INVESTMENT PROPERTY FINANCING

Presenter:

VP of Sales

Chris Dorin

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About RCN Capital

National, direct private lender since 2010

Leader in industry for

Fix & Flips and Rental Loans

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Access to multiple sources of capital

Common sense underwriting

done in house, flexibility

Funded 20,000+ transactions

Total origination over $5B

About RCN Capital (page 2)

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Non-owner occupied residential & commercial property backed loans

Common sense underwriting done in house

Not subject to conventional mortgage lending laws or regulations

Focusing on the real estate asset & loan-to-value and

less on the borrower’s credit or income

One Stop Shopping

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Not Lending In:

AK

VT

NV

ND

SD

ACTIVELY LENDING

REFERRAL SOURCES

RCN Loans Can Be Used For:

Purchase

Purchase & Rehab

Refinance

Cash-out

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No partial occupancy

Non-owner occupied only

1-4 units, condos, & townhomes

$50k - $2M

5+ unit

$250k - $10M

What is Private Lending/Hard Money?

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Private Lending

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Private lenders are non-bank lenders that usually allow for

more flexibility than traditional banks

Private Lending

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Less regulation and red tape

Provide capital to people who do not qualify for a traditional bank loan

Less documentation than traditional lenders

Faster than traditional bank lenders

Usually funding commercial loans made to a business entity

Hard Money

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Short-term and long-term options

Asset based

Primarily used in real estate transactions

Not subject to conventional mortgage lending laws

Speed unmatched by conventional lenders

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Why conventional financing doesn’t always work

Length of time

until loan closing

Debt to income verification

Extensive

document

collection

Loan Process

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Basic Loan Qualifying Factors

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Above all factors, RCN Capital

places an emphasis on the collateral

Exit Strategy

Experience, Background

& Credit

Cash Reserves &

Existing Leases

Market Saturation Levels

The Asset/Collateral

The Exit Strategy

The Borrower

Underwriting Guidelines

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Property type

Property Valuation

Location & Condition

Scope of Work & ROI

Sell property

Refinance property

Income

Cash Reserves

RE investing experience

Credit & Background

Business Entity

Loans RCN Capital Will Not Fund

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Owner occupied properties

No exit strategy

Contaminated structures

Vacant land

Loan Programs

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After Repair Value (ARV) Loan

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WHO IS THIS PRODUCT FOR?

Fix & Flip Investors and properties needing renovation

Financing For Up To 85% Of The Purchase Price + 100% Of The Renovation Costs�

WHAT ARE THE LOAN CRITERIA?

Collateral: 1-4 Family, Non-Owner-Occupied Real Estate, Condos, Townhomes, 5+ Unit Apartments, Mixed-use

Term: 12 Months

Loan Amount: $50K to $2M

LTV: Not to Exceed 70% of the After Repair Value

Credit Score: 620 Minimum

Experience: not required, but does affect pricing

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ARV Loan Scenario: Basics

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12 Month Loan

Up to 85% of the purchase price

Up to 100% of the renovation costs

Total loan capped at no higher than 70% of the After Repair value.

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Purchase price:

$100k

Rehab:

$30k

Experience:

Has flipped 5

Properties in last 3 years

Credit

Score:

700

Single-family residence fix & flip example scenario:

Standard terms:

ARV Loan Scenario: Leverage/Pricing

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$30,000 rehab held back in draws

Draw issued upon receiving inspection that shows percentage of work completed

Remaining draws will be issued when each phase of renovation is complete

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Receives $85,000 at closing

$30,000 in rehab holdback

Maximum RCN will lend: $115,000

10.24% annual interest rate

Down payment

$15,000

Property appraises

for a min. of

$165,000

Closing costs

$2,927.50

Multi Family Loans: Basics

WHO IS THIS PRODUCT FOR?

Investors looking to purchase and renovate 5+ unit multi family properties. �

WHAT ARE THE LOAN CRITERIA?

Collateral: 5+ Unit Apartments and Mixed-use

Term: 12 Months (potential for 6-month extension)

Loan Amount: $250K to $10M

Minimum Unit value: $50k per unit

Credit Score: 620 Minimum

Experience: not required, but does affect pricing

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Multi Family Loans: Leverage/Pricing

STABILIZED BRIDGE:

Purchase- up to 75% of the as-is value

Refinance- up to 70% of the as-is value

Cash Out Refinance- up to 65% of the as-is value

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FIX & FLIP:

Purchase- up to 80% of the purchase price + 100% of renovation costs

Refinance- up to 70% of the as-is value + 100% of renovation costs

Cash Out Refinance- up to 65% of the as-is value + 100% of renovation costs

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Multi Family Scenario: Basics

12 Month Loan

Up to 80% of the purchase price

Up to 100% of the renovation costs

Total loan capped at no higher than 65% of the After Repair value.

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Purchase price:

$800k

Rehab:

$200k

Experience:

4 Current Rentals

3 Flips

1 Sold Rental

Credit

Score:

700

Standard terms:

10 Unit Apartment Building

Multi Family Scenario: Leverage/Pricing

Borrower fronts first draw of renovations.

Draws release after inspection verifies % of work completed.

Remaining draws will be issued when each phase of rehab is complete.

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80% of purchase is $640,000

100% of renovations is $200,000

Borrower’s down payment is $160,000

Closing costs:

$35,000

Property needs to appraise for a min of $1.15M

Closing costs

include points, appraisal,

& other fees

10 Unit Apartment Building

Long Term Rental Loans

WHAT ARE THE LOAN CRITERIA?

Collateral: 1-4 Family Non-Owner-Occupied Real Estate, Condos, Townhomes, � Planned Unit Development (PUD)

Term: 30 Years

Rates: as low as 5.875%

Loan Amount: $50K to $2M

LTV: �Purchase: The Lesser of up to 80% of the As-Is Value or Up to 80% Loan-to-Cost

Refinance: Up to 80% of the As Is Value

Cash-Out: Up to 75% of the As Is Value

Property Value: “As Is” Appraised Value Must Be Greater Than $100K ($50k per unit)

Credit Score: 680 Minimum

Debt to Service Coverage Ratio (DCSR): must be at least 1.1, lower credit scores 1.20 minimum

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Max Loan to Value / Loan to Cost

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Long Term Rental Scenario: Basics

30-year loan

Fixed interest

Up to 75% of the current value

Assumed taxes of $5,000/year and HOI of $2,000/year

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As is value:

$400,000

Rent:

$5,000/mo.

Occupancy:

100%

Credit

Score:

740

Standard terms:

Cash out on a recently renovated two-family fix and flip:

Long Term Rental Scenario: Leverage/Pricing

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Receives $300,000 at closing

75% of current property value

30-year loan

Closing costs:

$14,950

Interest rate:

7.2067%

Closing costs include points, appraisal & legal fee, and escrows

Cash out on a recently renovated two-family fix and flip:

151 Broadway Street, Wakefield, MA 01880

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Purchase Price $490,000

Rehab Budget $122,800

ARV $752,000

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Credit score 763

Flip Experience 4

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2 family renovation

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Interest rate 10.74%

1 lender origination point

1 broker origination point

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151 Broadway Street, Wakefield, MA 01880

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• The max loan size is limited to 70% of the after repair value (ARV) $526,400
• We still fund 100% of the rehab cost, $122,800
• That leaves $403,600 or 82.4% of the purchase price advanced to the borrower at closing, giving a slightly larger down payment than the expected 15%
• Down payment $86,400, closing costs (including estimate for title ) $18,424, the borrower also needs to show reserves in the bank of $33,953
• The reserves are needed to be shown so we know as a lender that the borrower can get the rehab project started and make their first payments on the loan without issue.
• Each month the borrower will make an interest only payment starting at $3,612.22, and will increase as they take rehab draws.
• By taking draws, the balance of the loan increases, so the interest payment increases accordingly.

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151 Broadway Street, Wakefield, MA 01880

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• How much does the borrower really profit from this transaction?
• Assuming sale price at the ARV of $752,000 we start subtracting our costs
• $752,000 - 490,000 (PP) – 122,800 (rehab) – 18,424 (closing costs) – $24,969(holding costs 6 months) = $95,807

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• But wait, we’ve got realtors who need to get paid too!
• 6% commission on $752,000 = $45,120
• 5% commission on $752,000 = $37,600
• True net profit $50,687 - $58,207

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• We have a profit of $50,687-$58,207 for the borrower’s initial outlay of $104,824

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BRRRR…Buy, rehab, rent, refi, repeat

• The BRRR method is the tried and true way to building long term wealth
• Fixing and flipping can be very profitable, but it’s transactional money. Once the property is sold, it will not generate additional income for you.
• In order to build wealth, buying good cash flowing properties at a discount, getting them fixed up for tenants, and then cashing out on the new improved value of the property allows you to convert the sweat equity into the down payment for your next project. Income generates regularly and property values will typically increase over time.
• Case study:
• 685 Newhall Street, Hamden, CT 06517 – Purchased for $50,000 in 2015
• Borrower invested $65,000 into the rehab and rented it out, $1,650/month
• Borrower held the property and used the cash flow for income
• 2021 borrower comes to RCN to see what he can do to bring more properties into his portfolio.
• Fast forward, we have now done 26 properties together.
• That first property is now worth $215,000 he owes about $150,000 on it now, he continues to build equity in it, and he’s reaping the monthly cash flow as income.

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Questions?

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Chris Dorin

VP of Sales

CDorin@rcncapital.com

860-432-2867

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Ryan Taft

Loan officer

RTaft@rcncapital.com

860-432-4928

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