Residential Rehab Funding
Aegis RE Partners' residential rehab lending platform provides up to 70% of after-repaired-value (ARV), or 80% loan-to-cost (LTC). Our program is structured as two loans, secured by 1st and 2nd trust deeds. The first trust deed loan funds up to 60% of ARV, and the second funds the gap up to 70%. Aegis can provide both loans, or can work with other hard money lenders providing the first, with Aegis funding just the second trust deed.
The first trust deed loans typically carry a rate of 10-12%, and up-front fees of 2-5 points, all based on location, property type, loan amount, etc. While we have no minimum credit score requirements, we will look at a prospective borrower's credit history as part of our risk assessment, as character is one of our primary underwriting metrics.
Our second trust deed loans typically carry a rate of 12%, and up-front fees of 3-5 points. In addition to the rate and fees, we will take a percentage of the resale profits. The percentage is determined based upon the experience level of the borrower, size of the loan, extent of the renovations, and the amount of time it takes to rehab and resell the property.
Q: What sets Aegis apart from other rehab funders?
A: There are two key differences between the Aegis program and what is most commonly offered by rehab funders:
1. Aegis looks primarily at the project and experience of the borrower, rather than the personal financials or credit score. As such, we will not decline a deal based solely on limited personal resources, or a low credit score.
2. Aegis provides up to 100% of the total project costs, including the acquisition, rehab, closing costs, and prepaid interest.
Q: How does Aegis make money? What percentage of the profit is allocated to Aegis?
A: In addition to collecting interest and origination fees, Aegis receives a preferred return on the capital invested in each transaction. To achieve our targeted IRR for this investment strategy, we receive a split of the profits based upon a number of factors, including experience, amount of cash contributed by the Client (if any), length of holding period (i.e., how long our capital is outstanding), and size of transaction. While we have some general pricing parameters, each deal is priced on a case-by-case basis.
Q: In addition to the profit allocation, are there any other costs associated with each transaction?
A: Since we fund transactions based upon the merits of each deal, it is imperative that we perform the necessary due diligence on each transaction (e.g., valuation, market analysis, title history, etc.). To cover the costs associated with this due diligence, the Client pays for the appraisal and property inspection. In addition to these due diligence costs, the Client is responsible for the property insurance, which must be for a minimum of six months and paid in full prior to closing, and all utility costs during the renovation process (e.g., water, electric, etc.).
Q: Does Aegis perform a credit check?
A: Yes, we do run credit checks; however, credit score is not a factor in our decision process. Additionally, as part of our standard due diligence, we will run a full background check - including criminal - on each principal of the company. We will not lend to anyone convicted of a crime of moral turpitude.
Q: What information does Aegis require in order to begin underwriting a new transaction?
A: In order for us to begin the underwriting process, we must have all of the following information:
1. Aegis Application Form (found on the Submit Application page)
2. Aegis Rehab Funding Transaction Worksheet (found on the Submit Application page)
3. Copy of Drivers License
4. Articles of Incorporation/Organization
5. Bylaws/Operating Agreement
6. Evidence that Corporation is in Good Standing (as of transaction date)
7. Resumes of all Principals and/or Authorized Signers
8. Brief Narrative Describing Business Plan
9. Fully Executed Purchase Contract (with all Addendums if applicable)
10. Detailed Rehab Budget
11. Contract with licensed and insured contractor performing rehab
12. Comparative Market Analysis (CMA) with at least three (3) recent comparable sales
13. Proof of contractor's insurance: General Liability, Worker's Comp and Builder's Risk
14. Interior and exterior photos of subject property
15. Last three months' bank statements for business
16. Contact info for realtor who will be listing the property subsequent to rehab being completed
17. Aegis Due Diligence Fee
18. Other documents as needed
Q: How long does Aegis take to underwrite, approve and fund a transaction?
A: Typically, our underwriting process can be completed within 14-21 business days from the time we receive all of the information listed above. Since an appraisal and inspection report is required, the total time it takes for an approval and closing could vary depending on how long it takes to receive these reports. Please keep this timing in mind when structuring your transactions, as we will very rarely make exceptions to this policy.
Q: Can I choose the title and escrow company for the transaction?
A: Yes, but we must first approve the companies you would like to use. Aegis has approved a number of title/escrow companies in California and Florida, so please feel free to use on of these preferred vendors. A list of these service providers can be found on the Aegis Partners page of this site.
Q: How does Aegis protect its investment?
A: In order to protect our investment and mitigate risk, we do the following for each transaction: (i) perform extensive transaction-level due diligence; (ii) record a Mortgage or Performance Deed of Trust; (iii) require a lender's title insurance policy and closing protection letter provided by a reputable title insurance company; and (iv) work only with trusted third party providers (e.g., title/escrow companies, mortgage lenders, appraisers, etc.).
Q: How do I get started with Aegis?
A: To be added to our “prospect” database, which we encourage you to do prior to having a deal to submit, please complete the Investor Information Package and return, via email, to firstname.lastname@example.org. This will help in expediting the process once you have a transaction in need of funding. Please note, we don’t “pre-approve” Clients, as our decision to invest is based primarily on the transaction. However, if you have any liens, judgments, or pending lawsuits against you or the company in which you be taking title to the property, we may need additional documentation prior to approving you. We will not approve any applications where the applicant has been convicted of any crimes of moral turpitude.
- REHAB FUNDING PRE QUALIFICATION FORM (58.5 KB .doc)