Small is Beautiful - Micro Loans

We recently closed a loan many brokers would scoff at. Sure, it was for only 30-thousand dollars, but it was a beautiful thing. Why?

Well, for one thing it was an incredible deal, the borrower was able to purchase an ENTIRE two story building commercial building for that price, and it was a nice one too! Wow, the deals out there to be found by buyers seem to be getting better and better. After the deal closed, he expressed his sincere appreciation. He said that because the loan amount was so low, he thought no one would take him seriously.

It was a beautiful thing because the investor who put up the money - well, he was more than happy to have first lien position of a great building which is sure to appraise for a couple hundred thousand more than what he loaned against it. It was such an obviously good bargain, he didn't even require an appraisal. And the investor is earning a very nice return on his money! Six months interest, collected up front, isn't a bad thing, either.

It was also a beautiful thing, because from inception to close, the deal only took a couple weeks to close, despite the fact that a new LLC had to be formed to hold the real estate, etc.

What is also neat, is the fact that when this borrower performs on this loan, and makes a clean exit, he will be elevated to an internal thing we do with proven borrowers - he gets "preferred status", meaning his chances of getting a new loan services are much improved, and it will likely mean lower interest rates and fees, because he will have proven himself a good borrower, which is all a good investor really needs. The same investor may even fund the same borrower again and again, because he knows the borrower will fulfill his obligations.

I personally love deals like this, for many reasons, but probably most because it is the kind of transaction that we cut our teeth on; if it wasn't for the very first small private commercial loan we made not long ago, which I think was for about 130K, which literally "saved the farm" for a hardworking Wisconsin Dairy Farmer, White Knight may never have gotten it's start.

OH Investor Needed...1.8M for Oil Rig Purchase

Have a client in the Midwest looking to purchase an oil rig to service its own leases. Very experienced borrower in the business 30+ years. The rig they are trying to purchase is very new and they are getting a steal of a deal. Local bank isn't in the mood so they are trying to attract a private investor. You and I know that oil prices will rise again, and every well they drill they get a nice %. If you have the cash and the patience this should be a great opportinity. Email for details.

TX Investor Needed...1.6M

At White Knight we always strive to match private investors with borrowers in the same state. We got a great loan request today for an entity that runs a 100% occupied apartment complex, looking for 1.6M for a straight refinance. You can earn 8% on this deal plus 3% at close, and your investment will be protected with first lien position on an fine income generating property. They will be happy with a two year deal. Please contact me if you are interested in this deal and we will send you the particulars.

To Fee or not to Fee, that is the Question

There are funding institutions and brokers out there who will tell you until they are blue in the face that there is no such thing as a funder who doesn't charge up-front fees. This is probably largely due to their need to defend the fees they have historically charged, and due to folks like me who actively promote the fact there ARE funders who don't charge up-front fees. As with most arguments, this boils down to semantics.

Let me tell you the truth and I will keep it as simple as possible:
1)
There ARE funders who will review a file and underwrite it with out expense beforehand, (yes they are hard to find, but they do exist), BUT there will ALWAYS be 3rd party fees (such as to appraisers, risk assessors, title companies) that the borrower is expected to shoulder in pursuit of their loan. Its that simple.

The skilled broker will work with both the borrower and the funder to estimate these expenses and build them into the loan proceeds, so that the client is not "short" at the end. I personally don't like it when a borrower is expected to cut a blanket check to the funder to start the "due diligence" process. Don't like it, but have done it. I PREFER to have these expenses discussed BEFOREHAND, and for the checks to be cut to any 3rd Party directly. This eliminates any possibility the funder is benefitting in any way from these fees.

2)
There ARE brokers who will review a file and prepare it for funder review with out expense beforehand, and there are ALWAYS expenses associated that process, but it is up to the broker whether or not to ask for compensation for this extensive amount of work. White Knight does not. We believe in putting our money where our mouth is and getting paid a success fee out of closing. If we don't think a loan is going to go anywhere, we won't waste your time or ours. Sometimes it takes a good deal of time to figure this out, but we will do that at our expense if the project is worthy or compelling. At least you are not out any money to find this out.

We do ask clients for a small amount of money once a funder is found that has issued terms that are acceptable and who has a) satisfied the borrower of its ability to fund and 2) satisfied the borrower of its intent to fund. A good rule of thumb for this fee is 1/10th of 1% of the loan amount, but with the bigger loans this is complete overkill so we usually just discuss what is appropriate with the borrower ahead of time. Never any surprises and total transparency is what you get when you deal with us.

A little patience pays off...

I am happy to say a private investor stepped up to take the loan scenario that I posted previously. It is my second loan for this investor, who is giving White Knight another chance since the first loan he did with us over a year ago is panning out nicely. He agreed to loan the borrower approx 80K (53% LTV) at 13 % interest and two points, for two years. He is not requiring an appraisal. If you want to earn similar returns on your cash, contact me for a referral and lets get going!

Investor Needed

I have a great loan scenario for someone who wants to "get their feet wet" in the world of private lending, with out using too much money. I have a borrower in Madison, WI, willing to put up a nice income-producing property (duplex, upper & lower) worth about $163K, for a 70K loan. The property is free and clear. That loan amount is 47% of the value of the property. You would have first lien position, just like a bank. You would earn 16% on your money in the first year. Try making that on the stock market right now! Borrower will pay all closing costs. We do all the paperwork. You just cut a check and sit back and earn that nice interest. Please call me if your would like to have more information!

The Delights of Skype

...sure it's been around a while now, but I just never made the effort to get to know this service until I started doing work for a London based borrower looking to finance the purchase of a mega-resort in the Mediterranean. He is a big fan of it, and because all of a sudden I started having dealings with folks all over this planet, because of my dealings with him, and noticed all of those guys used it...I took the plunge.

...well, not much of a plunge really, I think the head set cost me $20 at the local Office Big Box. I got home, downloaded the Skype software in about 2 minutes flat, and it rang! It was my friend Ivan. Holy cow I couldn't believe the clarity of the call, no noise, a barely discernible delay.

If you do any business with folks overseas, do yourself a favor and get a Skype address, its the neatest thing since sliced bread. Oh, and if you want to use it to contact me, give it a whirl at:
"white.knight.cf"