A lender explains a loan product where borrowers make no monthly payments or upfront fees. Interest accrues as a single lump sum due at payoff, freeing cash flow for investors to run multiple renovation projects at once. The lender absorbs the risk if the loan defaults.
We are an investment platform first and foremost, but what we are as a lender is a lender that allows our borrowers to take out loans without paying us a single dollar. Not $1 in fees, not $1 of monthly interest until they are done. So literally they can go the entire duration of the loan without making a single payment. Any fees that we have are rolled into the loan, and so nothing is paid until the exit. We're going to back that bus up.
So let me make sure I fully understand it in the audience. Yeah. So I'm going to borrow $200,000 on a purchase. Yes, sir. $75,000 on a rehab. Yes, sir. And I'm not going to pay any closing costs.
Well, every fee that all lender fees are rolled into the loan. So yes, all lender fees. I got to pay third-party fees. Correct. Okay. And then I don't have any payments for 12 months. Correct. Right. You know, when some lenders say they don't have any monthly payments, that's because there's some sort of interest reserve or that they're bringing in, you know, a certain amount of prepaid interest to closing. That's not the case with us. We're truly deferring a whole year of interest. So if you pay us back in 7 months, we'll just add 7 months of interest to the final payoff.
Yeah. So, so I borrowed $275,000 and I don't now have a $325,000 loan. I still have the $275,000 because you didn't roll in all those payments.
Correct. And it's not like the— some people hear what we do and they think, oh, well, does that mean my loan amount is going to continually be increasing? Is that my interest is compounding on it? No, the loan amount is the loan amount. That The only thing that gets added on top is the interest at the end of the loan.
So when I go to pay off, whether it's 6 months, 9 months, 10 months, 12 months, you calculate the amount that's owed. Correct. Which is your payment and your points. Correct. And then you pay that off at closing. So I have a $295,000 payoff as an example. Correct. Right? Yeah.
That's amazing. And look, what I tell people, whether you're paying at the end of the loan or monthly, It all comes out the same, right? The ROI for the project is going to be the same. Our borrowers love the fact that they don't have to worry about money going out the door during the renovation, and it allows our clients to grow their business in a way that they never would have been able to.
Cash in the pocket.
Right. So, you know, our programs are designed for people who want to do volume. If you're doing 3, 4, 5 projects at a time, that would be really hard if you were having to make 3, 4, 5 monthly payments every month. But the fact that we defer all that, it allows our clients to grow their business in a way that they never would have been able to had they been making monthly debt service on all those loans. Elephant in the room. You guys don't get paid if it defaults.
