About 1st Choice Lending
1st Choice Lending is a Scottsdale, AZ based private money lender offering loans in 22 states across the US. Their focus is mainly on fix and flip hard money loans. Their lending guidelines are flexible, including loan amounts ranging from $75,000 to $1,000,000 and terms up to 1 year. Their lending parameters call for a minimum FICO rating of 550. They will consider different lending scenarios but mainly focus on single family units and multi-family units.
Loan Types Offered: Fix and Flip Loans
Property Types Covered: Single Family, Multi Family
Areas Served: AZ, CA, CO, CT, FL, GA, IL, KY, MD, MA, MI, MO, NV, OH, OR, PA, SC, TN, TX, VA, WA, WV
Fix and Flip LoansLoan Amounts: $75,000 - $1,000,000
Available Rates: N/A
Typical Terms: 12 months
Points Charged: N/A
Max Loan-to-Value (LTV): N/A
Max Loan-to-Cost (LTC): N/A
Owner Occupied Allowed: N/A
Interest Only Loans: YES
Prepayment Penalties: N/A
Minimum FICO Score: 550
Time to Close: 5 - 7 Days
Loan Example 1
Jose finds a house in Houston, TX to rehab and sell. Since he does not have enough cash to buy the $250,000 property outright, he decides to take out a hard money loan from 1st Choice Lending. The borrower will be required to bring 15% of the purchase price in cash to the closing based on a 85% loan-to-value stipulated by the lending company. This makes the principle amount from 1st Choice Lending $212,500. The interest rate on the note is 9% for a length of 18 months and the lender requires a three point origination fee at the closing. The interest payments are to be paid monthly and the principle will be repaid after the property sells.
Therefore, Jose will need to make a $37,500 down payment in addition to paying a $6,375 origination fee. The lender will collect $1,594 in monthly interest from the Jose . This is computed by taking the total note value of $212,500, multiplying that by the 9% rate of interest, and then dividing that number by 12. At the end of the note, he sells the renovated house for $312,500. After deducting the $28,688 in interest payments ($1,594 times 18 months), the $6,375 origination fee, the $212,500 principle amount on the note, and the $37,500 he brought to the closing, he will make a gross profit of $27,438 ($312,500 price minus $285,063 in costs). This amount would be reduced by any rehab costs paid by Jose .
Loan Example 2
Willie takes a fix and flip loan from 1st Choice Lending so he can remodel a townhome to re-sell in Houston, TX. The loan has the following terms:
a) A $340,000 purchase price, b) a 85% loan to value (LTV), c) a 12 month term, d) a 8% interest rate, and e) a 4% origination fee.
Once the rehab project is completed, if Willie sells the project for $425,000, the final numbers would be as follows:
$425,000 sales price
- $289,000 loan principle (85% LTV)
- $51,000 cash paid at closing (15% on 85% LTV)
- $11,560 origination fee (4% of the $289,000 principle amount)
- $23,120 interest payments (12 months x 8% interest)
= $50,320 gross profit (does not include taxes or renovation costs)
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