Portfolio Mortgage 101: A Complete Guide

When it comes to financing a home or investment property, many borrowers automatically think of conventional loans. However, not all situations fit the rigid requirements of traditional lending.

Enter the portfolio mortgage—a flexible and tailored option designed to meet unique financial needs. This guide explores what a portfolio mortgage is, how it works, its benefits and potential drawbacks, and whether it’s the right choice for you.

What is a portfolio mortgage and how does it work?

A portfolio mortgage (also known as a “portfolio loan”) is a type of mortgage where the lender retains the loan in-house, rather than selling it to secondary market investors like Fannie Mae or Freddie Mac.

This arrangement offers greater flexibility in terms of setting loan terms and eligibility criteria. Since portfolio mortgages are not restricted to traditional lending guidelines, they can accommodate borrowers with non-traditional income, credit challenges, or unique property needs.

For example, a self-employed borrower with fluctuating income might struggle to meet the requirements of conventional loans. In such cases, a portfolio mortgage can offer customized terms that better suit their unique financial situation.

This flexibility is a key reason why portfolio loans are becoming increasingly popular. In 2023, 27.6% of home loans in the U.S. originated from portfolio lenders, according to the Urban Institute. This emphasizes their expanding influence in the mortgage market.

Portfolio mortgage vs. Conventional mortgage: Key differences

While both serve the same basic purpose, portfolio mortgages and conventional mortgages operate very differently in terms of ownership, flexibility, and terms.

As mentioned above, portfolio mortgages offer more customized solutions for borrowers who may not meet the stringent criteria of traditional lending, making them an attractive choice for unique situations.

On the other hand, conventional mortgages follow a set of standardized guidelines designed to minimize risk for lenders and investors.

This table will summarize the key differences between portfolio and conventional mortgages, helping you understand which option may be the best fit for your financial needs.

5 Benefits of portfolio mortgages

Below are some key benefits of portfolio mortgages that make them an attractive option for potential borrowers:

1.      More Lenient Underwriting Criteria

Portfolio mortgages allow lenders to use more lenient criteria when evaluating potential borrowers.

As long as the lender feels confident in the borrower's ability to repay the loan, they can approve applications that would otherwise be rejected by conventional lenders.

2.      Ideal for Unique or Non-Traditional Properties

If you're purchasing a non-conventional property, such as a multi-family home, commercial property, or even a fixer-upper, conventional loans might not be an option due to their strict property requirements.

However, a portfolio mortgage can accommodate these unique situations.

Lenders can approve loans for properties that don’t meet the standardized criteria set by investors, providing greater opportunity for borrowers interested in unusual or high-risk properties.

3.      Flexibility in Loan Terms and Refinancing

Portfolio mortgages can be more accommodating than conventional loans. Since the lender retains the loan in-house, they can adjust repayment schedules, interest rates, and other key factors to better align with a borrower’s specific needs.

Refinancing with a portfolio mortgage also tends to be easier than with a conventional mortgage.

Because the lender already holds the loan in-house, they may be more willing to offer refinance options tailored to your current financial situation, without requiring extensive documentation or eligibility checks. This can help borrowers save time and money when looking to adjust their loan terms.

4.      No Prepayment Penalties

Many portfolio mortgages do not include prepayment penalties. This means that borrowers have the option to pay off the mortgage early without incurring additional costs.

This can be especially beneficial for those who may come into extra money and want to pay down their loan faster without facing financial penalties.

5.      Higher Loan Limits

Portfolio mortgages may also allow for higher loan limits especially in high-cost areas. Since the lender isn’t constrained by the rules set by government agencies or secondary market investors, they can approve loans that exceed typical loan limits for a given region.

3 Potential drawbacks of portfolio mortgages

While portfolio mortgages offer significant benefits, they are not without their drawbacks. Below are three key challenges borrowers may face when considering a portfolio mortgage:

1.      Higher Interest Rates

One of the primary disadvantages of portfolio mortgages is the higher interest rates compared to conventional loans.

Since lenders retain these loans in-house, they take on more risk by not selling them to secondary market investors. Lenders charge higher rates to compensate for this risk.

Borrowers may end up paying more over the life of the loan which makes it a less affordable option for some individuals.

2.      Limited Availability

Portfolio mortgages are not offered by all lenders. Not all financial institutions provide this type of loan, and those that do may have specific criteria for eligibility.

As a result, finding a lender that offers a portfolio mortgage could be more challenging and time-consuming than applying for a conventional loan.

3.      Smaller Loan Amounts

Since portfolio mortgages are riskier, lenders may impose caps on how much they’re willing to lend. This can be a significant drawback for borrowers who need substantial financing, such as those purchasing high-value properties or financing large-scale investments.

Who should consider a portfolio mortgage?

A portfolio mortgage is a game-changer for borrowers who don’t fit the mold of conventional lending criteria. Unlike traditional loans, portfolio mortgages are designed to cater to unique financial situations, offering flexibility and faster approval processes.

Below are some scenarios where a portfolio mortgage might be the ideal choice:

1. Self-Employed Borrowers

If you’re self-employed, you may face challenges qualifying for a traditional mortgage due to fluctuating income or non-traditional documentation.

Portfolio lenders are more accommodating. They consider factors like long-term earnings potential or asset strength rather than relying solely on tax returns and pay stubs.

2. Individuals with Unique Financial Situations

Borrowers with inconsistent income, recent credit issues, or non-standard employment history can benefit from the customized approach of portfolio loans.

Portfolio mortgages allow for a more holistic review of your financial profile, in contrary to the stricter nature of conventional mortgages.

3. Buyers of Non-Standard Properties

If you’re purchasing a property that doesn’t meet traditional lending guidelines—such as a multi-family home, vacation property, or commercial space—a portfolio mortgage might be the solution.

Lenders offering portfolio loans are often more willing to finance properties that fall outside conventional criteria, giving you the flexibility to invest in unique or high-value properties.

4. Borrowers Who Need Fast Approval

Traditional loan processes typically require weeks or even months for approval. Portfolio lenders, however, manage the loan entirely in-house, enabling faster approvals and quicker closings.

This is especially beneficial for buyers who are securing a time-sensitive investment or purchasing in a competitive market.

Is a Portfolio Mortgage Right for You?

Whether you’re investing in real estate or purchasing your dream property, understanding your financing options is the first step toward success. A portfolio mortgage could open doors that conventional loans simply cannot.

Ready to explore portfolio loans?

Consult with a qualified lender like SDC Capital to explore your options and make an informed decision that suits your needs. With the right lender, a portfolio mortgage can help you turn unique financial challenges into opportunities.

Hard Money Lenders in California

Hard money lenders in California provide fast, asset-based financing solutions for real estate investors and property developers.

Unlike traditional banks, these hard money lenders focus primarily on the value of the property rather than the borrower’s credit history or financial standing. This makes California hard money loans an attractive option for investors looking to seize time-sensitive opportunities.

California Hard Money Lenders: A Growing Industry

With California’s current real estate market, demand for alternative financing solutions is rising. California hard money lenders offer flexible lending options that cater to fix-and-flip projects, bridge financing, and commercial property investments.

These lenders specialize in quick approvals and short-term funding, making them an ideal choice for real estate professionals who need to move fast in a competitive market.

California Hard Money Loans for Residential Properties

For investors looking to purchase, renovate, or refinance residential properties, California hard money loans offer a practical and efficient financing solution. These loans provide access to capital when traditional lending options may not be viable.

They are commonly used for:

Fix and Flip Projects

Investors can acquire distressed properties, renovate them, and sell for a profit.

With fast funding and flexible terms, hard money loans enable quick turnarounds, helping investors stay competitive in California’s booming real estate market.

Rental Property Acquisitions

Hard money lenders in California allow investors to quickly secure rental properties before refinancing with traditional lenders.

This is especially useful for landlords looking to expand their portfolios without delays caused by conventional mortgage processes.

Bridge Loans

Homeowners and investors use bridge loans to secure short-term financing while waiting for long-term funding or property sales.

These loans help bridge the gap between property transactions, ensuring investors don’t miss lucrative opportunities.

California Hard Money Loans for Commercial Properties

Hard money lenders in California provide crucial financing solutions for commercial real estate investors looking for speed and flexibility.

These loans cater to a variety of commercial property types and investment strategies, making them an attractive option for those needing capital without the delays of traditional lending.

Office, Retail, and Industrial Properties

Investors can access quick funding to acquire, renovate, or expand income-generating commercial spaces.

California hard money loans provide the flexibility needed to execute value-add strategies, reposition properties, or handle time-sensitive purchases.

Multi-Family Units

Financing for apartment complexes and multi-unit residential properties is often challenging with conventional lenders.

Hard money loans allow investors to close deals faster, complete necessary improvements, and stabilize properties before refinancing with long-term financing.

Land Acquisition and Development

Developers can secure funding for land purchases, new construction, and entitlement processes. Hard money loans enable investors to act quickly on prime development opportunities while waiting for permits, zoning approvals, or permanent financing.

Refinancing and Cash-Out Loans

Commercial property owners can leverage their existing assets for immediate capital, using hard money loans to fund additional acquisitions, renovations, or operational expenses.

By offering streamlined approvals and flexible terms, California hard money lenders empower investors to take advantage of lucrative commercial real estate opportunities without the constraints of traditional bank financing.

Why Choose Hard Money Loans in California?

California's fast-paced real estate market demands quick and flexible financing solutions, making hard money loans an attractive option for investors.

Hard money lenders in California provide several key advantages:

• Speed. Traditional loan approvals can take weeks or even months, but hard money lenders offer fast funding, often closing deals within days. This allows investors to act quickly on profitable opportunities.

• Flexible Terms. Unlike conventional banks, hard money lenders structure loans based on the borrower's specific needs, offering customized repayment plans and terms that align with investment strategies.

• Asset-Based Lending. Loan approvals are primarily based on property value rather than personal credit history or income verification, making hard money loans a viable option for investors with unconventional financial backgrounds.

• ·Minimal Documentation Requirements. Borrowers can bypass the extensive paperwork required by traditional lenders, streamlining the process and reducing bureaucratic delays.

• ·Short-Term Solutions for Unique Situations. Whether it's funding a fix-and-flip project, securing a bridge loan, or refinancing an existing investment, hard money loans provide short-term solutions tailored to various real estate scenarios.

By leveraging the flexibility and speed of hard money loans, investors can seize opportunities and navigate the complexities of California’s real estate market with confidence.

SDC Capital: A Trusted California-Based Hard Money Lender

With over 35 years of experience in bridge lending and real estate development, SDC Capital is more than just a lender—we are a strategic partner for real estate investors.

Our deep understanding of the industry allows us to structure flexible loan solutions tailored to the needs of our borrowers.

Why Choose SDC Capital?

• Fast and Reliable Funding. Close deals in as little as 7 days, allowing investors to seize time-sensitive opportunities.

• Customized Loan Solutions. We tailor financing to fit various investment strategies, whether for fix-and-flips, bridge loans, or commercial acquisitions.

• Real Estate Expertise. Our background in real estate development enables us to provide more than just capital; we offer valuable insights and guidance to help investors maximize their success.

• Well-Capitalized and Committed. With a strong financial foundation and a proven track record, we are dedicated to executing deals efficiently and reliably.

If you’re ready to take the next step, consider working with a trusted lender like SDC Capital to secure your next investment opportunity.

Reach out today to learn more about how hard money loans in California can help you achieve your real estate goals.

Hard Money Lenders Near Me

When looking for hard money lenders near me, it’s crucial to understand how these lenders operate, where to find them, and what to consider before choosing the right one.

Hard money loans offer quick financing solutions for real estate investors, but selecting the best lender can make a big difference in your success.

What are Hard Money Lenders?

Hard money lenders are private lenders or companies that offer asset-based loans secured by real estate.

Unlike traditional banks, hard money lenders focus on the value of the property rather than the borrower’s credit history.

Hard money loans are commonly used for:

• Fix-and-flip projects

• Bridge loans for short-term financing

• ·Rental property investments

• Commercial real estate deals

Since traditional lenders may take weeks or months to approve loans, many real estate investors search for hard money lenders near me to secure fast funding with flexible terms.

How to Find Reliable Hard Money Lenders Near Me

If you’re looking for hard money lenders near me, consider these effective ways to find reputable lenders in your area:

1. Online Searches & Directories

Start by searching "hard money lenders near me" on Google. Review lender websites, customer testimonials, and loan offerings.

Platforms like PrivateLenderLink, Yelp, and LinkedIn can also provide valuable insights into a lender’s reputation.

2. Networking with Real Estate Investors

Connecting with experienced real estate investors can be one of the best ways to find reliable hard money lenders near me. Attend local real estate meetups, networking events, and investment forums to get firsthand recommendations.

Many investors have strong relationships with lenders and can share firsthand experiences about reliability, loan terms, and funding speed.

3. Real Estate Agents & Brokers

Local real estate agents and brokers often have direct connections with hard money lenders near me who specialize in funding investment properties.

Since they understand the market and lender preferences, they can refer you to a lender that best fits your specific financing needs.

By leveraging these strategies, you can confidently find hard money lenders near me who offer the best loan options and terms for your real estate investments.

What to Consider When Choosing a Hard Money Lender

Not all hard money lenders are the same. While some offer competitive rates and fast funding, others may have hidden fees, slow approval processes, or rigid loan terms that don’t align with your needs.

Before selecting a lender, take the time to evaluate these key factors:

1. Loan Terms & Interest Rates

Hard money loans typically have higher interest rates than traditional bank loans, but that doesn’t mean you should settle for unreasonable terms.

Compare multiple hard money lenders near me and assess:

• Interest rates and how they compare to industry standards.

• Loan-to-value (LTV) ratios—how much financing they offer based on the property’s value.

• Additional fees, such as origination fees, processing fees, or prepayment penalties.

A lender with transparent pricing and reasonable rates will help you maximize your investment returns without unnecessary costs.

2. Speed of Funding

One of the biggest advantages of working with hard money lenders near me is fast access to capital. Traditional banks can take weeks—or even months—to approve a loan, whereas a reliable hard money lender can close in a matter of days, not weeks.

When evaluating a lender, ask:

• How quickly can they process and approve applications?

• What’s their typical turnaround time from approval to funding?

• Are they efficient with underwriting, or do they have a lot of red tape?

For real estate investors working on time-sensitive deals, speed is crucial. Choose a lender known for fast, hassle-free closings.

3. Reputation & Transparency

Not all lenders operate with integrity. Some have hidden fees, misleading terms, or poor customer service.

Before committing to a lender, do your research:

• Read online reviews on Google, Yelp, and industry-specific platforms like PrivateLenderLink.

• Ask for references from past clients who have worked with the lender.

• Check if they’re licensed and whether any complaints have been filed against them.

A reputable hard money lender will be upfront about their loan terms, fees, and expectations—no surprises down the road.

4. Loan Flexibility

Every real estate deal is unique, and a one-size-fits-all loan doesn’t always work. Some hard money lenders near me offer more flexible financing solutions than others.

Consider the following:

• Do they provide tailored loan structures based on your project’s needs?

• Can they accommodate unique situations, such as distressed properties or high-risk investments?

• Are they open to negotiations on terms like repayment schedules or exit strategies?

A lender who understands your investment goals and is willing to structure a deal that works for you is a valuable partner in your real estate journey.

Best California Hard Money Lenders

Finding the right hard money lender in California can make all the difference when securing fast and flexible financing for your real estate investments.

Whether you're flipping a property, securing a bridge loan, or funding a commercial project, working with a lender who understands the local market is essential.

At SDC Capital, we specialize in providing reliable hard money loans across California, offering competitive terms, quick approvals, and expert guidance tailored to each market.

No matter where you're investing, we have dedicated lending solutions in key regions:

• Riverside Hard Money Lenders – Fast financing for real estate projects in Riverside and surrounding areas.

• San Diego Hard Money Lenders – Flexible lending solutions for investors in the San Diego market.

• Los Angeles Hard Money Lenders – Quick funding for fix-and-flips, rental properties, and more in LA.

• Sacramento Hard Money Lenders – Bridge loans and real estate financing in the Sacramento region.

• San Francisco Hard Money Lenders – Competitive hard money loans for Bay Area investors.

Each of these pages provides detailed information on our loan programs, funding timelines, and how we can help you secure the right financing for your investment needs. Explore our lending solutions and get started with a trusted California hard money lender today!

Residential Bridge Loan: What You Need to Know

A residential bridge loan is a unique financing option often used to bridge the gap between selling an existing property and purchasing a new one. You may have come across this term if you’re in the process of buying a new home or managing a residential real estate transaction.

Now, what exactly is a bridge loan, and what should you know before taking the plunge?

What is a Residential Bridge Loan?

A residential bridge loan is a short-term loan used to cover the financing gap when you’re transitioning between properties. This type of loan is secured against your existing property and allows you to access funds to purchase a new home before you’ve sold your current one.

Bridge loans are commonly structured for terms ranging from a few months up to a year and are generally interest-only, making them easier to manage on a temporary basis.

They’re a popular choice among homeowners who need quick financing and can’t wait for a traditional loan or sale to go through.

4 Benefits of Using a Residential Bridge Loan

Residential bridge loans come with a variety of advantages, especially in competitive real estate markets where timing is critical.

Let’s take a look at four of its main benefits.

1. Quick Access to Funding

Residential bridge loans are known for their fast approval process, often taking just a few days. This speed can be crucial if you need immediate financing to secure a new property before your existing home has sold.

This fast access to funds means you can act quickly when you find the right property, making stronger offers without relying on contingencies related to your current home sale.

For buyers and investors facing pressing deadlines, the quick funding of a bridge loan can mean the difference between successfully closing on a new property or losing out in a competitive bidding situation.

2. Customizable Terms

Many bridge loan lenders offer customizable terms and conditions tailored to meet specific needs. This means you can work with a lender to determine the loan amount, interest rate, and repayment terms that fit your unique situation.

3. Interest-Only Payment Options

Bridge loan lenders typically grant an interest-only payment structure, which eases the financial burden during a transitional period.

With this setup, you’re only required to pay the monthly interest on the loan, rather than both interest and principal. This keeps monthly payments lower and more manageable, freeing up cash flow while you prepare to sell your existing home.

4. Minimized Moving Hassles

A bridge loan allows you to move forward confidently with purchasing a new property, even if there’s a delay in selling your current home.

This can reduce the stress of managing two transactions simultaneously by giving you the funds needed to handle each step at your own pace.

Common Uses of Residential Bridge Loans

Residential bridge loans are versatile financing solutions suitable for various scenarios, particularly when time is of the essence.

Here are some common uses of residential bridge loans:

• Transactions Requiring a Quick Close: Bridge loans facilitate quick transactions that may not align with traditional financing timelines. This speed can be crucial when a desirable property becomes available.

• Higher Loan Amounts with Cross-Collateralization: Borrowers needing a higher loan amount than what banks typically allow can leverage bridge loans. Cross-collateralizing additional properties can result in a lower combined loan-to-value (LTV) ratio, providing access to more funds.

• Avoiding Traditional Bank Requirements: For borrowers who may not meet traditional bank requirements—such as those needing to underwrite global cash flow or disclose income on tax returns—bridge loans provide a streamlined alternative.

• Reverse 1031 Exchanges: Bridge loans can also accommodate complex transactions such as reverse 1031 exchanges, allowing investors to purchase a replacement property before selling their current one.

• Fix & Flip Projects: Investors often use bridge loans for fix-and-flip projects, providing the necessary funding to purchase and renovate properties quickly for resale.

Is Residential Bridge Financing Safe?

Safety is a common concern when it comes to short-term financing options, and residential bridge loans are no exception. However, it’s important to note that a residential bridge loan is a safe option.

That said, because it is a temporary solution, you need to have a clear plan for repaying the loan.

Working with an experienced lender and fully understanding the loan terms can help mitigate risks and ensure a smooth process.

Residential Bridge Loan Lenders

Choosing the right lender for a residential bridge loan is essential for ensuring a smooth and hassle-free financing experience. Look for a lender with extensive experience in bridge financing and a deep understanding of your local real estate market.

Since these loans are highly specialized, choose a lender that provides flexible terms and transparent, competitive pricing. They should be able to communicate clearly and work closely with you throughout the lending process.

SDC Capital stands as a premier provider of residential bridge loans. With decades of experience in bridge lending, SDC Capital guarantees that you are in safe hands at every step of the process.

Ready to take the next step? Get a free quote now to get started.

7 Factors Affecting Real Estate Market in 2025

California’s real estate market is poised for significant growth in 2025, with home sales projected to increase by 10.5% and median home prices rising to $909,400.

However, to make informed decisions, investors, brokers, and borrowers must carefully consider the key factors shaping the market.

In this article, we’ll explore the seven major factors affecting the real estate market in 2025 and their impact on buying, selling, and investing strategies.

7 Factors Affecting the Real Estate Market in 2025

1.      Demographics

Key demographic factors such as population growth, age distribution, household size, and migration patterns influence demand for different types of housing. Each generation has unique priorities when it comes to property purchases, which directly influence trends.

For example, Baby Boomers (born 1946-1964) may prefer downsized homes in low-maintenance communities as they approach retirement, while Generation X (born 1965-1980) may prioritize family-oriented housing in suburban areas.

While Millennials (born 1981-1996) and Generation Z (born 1997-2012) are expected to drive demand for affordable housing, only time will confirm. Understanding the preferences of each demographic can help anticipate shifts in demand and better cater to the needs of specific buyer segments.

For investors, taking these factors into account can help identify potential high-value opportunities even before demographic trends fully take shape.

2.      Government policies

Government policies, including tax incentives, zoning regulations, and housing laws, are major factors affecting the real estate market.

Changes to property tax laws or rent control regulations can impact both investor behavior and housing affordability. With a new administration, more changes are likely to be implemented.

Staying informed about government actions in 2025 is critical for navigating highly regulated real estate market in states like California.

3.      Interest rates

Interest rates are a powerful factor in real estate, directly affecting mortgage affordability and overall market activity. As rates fluctuate, they can either encourage or deter buyers and investors.

According to the Mortgage Bankers Association, mortgage rates are expected to range from 6.4% to 6.6% in 2025, with rates stabilizing at 6.3% in 2026. Similarly, Fannie Mae projects mortgage rates to average 6.5% in 2025, with rates remaining above 6% into 2026.

As interest rates impact monthly mortgage payments, the cost of borrowing directly affects property demand and investment strategies. Understanding these projections can help buyers, investors, and lenders make informed decisions in a shifting market.

4.      Supply and demand

The balance between supply and demand continues to drive property values and market dynamics.

In October 2024, the number of newly listed homes went up by 11.2% year over year, indicating a growing supply of available properties. While this uptick in listings is encouraging for prospective buyers, the real impact on the market depends on the rate of demand.

If buyer demand continues to outpace the new supply, property values could remain high, particularly in desirable locations.

This imbalance can lead to more competitive bidding, especially in sought-after neighborhoods, further driving up prices.

5.      Economic growth

Local economic growth is a cornerstone of real estate market strength.

In California, industries such as technology, entertainment, and renewable energy are major contributors to economic expansion. Cities like San Francisco, Los Angeles, and San Diego benefit from job creation and income growth, driving real estate demand.

On the other hand, economic slowdowns or industry-specific challenges can affect housing affordability and investment activity.

6.      Location

“Location, location, location!” is more than just a real estate mantra; it’s a key factor affecting the real estate market.

The desirability of a property’s location is one of the most consistent factors affecting the real estate market. Factors like proximity to schools, employment hubs, and transportation networks can significantly impact property prices.

In the age of remote work, emerging suburban areas have gained popularity. Many professionals are no longer bound by the need to live near their offices, causing an uptick in demand for homes in quieter, less expensive areas while still offering access to urban amenities.

Additionally, commute-friendly locations remain highly desirable, especially in California’s high-density urban centers. Properties located near public transportation systems or major freeways tend to retain their value, as convenient commuting options are a priority for many buyers.

By understanding the nuances of location trends—including the rise of remote work, growing suburban markets, and proximity to economic hubs—investors and homebuyers can better identify high-potential areas for investment or purchase.

7.      External investors

External investors, including foreign buyers and out-of-state investors, continue to influence California’s real estate market. High demand from these groups can drive up property prices, especially in luxury and metropolitan markets.

California’s status as a global economic hub makes it a prime target for international investment. This influx of external capital boosts demand for both residential and commercial properties, especially in sought-after areas like Los Angeles, San Francisco, and Silicon Valley.

As the landscape continues to evolve in 2025, understanding the factors affecting real estate market is crucial for making informed decisions. From demographic trends and government policies to location preferences, these key factors will shape the market in the coming years.

For investors, brokers, and buyers alike, staying updated on these changes can help identify opportunities and avoid potential risks. Whether you're looking to buy your first home, expand your real estate portfolio, or simply stay updated on the latest market trends, proactive research is essential.

For more information or expert advice on all things real estate, feel free to reach out to us at info@sdccap.com.

Top 10 Best hard money lenders for 2025

California’s Best Hard Money Lenders

• SDC Capital

• North Coast Financial

• Archway Capital

• Val-Chris Investments

• Wilshire Quinn

• Lantzman Lending

• Talimar Financial

Best Hard Money Lenders Across the United States

• Kiavi

• Conventus

• RCN Capital

What is Hard Money?

Hard money is a short-term real estate financing option secured by a physical asset—typically the property being purchased or developed.

Hard money loans are provided by private money lenders, who focus primarily on the value of the property rather than the borrower’s creditworthiness or financial history.

For borrowers, hard money loans offer the advantage of fast funding for time-sensitive real estate projects. On the other hand, investors in hard money lending can enjoy higher returns on their capital due to the elevated interest rates associated with these loans.

Whether you're considering borrowing or investing, it's essential to familiarize yourself with the best hard money lenders in California.

In this article, we'll highlight the top hard money lenders in California and across the United States, helping you make informed decisions in the world of hard money lending.

6 Best Hard Money Lenders in California

Here are the top hard money lenders based in California:

SDC Capital

SDC Capital is California’s premier real estate bridge lender, with almost four decades of experience in the industry. Our dedicated team is committed to guiding you through every step of the lending process, ensuring a smooth and efficient experience.

We specialize in providing hard money loans for a variety of purposes, including:

• Residential Bridge Loans: Secure quick funding to bridge the gap between selling your current home and purchasing a new one.

• Residential Rehab Loans: Finance renovations and improvements on residential properties to maximize their market value.

• Commercial Bridge Loans: Get the necessary capital for commercial real estate investments, enabling you to act quickly in a competitive market.

• New Property Construction Loans: Fund your new construction projects with our flexible financing solutions tailored to your needs.

To explore our recently funded loans and see how we've helped clients achieve their real estate goals, click here.

North Coast Financial

North Coast Financial offers fast approvals and funding for real estate investors and homeowners in California.

Based in San Diego, this hard money lender provides bridge loans, trust loans, fix and flip/rehab loans, and commercial hard money loans.

Archway Capital

Archway Capital, a Los Angeles-based alternative investment manager, provides short-term capital for real estate projects across the United States. The firm funds various property types, including multifamily, medical office, industrial, student housing, and retail.

Val-Chris Investments

Val-Chris Investments is a hard money lender based in Irvine, California. The firm’s management has a combined real estate experience of over 100 years – making them a reliable provider of creative loan solutions.

Wilshire Quinn

Wilshire Quinn has been a leading hard money lender since its inception in 2004. The firm takes pride in its “fairly diverse” customer base, which range from corporations looking for quick financing to individuals looking to refinance an investment property.

While primarily focused on California, the firm also lends nationwide, particularly in major metropolitan areas.

Lantzman Lending

Lantzman Lending is a direct private money lender with over 50 years of combined experience. The firm offers financing for fix and flip/rehab projects, construction, commercial properties, and refinances.

Further, Lantzman Lending is licensed for both Nevada and California hard money loans.

Talimar Financial

Based in San Diego, Talimar Financial is trusted for its direct, fast, and aggressive hard money lending programs.

While the firm finances both residential and commercial properties, it currently specializes in bridge loans and 30-year rental loans.

Best Hard Money Lenders Across the United States

If you're seeking financing outside of California, consider these hard money lenders that specialize in nationwide lending:

Kiavi

Kiavi, formerly known as LendingHome, is one of America’s largest private lenders. Since 2013, the firm has funded over $23 billion in loans for 85,000+ real estate projects nationwide.

As of this writing, Kiavi focuses on financing residential real estate investors and does not lend on mixed-use, commercial, rural properties, or mobile homes.

Conventus

Founded in 2015, Conventus provides private money lending solutions nationwide, excluding Nevada, North Dakota, South Dakota, Minnesota, and Iowa. The firm offers various loan types, including bridge loans, construction loans, long-term rental financing, and custom business-purpose loans.

RCN Capital

RCN Capital has been a trusted nationwide private lender for over two decades. The firm, headquartered in South Windsor, Connecticut, focuses on providing rehab loans, commercial loans, long-term rental financing, and fix and flip loans.

RCN Capital lends in most U.S. states, excluding Alaska, Nevada, North Dakota, South Dakota, and Vermont

Should I Use a Hard Money Lender?

Deciding whether to use a hard money lender depends on your specific financing needs, the urgency of your project, and your investment strategy.

Here are some factors to consider when evaluating whether a hard money loan is the right choice:

• Speed of Funding. Hard money loans are the solution if you need fast access to capital.

• Flexible Qualification Requirements. Hard money lenders focus on the property’s value rather than the borrower’s credit history, making these loans accessible to investors who may not qualify for traditional financing.

• Short-Term Financing Needs. Hard money loans are ideal for projects where the borrower plans to repay within a few months to a few years. If your investment strategy involves a quick turnaround, a hard money loan may align well with your goals.

• Higher Interest Rates. Due to the higher risk that hard money lenders take on, these loans usually come with 2-3% higher interest rates compared to conventional loans. If the cost of higher interest fits your needs and you’re confident in your exit strategy, the flexibility and speed may outweigh the added expense.

• Property-Specific Funding. Hard money lenders focus on the value and potential of the property itself. This can be beneficial for borrowers who may not meet traditional lending criteria but have high-potential properties.

Hard money loans are a powerful tool for real estate investors who need fast, asset-based financing for time-sensitive projects.

If you are comfortable with short-term, higher-interest financing and have a clear repayment plan, hard money lending could be a smart alternative to traditional financing methods.

For more information about hard money lending, reach out to our team at info@sdccap.com.

Fix and Flip Loans: The Ultimate Guide

FIX AND FLIP LOANS: THE ULTIMATE GUIDE

Fix and flip investing has become a cornerstone strategy for real estate investors looking to build wealth quickly. By purchasing undervalued properties, renovating them, and reselling at a profit, investors can achieve impressive returns in a short timeframe.

At the heart of this strategy are fix and flip loans, which are specialized financing that support both the purchase and renovation of investment properties.

Whether you’re a seasoned investor or just starting out, understanding how these loans work can be the key to your success.

What are Fix and Flip Loans?

Fix and flip loans are short-term financing options tailored for real estate investors who buy, renovate, and resell properties for a profit.

Unlike traditional mortgages, fix and flip loans focus on the property’s potential value after repairs (known as the after-repair value or ARV) rather than its current condition.

In 2023, over 308,000 single-family homes and condos in the United States were flipped, according to property data provider ATTOM. Although this marks a decline from the more than 436,000 flips recorded in 2022, it still proves the continued influence of fix and flip loans in the real estate investing industry.

Fix and Flip Loans vs. Traditional Financing

When it comes to real estate investments, choosing the right financing option can significantly impact the success of your project. Fix and flip loans and traditional financing cater to different needs and borrowers, making it crucial to understand their distinctions.

Purpose

Fix and flip loans are designed for short-term projects where investors purchase, renovate, and resell properties quickly.

In contrast, traditional financing—such as a 30-year fixed-rate mortgage—is intended for long-term homeownership or rental properties.

Approval Process

One of the primary advantages of fix and flip loans is their fast approval process. Lenders prioritize the property’s after-repair value (ARV) and the borrower’s plan, often approving loans within 7 days.

Traditional loans, however, have a more rigorous underwriting process that evaluates the borrower’s income, credit history, and debt-to-income ratio, which can take weeks or even months to finalize.

Loan Terms

Fix and flip loans typically have short-term durations, ranging from 6 to 18 months, which align with the project timeline for purchasing, renovating, and reselling properties. These loans are designed to be paid off quickly once the property is sold or refinanced.

In contrast, traditional loans offer long-term options, usually spanning 15 to 30 years. This makes them better suited for ongoing property ownership or rental investments.

Interest Rates and Costs

Fix and flip loans often come with higher interest rates, ranging from 8% to 16%, due to their short-term nature and the increased risk for lenders.

Traditional financing offers lower interest rates, typically between 5% and 7%. However, they charge additional fees like private mortgage insurance (PMI) for high-LTV loans.

Flexibility

Fix and flip loans offer greater flexibility, with funds often covering renovation costs. Traditional loans are more rigid, requiring additional financing, such as personal loans or savings, to cover repairs and upgrades.

Types of Fix and Flip Loans

For real estate investors, selecting the right financing option can be critical to the success of a fix and flip project.

Here are the most popular types of fix and flip loans, each catering to different investment strategies and needs:

1. Hard Money Loans

Hard money loans are a go-to option for investors seeking quick access to capital.

These loans are (i) secured by the property itself; and (ii) offered by private lenders, making them faster and more flexible than traditional loans.

They’re ideal for investors seeking fast approvals and funding, especially for properties in poor condition that wouldn’t qualify for traditional financing.

2. Bridge Loans

Bridge loans provide short-term financing to help investors cover gaps between property purchase and long-term funding.

These loans are:

• Designed for quick acquisitions in competitive real estate markets.

• Often used to purchase a new property before selling an existing one.

They’re perfect for time-sensitive deals and enable investors to act quickly without waiting for traditional loan processes.

3. Cash-Out Refinancing

Cash-out refinancing allows investors to tap into the equity of an existing property to fund a new project. This type of fix and flip loan basically means remortgaging your own home.

4. Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit (HELOC) is a type of second mortgage that allows borrowers to access funds based on the equity they’ve built in your home.

Borrowing limits are determined by the value of your home and the amount of equity you’ve accumulated.

Additionally, interest rates are variable and depend on factors such as your credit score, existing debt, and the amount you’re requesting.

How to Qualify for Fix and Flip Loans: Fix and Flip Loan Qualifications

Securing a fix and flip loan requires meeting specific criteria that show your ability to successfully complete the project and repay the loan.

Here are fix and flip loan qualifications you need to meet before filing an application:

1. Creditworthiness

While fix and flip loans are more lenient than traditional financing, most lenders look for a credit score of 600 or higher. A higher score can improve your chances of approval and potentially lower your interest rate.

2. Real Estate Experience

Experience in property flipping is highly valued by lenders. Seasoned investors with a proven track record often have an easier time qualifying.

But no worries, new investors can still secure fix-and-flip loans by presenting a solid, well-researched plan and partnering with experienced contractors or mentors.

3. Detailed Property Plan

A strong property plan is essential to demonstrate the viability of your project. Lenders will assess the following:

• Purchase Price: How much you’re paying for the property.

• Renovation Budget: A breakdown of costs for improvements.

• Timeline: The estimated time to complete renovations and sell the property.

• After-Repair Value (ARV): The expected market value of the property after upgrades.

4. Financial Documentation

Lenders want to ensure you have the financial stability to cover costs and complete the project. Prepare your proof of income, bank statements, as well as your exit strategy. Exit strategies can be selling the renovated property, renting it out, or refinancing it.

By understanding and meeting these qualifications, you can position yourself as a strong candidate for fix-and-flip loans, ensuring faster approvals and better terms.

SDC Capital Funds $1M Purchase Loan in Bellflower, CA

DEAL HIGHLIGHTS

• Loan Amount: $1,000,000

• LTV:64.5%

• Loan Type: Purchase Loan

• Property Type: Retail Strip Center

• Location: Bellflower, CA

ABOUT THIS DEAL

SDC Capital is dedicated to providing fast, flexible financing. Recently, we funded this $1,000,000 purchase loan for a retail strip center in Bellflower, CA.

With a 64.5% LTV, this highlights our expertise in structuring tailored lending solutions for commercial real estate investors.

ABOUT SDC CAPITAL

SDC Capital brings over 35 years of expertise in bridge lending and real estate development. We understand the challenges that real estate investors face and provide the flexibility to structure loans tailored to their specific needs.

With a proven track record of success and strong financial backing, we are a dependable partner committed to delivering results.

SDC Capital Funds $4.6M Multifamily Property Purchase Loan in West Covina, CA

DEAL HIGHLIGHTS

• Loan Amount: $4,620,000

• LTV:70%

• Loan Type: Purchase Loan

• Property Type: 28-Unit Multifamily Property

• Location: West Covina, CA

ABOUT THIS DEAL

SDC Capital recently funded a $4,620,000 purchase loan for a 28-unit multifamily property in West Covina, California. With an LTV of 70%, this transaction is proof of our ability to deliver flexible financing solutions catered to investor needs.

ABOUT SDC CAPITAL

SDC Capital brings over 35 years of expertise in bridge lending and real estate development. We understand the challenges that real estate investors face and provide the flexibility to structure loans tailored to their specific needs.

With a proven track record of success and strong financial backing, we are a dependable partner committed to delivering results.

Private Money: A Guide to Alternative Lending Solutions

What is Private Money?

Private money refers to loans provided by private individuals or companies, rather than traditional financial institutions like banks or credit unions.

These lenders are often high-net-worth individuals, private equity firms, or specialized companies looking to invest in profitable lending opportunities.

Unlike traditional lenders, private money lenders typically focus on the value of the asset being financed, such as real estate, rather than the borrower’s credit score or financial history.

This approach makes private money an attractive option for those who may not meet conventional lending requirements.

5 Key Characteristics and Main Benefits of Private Money Loans

Private money loans offer a range of distinct advantages and features that set them apart from traditional financing. These characteristics make them particularly appealing to borrowers who need fast funding, flexible terms, or have unique financial situations.

From rapid approvals to customized loan structures, private money loans cater to those seeking efficient and accessible funding solutions.

Let’s explore the key traits that define private money lending and why they matter to borrowers.

1.       Fast Approval

Private money lenders can process and approve loans in as fast as 7 days. This speed is particularly beneficial for borrowers facing tight deadlines or competitive real estate markets.

2.       Asset-Based Lending

This alternative lending solution focuses on the value of the collateral, such as a property or asset. This makes it easier for borrowers with poor credit or non-traditional income to secure funding.

3.       Short-Term Nature

In addition, private money loans typically have shorter repayment periods, ranging from 6 months to 3 years. These terms are designed for borrowers seeking quick financial solutions, such as bridge loans or funding for real estate projects.

4.       Flexible Loan Terms

Private money lenders often customize loan structures to meet the unique needs of the borrower. This flexibility allows for creative solutions, such as interest-only payments or tailored repayment schedules.

5.       Easier Qualification Process

The application process for private money loans is less rigorous compared to traditional loans. Borrowers benefit from reduced documentation requirements, which speeds up approvals and lowers the barrier for obtaining funding.

These characteristics make private money loans a unique and viable option for borrowers with specific financial needs, especially those looking for flexibility and speed in their lending solutions.

Private Money: Risks and Considerations

While private money loans offer numerous advantages, they also come with certain risks and considerations that borrowers should carefully evaluate before proceeding.

Understanding these potential downsides is essential for making informed financial decisions. Below are some of the key risks associated with private money lending.

Higher Interest Rates

One significant drawback of private money loans is their higher interest rates compared to traditional bank loans.

Since private money lenders take on greater risk by providing funding based on collateral rather than creditworthiness, they typically charge higher rates to compensate for that risk. Borrowers should carefully assess whether the potential returns from their project justify these higher costs.

Risk of Losing Collateral

Private money loans are typically secured by collateral, such as real estate. While this offers the lender assurance, it means that if the borrower fails to meet repayment obligations, they risk losing the asset.

This is a significant consideration, particularly for borrowers who are investing in properties or projects with uncertain outcomes.

Limited Availability of Lenders

Finding the right private money lender can be challenging, especially for borrowers who are new to this type of financing.

Private money lenders are not always easy to find unlike traditional banks – and their terms can vary widely. It may take time to find a reliable lender that offers the right loan structure for your needs.

Fortunately, we at SDC Capital simplify this process by providing straightforward, transparent, and reliable private money lending solutions.

As a leading provider of bridge loans and other alternative financing options, SDC Capital offers tailored lending solutions to meet the unique needs of real estate investors and borrowers.

Our experience, commitment to customer service, and competitive loan terms make us a reliable partner in navigating the world of private money lending.

Whether you're looking for fast funding for a fix-and-flip project or a bridge loan to seize a timely investment opportunity, SDC Capital can offer the solution you're looking for.

Why Private Money Might be Right for You

Private money loans are not the right fit for every borrower, but they offer significant advantages for certain situations. If you find yourself in any of the following scenarios, private money might be the ideal solution for your financial needs.

1.      You Are Investing in Real Estate

Private money loans are often the go-to financing solution for real estate investors, especially those engaging in fix and flip projects, property renovations, or other short-term ventures.

These loans allow for quick access to capital, enabling investors to act fast in competitive markets.

2.      You Need to Bridge Financing Gaps

Private money loans are often used for "bridge financing," providing temporary funding until long-term financing can be arranged.

If you need to bridge the gap between the sale of one property and the purchase of another, or if you’re waiting for more favorable financing terms, a private money loan can give you the cash flow needed in the interim.

3.      You Need Fast Funding for Time-Sensitive Opportunities

Private money loans are known for their speed. Unlike traditional loans, which can take weeks or even months to process, private money lenders can approve and fund loans in as fast as 7 days.

This makes them ideal for real estate investors or borrowers facing urgent financial opportunities, such as purchasing a distressed property before a competitor does or covering an immediate cash flow gap in a business.

If any of these situations apply to you, private money lending can provide fast, flexible, and reliable funding solutions for you.

It’s essential to understand your specific needs and goals to determine if private money is the right option, and consulting with an expert can help guide you in making the best choice.

Speaking of private money experts, let SDC Capital help you in your real estate investing journey. Contact us today.

SDC Capital Funds $900,000 Owner-Occupied Bridge Loan in Huntington Beach, CA

SFR property in Huntington Beach, CA

DEAL HIGHLIGHTS

• Loan Amount : $900,000

• LTV: 60%

• Loan Type: Consumer Owner-Occupied Bridge Loan

• Property Type: SFR

• Location: Huntington Beach, CA

ABOUT THIS DEAL

SDC Capital recently funded a $900,000 consumer owner-occupied bridge loan for a single-family residence (SFR) in Huntington Beach, CA. With a loan-to-value (LTV) of 60%, this transaction provided the borrower with the short-term financing needed to bridge the gap between properties.

Thankfully, SDC Capital’s expertise in structuring bridge loans allowed the client to move forward with their plans confidently, securing flexibility during a critical transition period.

ABOUT SDC CAPITAL

SDC Capital brings over 35 years of expertise in bridge lending and real estate development. We understand the challenges that real estate investors face and provide the flexibility to structure loans tailored to their specific needs.

With a proven track record of success and strong financial backing, we are a dependable partner committed to delivering results.

SDC Capital Funds $1.1M Cash-Out Refinance in Los Angeles, CA

An SFR rental property in Los Angeles, CA

DEAL HIGHLIGHTS

• Loan Amount : $1,100,000

• LTV: 50%

• Loan Type: Cash-out business purpose refinance

• Property Type: SFR Rental Property

• Location: Los Angeles, CA

ABOUT THIS DEAL

SDC Capital recently funded a $1,100,000 cash-out business purpose refinance for a single-family rental (SFR) property in Los Angeles, CA. With a conservative loan-to-value (LTV) of 50%, this transaction provided the borrower with liquidity while retaining significant equity in the property.

ABOUT SDC CAPITAL

SDC Capital brings over 35 years of expertise in bridge lending and real estate development. We understand the challenges that real estate investors face and provide the flexibility to structure loans tailored to their specific needs.

With a proven track record of success and strong financial backing, we are a dependable partner committed to delivering results.

SDC Capital Funds 1.34M Purchase Loan Property in Santa Ana, CA

8-Unit multi-family property in Santa Ana, CA

DEAL HIGHLIGHTS

• Loan Amount : $1,348,750

• LTV: 75%

• Loan Type: 1031 Purchase Loan

• Property Type: 8-Unit Multi-family property

• Location: Santa Ana, CA

ABOUT THIS DEAL

SDC Capital recently funded a $1,348,750 loan to facilitate the 1031 exchange purchase of an 8-unit multi-family property in Santa Ana, CA with a loan-to-value (LTV) of 75%. This financing solution demonstrates our expertise in supporting investors navigating time-sensitive 1031 exchange transactions.

ABOUT SDC CAPITAL

SDC Capital brings over 35 years of expertise in bridge lending and real estate development. We understand the challenges that real estate investors face and provide the flexibility to structure loans tailored to their specific needs.

With a proven track record of success and strong financial backing, we are a dependable partner committed to delivering results.

SDC Capital Funds $350,000 2nd Lien Cash-Out Refinance in Oceanside, CA

Industrial condo in Oceanside, CA

DEAL HIGHLIGHTS

• Loan Amount : $350,000

• LTV: 56%

• Loan Type: 2nd lien cash-out business purpose refinance

• Property Type: Industrial condo

• Location: Oceanside, CA

ABOUT THIS DEAL

SDC Capital recently funded a $350,000 second lien cash-out business purpose refinance for an industrial condo in Oceanside, CA. With a loan-to-value (LTV) of 56%, this transaction highlights our ability to provide strategic financing solutions for business owners leveraging their real estate assets.

By structuring a second lien loan, we enabled our client to access capital while retaining flexibility for their operational needs.

ABOUT SDC CAPITAL

SDC Capital brings over 35 years of expertise in bridge lending and real estate development. We understand the challenges that real estate investors face and provide the flexibility to structure loans tailored to their specific needs.

With a proven track record of success and strong financial backing, we are a dependable partner committed to delivering results.

Impact of Federal and California Tenant Eviction Moratoria

The ongoing COVID-19 pandemic has affected all aspects of the US economy, including the rental market. As a result, tenant protections (which vary in form, function, length, and eligibility requirements) have been implemented by the federal, state, and local governments. These protections (including without limitation an eviction moratorium) apply broadly to residential tenants, whereas no federal or state protections apply to commercial tenants (who are therefore subject to localized community protection).

National Tenant Protections – US Centers for Disease Control Eviction Moratorium

The US government, through the Centers for Disease Control (CDC), has issued an order (Agency Order) prohibiting residential evictions for covered persons who (1) are unable to pay rent and (2) meet eligibility requirements. It has been extended several times and is currently set to expire June 30, 2021. Qualification does not require a person’s financial hardship be directly COVID-19 related. The Agency Order protections have been mirrored by the USDA, HUD, VA, and FHFA. The CDC has issued non-binding guidance  in connection with the Agency Order (of note, this guidance has not been updated to include the most recent extension). It should be noted that the Agency Order does not require a landlord to forgive or forbear rent, it merely creates a moratorium on evicting covered persons. There are currently no active federal rent forbearance or forgiveness programs, however, the recently enacted American Rescue Plan Act  seeks to provide $100 million in rental assistance programs. The Agency Order  protections only apply if they are greater than those offered by the applicable state or local government.

California COVID-19 State and Local Tenant Protections

California has implemented residential tenant protections through a progressive series of actions, which are generally more expansive than the Agency Order. Of note, unlike the Agency Order, the California residential protections do restrict eligibility to persons with COVID-19 related hardship and require the tenant meet financial eligibility requirements. In 2020, Governor Newsom issued a series of Executive Orders protecting residential tenants. These were followed by the enactment of the Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020 (Tenant Stabilization Act). The Tenant Stabilization Act prohibits a tenant’s non-payment of rent eviction due to COVID-19 related hardships experienced between March 4 and August 31, 2020 so long as the tenant delivered a hardship declaration. Tenants who experienced such hardships between September 1, 2020 and January 31, 2021 are required to pay 25% of the rent owed by June 30, 2021 to retain such protection. The Tenant Stabilization Act imposed additional landlord obligations, including revised notice requirements and an extended 15-day notice to quit, rather than the standard 3-day notice. The Tenant Stabilization Act also expanded the small claims court jurisdiction to cover unpaid rent claims, regardless of the amount owed.

In January 2021, the heavily pro-tenant Senate Bill 89 (Budget Act of 2020) (SB 89) and Senate Bill 91 (SB 91) were passed (collectively, the 2021 Protections). The 2021 Protections generally prohibit unlawful detainer actions prior to July 1, 2021; expand the previous protections; and add new protections, obligations, and time constraints. See Cal. Civ. Proc. Code § 1179.03.5.  Generally, SB 91 revises the Tenant Stabilization Act protections in the following ways:

• Extends the prohibition on a landlord interrupting or terminating a tenant’s utility service with the intent of terminating the tenant’s occupancy

• Extends until July 1, 2021 the time in which a tenant may avoid eviction by paying 25% of rent arrearages

• Prohibits the use of COVID-19 rental debt as a negative application factor or as the basis for refusal to rent a dwelling unit to an otherwise qualified person (of note, this provision does not include a termination date, and therefore, arguably, such COVID-19 related debt may never be used as a negative factor)

• Prohibits a person from selling or assigning specified unpaid COVID-19 rental debt until July 1, 2021 (this prohibition is permanent with respect to unpaid COVID-19 rental debt owed by qualifying tenants)

• Prohibits COVID-19 rent default retaliatory unlawful detainer actions

• Prohibits late payment fees or additional/increased fees for services previously provided at no charge where the tenant has COVID-19 rental debt and has submitted a hardship declaration

• Permits temporary reduction or cessation of a service or amenity as the result of compliance with federal, state, or local public health orders or guidelines

SB 91 included the following protections, obligations, and time constraints:

• Extends (until July 1, 2025) the small claims court jurisdiction over COVID-19 rental debt recovery and prohibits the commencement of an action until August 1, 2021.

• Imposes (until July 1, 2027) additional landlord documentation requirements for the recovery of COVID-19 rental debt.

• Prohibits recovery (until July 1, 2025) of excess attorneys’ fees in COVID-19 rental debt matters

• Extends the covered “COVID-19 rental debt” period to the period between March 1, 2020 and June 30, 2021, and further extends the repeal date until July 1, 2025.

• Prohibits application of a security deposit to satisfy COVID-19 rental debt for any tenancy existing between March 1, 2020, and June 30, 2021 (absent the tenant’s written consent).

• Modifies the requirement that a tenant “deliver” the COVID-19 hardship declaration, to require only that the tenant “provide” same.

• Modifies required statutory landlord notice provisions.

The most expansive component of the 2021 Protections, however, are the provision of rental assistance to tenants. The 2021 Protections permit a landlord to elect payment of a rental subsidy equal to 80% of the total rent arrearages incurred between April 2020 and March 2021, in exchange for an agreement to (1) forgive the remaining 20% rent arrearage and (2) not pursue an eviction or other monetary judgment. Failure to make such election will result in the tenant’s eligibility to receive 25% rent arrearage as a subsidy. It is unclear if courts will permit landlords who refuse to participate to obtain a judgement for the full amount of the rent arrearage.

California commercial tenant protections are authorized by Executive Order N-03-21  and Executive Order -80-20, which provide authority to local jurisdictions to suspend COVID-19 related commercial evictions until June 30, 2021. This authority has been implemented by various local municipalities. Some California counties (such as Contra Costa and San Francisco) and cities (such as San Francisco and Oakland) have extended additional residential and commercial protections. For example, Contra Costa has utilized this authority to extend the eviction moratorium on qualifying small businesses until June 30, 2021 and has further expanded the residential eviction moratorium to prohibit evictions based upon (1) no cause, or (2) a tenant allowing an unauthorized occupant to live in the dwelling unit, if the occupant is a member of the tenant's immediate family living in the dwelling unit as a result of the COVID-19 pandemic. See Ordinance No. 2021-11.  San Francisco adopted an ordinance protecting “covered commercial tenants” from eviction, for rent defaults from March 16, 2020 through June 30, 2021 which resulted from COVID-19 related impacts. The San Francisco ordinance  imposes a commercial eviction moratorium, prohibits the assessment of interest or other charges based on unpaid rents that were due during the moratorium period, and provides smaller covered commercial tenants a forbearance period after the moratorium ends to repay the missed rent. The San Francisco residential ordinance imposes an eviction moratorium and permits tenants six months to pay missed rent, as well as  tenant notice and documentation requirements. The City of Oakland’s commercial eviction moratorium prohibits eviction of small businesses for failure to pay rent if such failure is due to a documented substantial income decrease caused by the COVID-19 pandemic or by any governmental COVID-19 response. It will expire upon the termination of  EO N-80-20 (currently set to expire on June 30, 2021).

Can Any Tenant be Evicted?

It should be noted that neither federal or state protections prohibit a landlord from evicting tenants who otherwise violate the rental agreement terms, it merely creates a moratorium on evicting protected persons. The right of a landlord to commence an eviction suit is also subject to variance between state and federal law. As a result of nationwide court closures due to COVID-19, few cases have been adjudicated, and therefore, it is undetermined if the CDC had the proper authority to issue this order. Several federal courts have determined that the Agency Order is unconstitutional but stopped short of imposing an injunction (which would effectively permit landlords to continue eviction proceedings). Additionally, there is currently no binding case law which determines whether the federal, state, or local residential protections offer tenants more benefit, and therefore it remains unclear which protections apply, in particular where California ties the protection to additional documentation or COVID-19 relationship requirements. California commercial tenants must avail themselves of the localized protections. Additionally, it is unknown if this patchwork system of federal, state, and local protections will continue to be extended or otherwise modified or amended. Therefore, we will continue to monitor this evolving situation and provide updates.

The expansive federal, state, and local tenant protections instituted as a result of COVID-19 inhibit a landlord’s ability to collect rents owed, remove defaulting tenants, and increase rental income through value-add renovation programs. SDC Capital can help close this gap. We specialize in providing short-term bridge loans (up to 24 months) with flexible terms to help meet the evolving needs of our borrowers, as they navigate through these uncertain times. 

Kevin Arrabaca
Principal
P: (818) 835-8936
E: kevin@sdccap.com

SDC Capital funds $720,000 Cash-out Bridge Loan On Multi-Tenant Retail Property with No Appraisal

•  $720,000 cash-out loan secured by a quaint multi-tenant retail property in Lafayette, CA

• Cash-out proceeds used to complete the renovation of the property

• 65% of "As-is" LTV

• 8.99% interest rate

• 12 month term

SDC Capital funded a cash-out refinance of a family-owned multi-tenant retail center in Lafayette, CA. The owners needed the funds to complete renovations of the property that were long overdue. The broker who brought us this deal initially requested a cash-out loan secured in 2nd position, but that plan changed once it was determined that subordinate financing required approval from the 1st lien lender – approval the lender was unwilling to give after nearly one month of deliberation. Now short on time and shorter on funds to pay their contractor, the borrowers approached us regarding the refinance of their 1st lien loan. To avoid any further delays by requiring the borrower to get an indemnity package approved by the title company to obtain mechanics lien coverage on the lender’s title policy, SDC Capital mitigated the loss of priority risk through our due diligence and we closed the loan quickly without an appraisal.  The broker was happy as his clients’ financing need was solved and he received a higher commission as the loan amount increased from the original request.

SDC Capital funds $1,375,000 Multi-Family Bridge Loan at 5.99% With No Appraisal

• $1,375,000 loan secured by a 6 unit- multi-family property in San Francisco

• 55% LTV

• 12 month term

• 5.99% interest rate

• 1.25 lender points

• No appraisal required

SDC Capital funded a cash-out loan on a 6-unit multi-family property in San Francisco.  The borrower came to us requesting a quick close with conventional terms to complete the renovation of his daughter’s commercial property. It was a lot to ask but given the low LTV of 55%, which we determined without an appraisal, we were able to arrive at our lowest interest rate to date. SDC Capital provided the borrower with the best of both worlds: a quick closing and very attractive terms. We completed our due diligence and delivered loan documents to escrow within 10 days of receiving a signed term sheet. Unlike most bridge lenders, SDC Capital has the experience and ability to not only fund a broad range of deals from commercial bridge loans to residential construction loans, we also have the capital base that allows us to price deals appropriately based on the risk of the deal.