All posts by Craig Higdon

Craig S. Higdon graduated with a Bachelor's degree in Mechanical Engineering from the University of Southern California. He subsequently earned a Masters in Business Administration from Heriot-Watt University in Edinburgh, Scotland. After leaving school, he decided that he did not look good in a pocket-protector and consequently took a job on Wall Street as a retail stock broker. This began 30+ years of work in the financial services sector where he held jobs as an investment banker, business owner, and eventually as a mortgage broker. Mr. Higdon has been in the mortgage business since 1993 and is a licensed Real Estate Broker in the state of California. Mr. Higdon has extensive background in both residential and commercial mortgage loan transactions, including significant construction loan experience. His personal mission is to help small business owners and real estate investors create wealth through the acquisition of commercial income producing property. As a second degree black belt in Shaolin Kenpo, he considers it his personal duty to protect real estate investors from commercial loan misinformation.

Mid-April SCO Update

Our Blacksville Oil & Gas Soft Corporate Offer was updated for the next fifteen (15) days to April 30. Of note is our D6 pricing for this period. Please go to our Offers tab to download and review this and our other offerings: https://DragonRealtyCapital.com/soft-corporate-offers/.

If you have any questions, you can reach us on WhatsApp at 1-310-463-3799 or email to Info@DragonIndustries.us.

April SCOs Issued

Soft Corporate Offers for April have been issued. There were a couple of corrections made to the OT FOB SCO after it was issued this month, so please make sure that you have the latest version before completing an ICPO. In this month’s SCOs there were some slight price changes on the B SCO and minor changes to the TTO (#4) and TTV (#5) procedures with regard to the PPOP provided in the early steps of the procedure.

As always, please check with us for the latest version of our SCOs if you have any questions.

Commercial Lending Lives!

Dragon Realty Capital is alive and well despite all attempts by the corona virus to take us out of action. We are actively reviewing commercial loan transactions and can fund commercial bridge loans even in “intensive care.” (Dragons are tough creatures, just ask Jon Stark!). If you have a commercial real estate financing scenario involving any of the following property types, please send us your scenario and we will do our best to get you funding:

Multifamily (5+ units), Office, Mixed Use, Warehouse, Industrial, Independent Living, Senior Assisted Living, Age Restricted Housing, Self-Storage, or Student Housing.

In general, we will fund loans that fall within the following guidelines:

  • Loan amount between $1MM and $10 MM.
  • Located nationwide.
  • 65% LTV / LTC (rehab, renovations, cap-ex, upgrades).
  • 6-36 month terms.
  • Interest only amortization.
  • Close in 20-30 days.
  • 2nd TD available behind Institutional Debt, only.

And to save you time, we will NOT finance Land or Special Use properties (Marinas, Cannabis-related, Golf Courses, etc.). For greater detail on our programs, please go here: https://dragonrealtycapital.com/loan-programs/bridge-rehab-loans/. If you or someone you know has one or is looking to acquire one of the property types above and is in need of financing, please reach out to us at 888-578-5441 x81.

We hope that you and your loved ones remain safe and we remain ready to assist with a commercial bridge loan if you need us. For more information on the Dragon, please visit www.DragonRealtyCapital.com or email us at Info@DragonRealtyCapital.com. 4/29/2020.

The Dragon Is Lending!

Dragon Realty Capital is actively reviewing commercial loan transactions and funding bridge loans in the “corona virus environment” (Dragons don’t fear itty-bitty viruses and no, they are NOT related to bats). If you have a scenario involving any of the following property types, we would be happy to review the request under our newly revised parameters:

  • Multifamily (5+ units)
  • Office
  • Mixed Use
  • Warehouse
  • Industrial
  • Independent Living
  • Senior Assisted Living
  • Age Restricted Housing
  • Self-Storage
  • Student Housing

Fore greater detail on our programs, please go here: https://dragonrealtycapital.com/loan-programs/bridge-rehab-loans/. If you or someone you know has one or is looking to acquire one of the property types above and is in need of financing, please reach out to us at 888-578-5441 x81.

We hope that you and your loved ones remain safe and we remain ready to assist with a commercial bridge loan if you need us. For more information on the Dragon, please visit www.DragonRealtyCapital.com or email us at Info@DragonRealtyCapital.com. 4/14/2020.

Dragon Closes a 5.625% Rental Loan In CA

Dragon Realty Capital, a Florida based direct private money lender, recently closed a small loan on a non-owner occupied residence in Northridge, CA. The property was free and clear at the time of the loan request and the borrower received $295,000 in cash out at a fixed rate of 5.625% on a 30 year fully amortized basis.

Besides the low fixed rate and unrestricted cash out, the other unique features of this loan were that it was:

  1. Underwritten with NO income documentation on the part of the borrower and
  2. Allowed a 90% Debt to Income Ratio on the property’s income and expenses.

The loan closed in 18 days, mostly because there was a delay on the part of the borrower in getting the funds to the appraiser. Had their been higher market rents, Dragon could have gone all the way to 80% LTV.

Dragon Realty Capital provides commercial, multifamily, and non-owner occupied residential loans nationwide. Brokers are protected. For more information on loan offerings, please go to www.DragonRealtyCapital.com or call 888-578-5441 x81.

Loans For Love

OK, that is admittedly an odd title for a commercial lending related post, but I had to tie this post to Valentine’s Day somehow, right? Yes, gentlemen… Valentine’s Day is quickly approaching and if you haven’t planned for it, you’ll be paying a premium for those roses, chocolates, and good luck getting a good seat at Mastro’s Steak House!

And that allows me to segué into my “lending” topic: Planning, specifically as it pertains submitting a commercial loan request. One of the most difficult aspects of being on the lending side is getting “piecemealed” on the information that we need to make a realistic decision on interest in the transaction and pricing. This represents a lack of “planning” from my perspective.

This is especially apparent in “fast funding” situations. There’s an old saying: “A lack of planning on your part does NOT constitute and emergency on my part.” Pulling documents one at a time out of a broker or borrower does not bode well for a quick close. So what does it mean to “plan” for a submission?

I would suggest at the very least that you have the following prepared and ready to sent to a lender:

  • A well prepared and complete Executive Summary describing the transaction clearly, no more than 2 pages of text, with pictures.
  • The guarantor(s) Personal Financial Statement, Schedule of Real Estate, and Credit Report.
  • If a purchase, the Purchase and Sale Agreement and Offering Memorandum.
  • If a refinance, SOME validation of value (either comps, a recent BPO, or an appraisal) and a breakdown of equity injected into the project.
  • A Use of Funds Statement.

All of that should pretty much describe the transaction in enough detail for a lender to provide a realist and quick response on pricing and closing time. Yes, it means more work on your part… at first. However, you’ll find that when shopping for good loan alternatives, this approach will save you a HUGE amount of time an headache.

Now gents… get out there and get those flowers, chocolates, dinner reservations, teddy bears, and anything else to let your special someone know just how special she is!

Craig Higdon is the Chief Executive Officer of Dragon Realty Capital, a nationwide private money direct lender who has been in the commercial real estate lending business since 1993.

The “Three Lender Rule”

If you broker loans for a living, whether commercial or residential, you’re only as good as the lenders with to whom you submit those loans. If you’ve been in the business for any length of time, then you know that your enemy is “time.” Your lenders are constantly change their guidelines, loan appetites, credit boxes, submission procedures, etc. all the time. Staying on top of those changes so that you can be an effective resource to your clients, is almost a full time job in itself.

Let me introduce you to the “Three Lender Rule.” I discovered this in my brokering career by accident. Basically it says that if you submit your loan request to multiple lenders and THREE of them give you essentially the same answer (accept or pass), then that will represent roughly 98% of all lenders to whom you submit that transaction. So what’s the take away and how do we leverage this for success.

First, you can use this as an effective time/loan management tool. If you get three “no’s,” then it is probably a good idea to let another broker waste HIS time on that loan while you focus on another one. (I’m not saying that this rule is perfect, but if you’re managing a large pipeline, then it’s a VERY good rule of thumb). Or give it to an assistant to try to find that lender exception.

Second, you can use the rule to develop a very effective Lender List. Now you know that you can pick 3 bridge lenders, 3 multifamily lenders, 3 office building lenders, etc. until you have a full grouping for those types of properties in which you care to specialize or represent. This magic number is also much easier to stay on top of then say 20 bridge lenders, 15 self storage lenders, and the like. Yes, have some back-ups, but keep 3 “top tier” lenders for each category of property you like to finance.

Last, you will find that giving most of your attention to fewer lenders will result in getting better concessions and exceptions from those lender when you really need them. Loyalty can provide you with rewards when you need them.

Next week I’ll discuss how lenders are more important to you than borrowers with regard to growing and maintaining your loan brokerage business.

Craig Higdon is the Chief Executive Officer of Dragon Realty Capital, a nationwide private money direct lender. More information can be found at www.DragonRealtyCapital.com. We also offer educational, interesting, FREE Reports for industry professionals and investors: Click Here to get yours. And Click Here to obtain free Broker-specific tools.

Successful Executive Summaries

When is a commercial loan “summary” not a summary? When it turns into a book, of course. Or when it showed up as only a few sentences. So perhaps the better question to ask is: “How much information should you include in an Executive Summary?

The purpose of an Executive Summary is to present to the reader (presumably a lender or investor) the important FACTS of the transaction in support of the loan request. When you consider that a typical lender may receive 20 to 50 requests for financing PER DAY, you can see that both brevity and impact are important in crafting your request. Also remember that everything you put INTO the Summary needs to be supported by all of the documentation you collect from your borrower.

We start with an overall description of the transaction wherein the first sentence is a “summary of the Summary.” Do NOT forget to have a compelling picture on the first page. Pictures sell far more than to the dry facts. In the Transaction Summary, also remember to lay out the purpose of the financing, the borrower’s motivation, and how value is derived. Finally, include a “Use of Funds” statement.

The next section describes the sponsorship (humans) behind the transaction including net worth, liquidity, credit, and a short biography. The more experience your borrowers have, the easier it will be to obtain financing.

Now we split: Is this a refinance or a purchase? Each type of transaction has its key points, with actual “cash in the transaction” being the key component. Skin in the game is what lenders prize most so make sure that this is described in detail, particularly in cash out refinance transactions.

The next section covers any construction or rehabilitation to be done to the property as part of the loan request. Soft costs, hard costs, reserves (interest, hard costs, TI, and/or leasing) and closing costs should all be laid out… clearly.

Last, but not least of the descriptions, here you can include property facts such as building size, lot size, zoning, parcel numbers, etc. At the end of the summary, include MORE pictures of the property, a map, and maybe a satellite photo from Google. Brokers can get one of our summary templates by signing up: Click Here.

Next week I’ll discuss how to pick good lenders to add to your “list” so that you can service your clients more effectively.

Craig Higdon is the Chief Executive Officer of Dragon Realty Capital, a nationwide private money direct lender. More information can be found at www.DragonRealtyCapital.com. We also offer educational, interesting, FREE Reports for industry professionals and investors: Click Here to get yours.


Questions To Be Asking

Last week I discussed the importance of the Executive Summary, the first document to send to a lender and the last document you create in your loan file. This week I want to give you a few very important questions to be asking at the outset of a potential financing to help you discover if you should give a particular request priority or even pass on it all together.

So you get a call from a prospective borrower and he/she starts to run through all the really great reasons why you should give him 110% LTV, interest only balloon note financing on his outhouse in Podunk. This is where you step in and ask these questions:

  1. How much is your property worth and how did you determine that? (Is there real value here?)
  2. How much do you owe on the property and are you current on your loan(s)? (What kind of trouble is this borrower in and is it even possible to finance him?)
  3. Where is the property located? (Are you in downtown LA or in Podunk… guess which is easier to finance?)
  4. What is your motivation for getting this loan? (Gets to WHY they need the money.)
  5. When do you need to close on the loan? (Gets to HOW motivated they are to get financing.)
  6. What are your credit scores? (Again, do you have problems you have to solve?)

First, notice that these are all open-ended questions. The prospective borrower can’t give you a Yes or a No. He’s got to tell you the story. Can you see how these questions will give you enough information to make a determination on whether to proceed?

I’m not suggesting that you turn down a tough to close if you know what you’re doing. You can make real money on tough loans because they ARE tough. It’s simply better to know up front what you’re getting into.

Next week I’ll elaborate more on the Executive Summary and its structure. The better you craft this document, the better your chances of getting initial interest in your loan request.

Craig Higdon is the Chief Executive Officer of Dragon Realty Capital, a nationwide private money direct lender. More information can be found at www.DragonRealtyCapital.com. We also offer educational, interesting, FREE Reports for industry professionals and investors: Click Here to get yours.