If you are buying, refinancing or building in the San Diego area and a bank cannot meet your timeline or read your file, a private lender can often fund against the property's equity instead. We lend on San Diego-area residential, commercial, apartment and construction deals from our Torrance office, and we review every application individually.
This article explains the situations where private financing tends to fit, what a lender wants to see, and how to prepare so the process moves faster.
Situations where private money fits
Private financing is a tool for specific problems, not a default. The deals we see most often fall into a few groups:
- Time-sensitive purchases. A seller wants a short close, or an auction or off-market opportunity will not wait for a bank committee.
- Properties a bank will not finance as-is. A building needing work, a partially vacant property, or a property with deferred maintenance.
- Borrowers whose file does not fit a scorecard. Self-employed owners, entities formed for one acquisition, or borrowers with a recent credit event but real equity in the property. See credit challenges and private loans.
- Bridge needs. A short-term loan to carry a property until a sale, a refinance or a stabilization milestone.
- Construction and rehab. Ground-up builds or renovations that need funds released as work is completed.
For a closer look at how a short-term loan compares with a bank loan, see our comparison of hard money and bank financing.
How we underwrite a San Diego-area deal
Our underwriting is equity-led rather than credit-score-led. We look at three things together: the equity in the property, your capacity to make the payments, and your exit. The exit is the part many borrowers underprepare. We want to know how the loan gets repaid, whether that is a sale, a refinance into long-term debt, or completion of a build that converts to a permanent loan.
Property valuation matters because the loan is secured by the real estate. Expect the lender to want a current picture of value, and for renovation or construction deals, a view of value both as-is and after the work is complete.
Key takeaways
- Private financing fits deals with a time constraint, a property a bank will not take as-is, or a file that does not match a standard scorecard.
- Underwriting centers on property equity, your ability to make payments and a clear exit.
- A complete, organized file is the biggest factor you control in how quickly a decision comes.
Preparing your file
Most delays come from missing information, not from the lender. Before you call, gather:
- The property address, a description of its current condition and use, and the purchase contract if you are buying.
- A plain statement of the loan amount you want and what the funds will be used for.
- Your exit plan in a few sentences, with a realistic timeline.
- The ownership structure: who or what entity will be the borrower, and who stands behind it.
- For construction or rehab, the plans, budget and schedule. Our documents page lists the kinds of items we commonly ask for.
If you are unsure about any of this, call us anyway. We would rather help you shape the request than receive a partial file.
Lending in San Diego from Torrance
We are based in Torrance and lend across California, which includes the San Diego area. Distance is not an obstacle to reviewing a deal: most of the early work is reading the file, the property information and the exit plan. Where a deal needs more than that, we will tell you what is required.
Matching the program to the property
Different properties point to different programs:
- Residential and luxury residential. Our private loans are secured by real estate and underwritten on equity.
- Commercial property. See our commercial hard money and bridge loans.
- Apartments. Multifamily bridge and value-add loans are underwritten on in-place and projected net operating income, occupancy and unit mix. See NOI and DSCR for apartment buyers.
- Ground-up and rehab. Our construction loans can go up to 90% of construction cost, with loan amounts to $75 million, and can convert to a permanent loan at conventional rates on completion.
Timing, honestly
We can offer approval in as little as 24 hours and funding in as little as seven days, subject to a complete file, underwriting, title review and property valuation. That is the best case for a clean file, not a promise for every deal. Title issues, an appraisal that comes in differently than expected, or missing documents are the usual reasons a timeline stretches. Approval is not guaranteed on any application.
A note on costs
Private loans generally cost more than conventional bank financing, in exchange for speed and flexibility. Because the loan is short term, what matters is the total cost over the time you will actually hold it. Ask any lender, including us, to walk you through every cost before you commit. For how pricing works, see how hard money loans are priced.
This article is general information, not legal, tax or investment advice.
Have a San Diego-area deal in mind? Call us at (800) 943-1314 or start an application online, and we will tell you plainly whether private financing fits.
Published by the US Lending & Company underwriting desk. General information only — not legal, tax or investment advice.