Why not get a traditional loan or mortgage?

Mortgages and loans through large, traditional institutions like banks are heavily regulated, take a long time to setup, and are designed to be paid off slowly over a long period of time. There are very specific parameters for what properties banks will mortgage and who can qualify. Hard money loans are intended to fill the gap around traditional loans. They are ideal for established borrowers seeking a short-term loan for a specific purpose, especially when they need to be flexible or move quickly.

Are hard money loans bad?

Hard money loans are not bad, shady, questionable, or in any way negative. While there may be some unscrupulous lenders in the space, hard money loans are a valuable tool when used properly that can open opportunities and make a lot of money for both the borrow and the investor. BSTN Capital only accepts borrowers and lenders who are in a strong position to succeed and complies with “bad actor” regulations to help prevent malicious lending.

Are hard money loans the same as private loans or bridge loans?

Hard money loans are an example of one type of private loan, just as a bridge loan is an example of one type of hard money loan. The most common hard money loans are to fix and flip homes, or to provide working capital while a person or company negotiates a more traditional loan, which is commonly known as a "bridge loan." However, hard money loans come in a variety of shapes and sizes and serve a variety of purposes. If you aren’t sure whether your needs fit the model of hard money lending, feel free to reach out and we’ll find out if we are a good fit for what you are seeking.

What is LTV? What are Points?

LTV stands for Loan To Value, which is a percentage of a property’s fair market value, or what you can sell it for. Points are a percentage of the total loan charged as a fee for setup. To illustrate, if a borrower wanted a loan and had a property worth $100,000, then the maximum that borrower could borrow is 75% LTV, or 75% of the value of the property, which would be $75,000. The terms to borrow the $75,000 would be 12% interest and 2 points, or 2% of the total value of the loan, which would be $1,500. Putting this all together, the borrower could receive a maximum of $73,500 (($100,000*75%)-2%) and would have to pay $750 (($100,000*75%)*12%/12) per month in interest until the loan was paid off.

What is a lien?

A lien is a claim, or a legal right, against a property used to secure a debt until it is paid off. A property cannot be sold until the debts are satisfied and the liens are released. If a debt is not paid, then the lienholder may be able to take possession or control of the property as repayment. The lien is what protects the lender.

Are liens bad?

Liens are not “bad” and usually have no effect on a property as long as the debt that the lien secures is paid in full. Liens are customary tools to secure a debt and are used in traditional mortgages, car loans, etc. They protect investors and are actually good for borrowers too, since they provide straightforward security so people will be willing to invest money and borrowers will be able to borrow money more cheaply.

What does first and second position mean?

First position or second position can refer to the order of lienholders against a particular property, if there is more than one lien against the property. In other words, a creditor who would get paid first if a property was sold is in the first position, and a creditor who gets paid only after that first creditor has been paid in full is in the second position. All of the loans that we facilitate use first position liens.

What if I have more questions?

We are happy to answer them for you. Contact Us today

What is a hard money loan?

Hard money loans are a type of private loan backed by a "hard" asset, usually real estate, and therefore may also be referred to as a private mortgage. They are much more flexible than standard mortgages, and can help fill gaps for situations that don’t “fit,” such as like flipping a home, repairing or stabilizing a commercial property, or working around credit issues or a prior bankruptcy. Much like a mortgage, they use real estate as collateral, and have specific timeframe, interest rates, and an application and approval process. However, unlike mortgages, hard money lenders typically won’t lend on a personal home, and hard money loans often mature in 6 to 24 months instead of 15 to 30 years.

Is a hard money loan right for me?

Hard money loans are right for people who know how much they need and for how long. Unlike a traditional mortgage, the point of a hard money loan is only to keep the money for the shortest amount of time, not to drag out payments for longer than most people will stay in the property. Also note, the property cannot be a primary residence or an owner-occupied residential property.

When is a hard money loan a bad idea?

A hard money loan is a bad idea if you are simply looking for additional capital but do not have any intended use for that money. A hard money loan may also be a bad idea if you are uncertain how much money you need or how long you may need it.

Why are interest rates so much higher than traditional mortgages?

Interest rates are higher than traditional mortgages because the loans are much shorter and don’t consider the credit of the borrower, instead being secured by real property. But, even though the interest rates are higher, a typical borrower pays much, much, less in interest over the life of a hard money loan than a traditional mortgage. For example, a homeowner with a $300,000 30-year mortgage and a 4% interest rate will pay more than $215,000 in interest before the debt is paid off. A borrower of a $300,000 hard money loan at 12% interest might only pay $36,000 in interest before the debt is paid off. Hard money loans are right for people who know how much they need and for how long.

Where does the money come from?

Money comes from an investor or group of investors depending on the type and amount of loan. For many loans, a single investor will provide all of the money received by the borrower, and that investor will receive the payments made by the borrower.

How long does each loan last?

Most commonly, 6 to 24 months. If you want a shorter or longer term, please contact us.

How do I qualify?

Every loan is different, so apply today to get an answer to your specific situation. You can review the loan terms and required documents on our Borrowers page as a reference for what type of information you will need to move forward.

What if I have bad credit or have had credit problems in the past?

Your credit is not a factor when determining the viability of a potential loan. Rather, we look at the valuation of the underlying property, market conditions, the intended purpose, and other similar factors. You can still get a loan if you have bad credit, as long as your property and business case are solid.

How long does it take to close?

The time to close will vary depending on the structure and amount of the loan, but most loans will close in 7 to 14 days, with some loans in as little as 24 to 48 hours.

What if I don’t have a preferred Title company?

No sweat. Just let us know and we’ll recommend one we’ve worked with in the past.

How will I receive the money?

After completing the loan process, the money will be wired to the designated account of your choosing.

What if I pay the loan off early?

Congratulations! There are no prepayment penalties, so if you pay off the loan early you are free to move on to your next project, no strings attached.

What if I need more time to pay off the loan?

If you anticipate needing more time to pay off the loan, please contact us as soon as possible to renegotiate the terms of your loan. If you wait until the last minute, there may be nothing we can do to help you.

What happens if I miss a payment or pay late?

The best place to answer this question would be the loan documents specific to your loan. A grace period may be provided to account for a delayed payment or late fees may apply, but generally an unnoticed missed payment will qualify as a default on the loan.

How can I get started?

Submit an application

Who can invest?

To invest, you must meet the SEC definition of an “accredited investor.” Generally, this requires either an annual income exceeding $200,000 ($300,000 for joint income) for the last two years with the expectation of earning at least the same in the current year, or a net worth exceeding $1 million. Additionally, an entity entirely owned by accredited investors or with assets exceeding $5 million also qualifies.

Are hard money loans a safe investment?

Every investment has risk. However, hard money loans offer some investor protection because the debt is secured by real property - a.k.a., land and what is built on it. Land cannot be lost or easily stolen, and will always have value, which generally increases over time. Also, the loans we offer are generally no more than 75% loan-to-value, meaning there is a 25% buffer against the value of the collateral. The buffer protects against market fluctuations and makes it easier to quickly recover our capital if things don't go to plan.

Why are the interest rates higher than what banks are offering?

Interest rates are higher because of the nature of the loan and the process involved. Unlike banks or other traditional lending institutions, hard money loans involve a simplified due-diligence process (because the asset matters more than the borrower) and are for much shorter terms than the traditional 15 or 30 year loans. Borrowers are willing to pay more for the relatively quick access to money, short terms, and flexibility in prepayment. The Fund passes those returns on to our investors.

How do these funds compare to the stock market?

All of BSTN Capital's Funds are only open to accredited investors, require a higher initial investment than stocks, and are not liquid - meaning they are a long-term investment. Hard money loans can be a great way to diversify a portfolio, and to hedge against inflation. Each Fund has its own objectives and advantages, so see the fund documentation for more information.

Is there a minimum investment amount?

Because of the process to verify an accredited investor, the minimum investment amount is $50,000, though this may vary depending on the offering.

How is this different than buying a property?

When you purchase a property, you take on all of the risk of the property in exchange for a share of the profit. BSTN Capital's Funds offer direct access to real estate, but without individual ownership of a single property. Instead, you join with other investors to gain access to a portfolio of properties, depending on the Fund. This gives you possible diversification, and we handle all of the day to day operations for you. See the offering details and documents for each Fund to learn more.

How long does an investment in a Fund last?

In general, all of these Funds are considered long-term, illiquid investments, designed to give you ongoing value instead of a large payoff. Each Fund has specific terms, so see the Fund offering for more information.

How can I get started?

Select a Fund to get more information.

What do you mean by "stable" and "performing?"

A performing note is one where the borrower has been making all payments on time and is not in default. A larger down-payment and at least a few months of successful payments are a strong indicator that the note is "stable" and the borrower is committed and capable of continuing through the term of the loan.

Why would someone sell a performing note?

A performing note is a valuable long-term investment, but sometimes you need capital now and don't want to wait for the note to mature. We provide a simple and easy way of converting your note to cash.

Do you buy non-performing or delinquent notes?

Not usually, but you can still contact us and explain the situation, especially if the note has a long history of performance. We evaluate each note individually, so it never hurts to ask.

What is the difference between a mortgage, a note, a loan, a trust deed, etc?

A "mortgage note" or "trust deed" is a type of security or "lien" against a property that is used to secure a loan. A "hard money loan" is like a private mortgage on a property. See our FAQ page for more information.

Do you buy the notes at face value?

The purchase amount will be based on the remaining or unpaid principle balance ("UPB"). Generally existing notes are purchased and sold at a small discount, which covers processing costs and helps protect the buyer from an early payoff. We will make you an offer after reviewing the loan information.

What documentation will I need?

Nothing up front, just send us a message with the loan details (original amount, interest rate, original funding date, maturity date, property address, and remaining principle balance) and we will get back to you if we are interested in exploring further. If so, we will provide you with a secure link where you can upload the loan documentation. We will want to see most everything you reviewed at the beginning of the loan (appraisals, the purchase agreement and closing statement, the note itself, etc) as well as a recent statement showing the payment history (usually from the loan servicer) and evidence of insurance if applicable. Don't worry, we will guide you through everything.

Why would I buy an existing note instead of a new note?

Even with a good due diligence process, a new note is an unproven commodity. By buying an existing, stable note removes some risk and is a more conservative way of securing long-term, passive cash flow.

How do I get started?

Contact Us Today

Who are you guys?

BSTN Capital is a family team based entirely in the United States that seeks to simplify and improve the private lending space. Between us, we carry over a decade of experience in investing, real estate, business leadership, legal, and technology. BSTN Capital synergizes these complimentary skills to provide a streamlined and professional borrowing or lending experience unlike any other.

Is your system secure? Is my information safe?

Yes. BSTN Capital utilizes enterprise-grade services to ensure all information exchanged is safe and secure. All of our document exchange is encrypted and we never ask you to email anything sensitive (watch out for companies that do!). We only use your information to evaluate and close the loan, and will never share or sell your information for any other purpose.

What if I have more questions?

Didn’t see your specific question in the list above, or just feel like talking to a human on the phone? Feel free to contact us any time.