Intro to FIG's Financing ProcessMar 02, 2021
Hello everyone, my name is Lane Aldrich, I am with First Colony Mortgage. I oversee all the investor-facing financing for the Fourplex Investment Group. I want to take some time today to do an introduction to FIG's financing process. I'll dive into the model of FIG on the financing side and how it's a little bit different than other purchases in real estate that you've likely experienced up to this point.
My goal is to make sure that you have a good introduction as to how this process works as you dive into and make a purchase with FIG.
Intro to FIG's Financing Process
Starting from the very beginning: FIG's purchase process, as you may know already if you've already spoken with one of the FIG agents or looked around on the website. FIG's build-to-rent fourplexes are a wholesale model. This means that you're coming in and buying a property pre-construction, you're getting your own construction financing, and then when the property is completed, there's a refinance that takes place to open up the permanent debt service on your property.
Most of the time, when we've spoken on the phone or in person, you have already talked with one of the FIG agents. With them, you'll go over the multifamily proforma, have a basic understanding of the FIG model, and when it's time to really dive into the pre-approval process, you'll speak to me.
My office oversees all of the investment pre-approvals that take place for FIG in the different real estate markets that they build in. I work with each investor to go over the financing process, analyze your financial situation, and solidify financing eligibility for those that are getting financing and not paying cash.
In another post, I'll go over what to expect as far as the construction closing costs and the details for that. But know that at the time of your construction closing, you'll have made some deposits with FIG up to that point that are contractual. After you go under contract or when the plat records, you'll come in with your full 25% down-payment for your construction closing (pre-construction), and will also have paid the costs associated with your construction financing.
Then it's just the waiting period as the property is built. When the property is completed, that's when a second transaction takes place to refinance your construction loan and open up the permanent debt service (typically a 30-yr fixed loan).
Our First Conversation
I always love to start every conversation with an investor spending 10-15 minutes having an introduction. I'll get an idea of where you're at, what your priorities are, and discuss the multifamily project you're investing in. I will then send you the link/instructions for the pre-approval process.
Once you fill that out and get any additional requested documents over to us, we like to turn around the pre-approval within 2-3 business days. That way you know upfront how the financing is going to look, whether you have the ability to solidify financing, and what you can expect on the loan terms for the construction financing. At this point, we can also give you our projections for your long-term loan.
If you want to map out a game plan for acquiring multiple properties, this is also when we'll go over that together. I can let you know what your capacities would be purchasing multiple properties, whether you can purchase them all at the same time, or if we'll need to stagger them. Depending on the status of your pre-approval and how your finances are structured, we'll break down the construction loan process.
A couple of things to note up front. Your full down-payment is required (or due) at the time of your construction closing, which is pre-construction, as well as the costs associated with the construction financing. After this, there are no payments over the 12-month period since the interest is prepaid as part of the closing costs. During that construction period, we will work on a refinance to pay off the construction loan once your property is completed and ready to lease.
If you're already working with a FIG agent and are looking at a specific project, I'd be happy to have a discussion with you on the phone to get you familiar with how everything works. We can also work on a strategy for those individuals looking to purchase multiple investment properties--whether it's possible to buy multiple properties now, or whether we need to stagger those purchases.
All of your situations are unique. Each of you have different employment statuses, funds that you would like to deploy for a fourplex purchase (or multiple purchases), and what your timelines are. I can be a valuable resource to you. This is my world and we're very, very good at it. My office does just as much (if not more) than anyone else in the country when it comes to financing new construction 2-4 unit investment properties.
I'm excited to have a great discussion with you, but know that in most cases, investors who I speak with on the phone have already had a conversation with a FIG sales agent and are familiar with the process enough to be ready to talk financing/pre-approval.
The best way to reach me is at [email protected] or by calling my office phone at (801)226-7456
Additional Links: FIG FAQ, The FIG Process