = $1500
20% down = $40,000
3 points = $6000
Title = $4000
Loan Processing Costs =$1800
Lawyer = $600
Application = $500
Appraisal = $500
Escrow = $200
Insurance = $1500
Photo by krystian_o
Fix/Flip Scenario 1 - HarD asset lending
- purchase price $71K
- Rehab Costs - $85K
- ARV - $290K
- Loan - $118K
- Borrower Investment (equity) $134K
- Equity Created $145K
- Profit: $80K
- Sold Price $340K
- Annualized Return 324%
- Total Project Time: 8 months
Investor Equity:
20% down = $40,000
3 points = $6000
Title = $4000
Loan Processing Costs =$1800
Lawyer = $600
Application = $500
Appraisal = $500
Escrow = $200
Insurance = $1500
20% down = $40,000
3 points = $6000
Title = $4000
Loan Processing Costs =$1800
Lawyer = $600
Application = $500
Appraisal = $500
Escrow = $200
Insurance = $1500
Photo by krystian_o
