We talked with the CEO of Stratton Equities Michael Mikhail about everything from entrepreneurship to the benefits of private money lending. How Stratton Equities Began Michael was an entrepreneur from the get-go. When he was in high school he would get knives from teachers and parents and would sharpen them for 50 cents each. He bought his first house at 19 using a hard money loan and at 21 had even opened a car wash. The entrepreneurial spirit has been with him ever since. At 22, he left the car wash industry and moved from Florida back to New Jersey. That’s when he got his start in the mortgage industry. According to him, a friend who worked for a mortgage company told him, “you know business, you know sales, you know a lot of realtors, why don’t you get into the mortgage industry?” Although Michael didn’t know the business at all, he took their advice. He started applying for jobs in mortgage companies and in August of 2003 he found one. How do Private Money Loans Differ From Traditional Money Loans? In 2017, Michael formed Stratton Equities, the nation’s leading hard money and NON-QM lender. As a private money lender, Stratton operates differently from banks and mortgage companies. “In the conventional world of qualified mortgages, traditional financial institutions and lenders are governed under the same restrictive guidelines. So it’s not like one bank is going to do this, and another is going to do that. It’s not going to be much different. When you’re in the conventional space, they don’t like real estate investors, they make it very hard to secure financing, and actually, the LTVs (loan-to-value) are much lower”, Michael said. The LTVs in most banks max out at 70%, while Stratton goes up to 85%. Most banks and mortgage companies charge PMI, which can be a few extra hundred dollars a month. Private money lenders like Stratton do not. In fact, at Stratton Equities, they do not charge junk fees or upfront fees, or ask for tax returns. “Real estate investors, most of them, don’t have the greatest of all tax returns. They move money around, they have different trusts, different accounts, different LLCs. Banks absolutely frown upon that and absolutely hate that. Good luck getting a loan through a bank if you’re a hardcore real estate investor”, Michael added. Stratton’s loan programs are designed for real estate investors to succeed. Every single part of the loan process is designed to facilitate you in becoming a successful real estate entrepreneur. Bridge Loans and Term Loans Stratton Equities offers an array of various private money and NON-QM loan programs. The common loan products are usually hard money, bridge loans, and term loans. Bridge Loan financing is primarily 12 to 24 months, the rates are significantly higher, but they’re meant for short-term financing. Bridge loans are easier to secure as they come with less underwriting. Michael has noticed that “a lot of people pre-COVID were pushing for bridge loans because they closed faster but now with every type of company taking longer, with appraisals taking longer, bridge loans aren’t closing that much faster than term loans.”. Term loans are the opposite of bridge loans. They’re meant for long-term financing and have significantly lower rates. For a property to qualify for a term loan it must have a CO (certification of occupancy), it has to be in good condition and it has to be livable or move-in ready. Michael sees soft-money lending, which is a term loan, as the real estate investing program of the future. “It is a program of the future, it’s a hybrid program that is very efficient for a real estate investor. It’s a program I use when I buy real estate. It’s just a great add-on for real estate investors to utilize”, he added. Before applying for a soft money loan, make sure to have your paperwork in order. Having good credit is always very helpful as well. Most importantly, make sure that you have a detailed investment plan. Is it a short-term play? Is it a long-term play? Once you take these things into consideration, you’ll be ready to begin your journey as a successful real estate investor. Let Stratton Equities Help You With Your Next Project At Stratton Equities, our mission is to make private mortgage lending easy, efficient, and worry-free. We help other experienced investors, borrowers, and professionals in the mortgage and real estate industry succeed with a simple 3-step process, including Pre-Approval, Processing & Underwriting, and Funding. Call us at 800-962-6613 or contact us at info@strattonequities.com and apply now at https://www.strattonequities.com/loan-pre-qualification to find out whether you are eligible for loan pre-qualification!
