CRE developers who want to build a profitable portfolio in the US must have a consistent source of earnest money financing. This will ensure that they can readily access the funds they need to pursue the deals they desire.
In competitive markets where buyers are jostling for prime properties in prime locations, quick access to earnest money and the ability to offer a higher rate than required can provide a competitive advantage.
But which earnest money provider can best support you as a developer with quick, flexible, and accessible earnest money financing?
In what follows, we seek to answer that question by considering the top 5 earnest money providers in the US.
Duckfund
Founded by a Stanford alumna in 2023 and managed by experts with more than 15 years of experience in CRE, Duckfund provides earnest money financing for CRE developers across all US states except California, Hawaii, Utah, and Vermont.
It also provides debt and equity financing for developers to complete their deals.
Top features of Duckfund’s earnest money financing solution
- Fee: The financing fee is paid upfront, and it is 2% of the deposit size per 30 days. Developers will get a discount on the financing fee during the feasibility due diligence phase.
- Accessibility: No credit report or collateral is required.
- Speed: CRE developers can complete the application in 2 minutes, and funds are transferred to the escrow within 48 hours of the application.
- Flexibility: Duckfund supports developers who have to pay higher EMD to gain an advantage in competitive markets.
- Simultaneous deals: Developers can work on multiple deals at the same time.
- Minimum amount and term: Duckfund will fund a minimum earnest money of $50,000 (no maximum amount stated). The soft deposit term must also be at least 30 days (no maximum term stated).
EMDDC
EMDDC provides short-term funding to help real estate investors and developers secure deals without using their capital. Their services include earnest money financing, double closings, seller carrybacks, and transactional funding.
Top features of EMDDC’s earnest money financing solution
- Minimum and maximum funding: Earnest money financing provided ranges from a minimum of $500 to a maximum of $100,000.
- Upfront fee: There is an upfront fee of $500 or 1% of the deposit (whichever is greater) for underwriting and processing.
- Return: In addition to the upfront fee, EMDDC expects to get a 40% return for 30 days on the earnest money loan, which will increase if the term extends beyond 30 days.
- Financing term: The typical term is 30 days, though it’s possible to get an extension up to 60 days.
- Speed: It typically takes 72 hours to process a transaction, though some have been done faster.
- Accessibility: Developers and investors must submit three HUDs (HUD-1 Settlement Statements) to demonstrate prior experience.
Y2 Lending
Y2 Lending is a private money lender founded in 2022. Operating out of its headquarters in California, it provides services that include earnest money financing, gap funding, fix-and-flip funding, and proof-of-funds financing.
Top features of Y2 Lending’s earnest money financing solution
- Accessibility: No pay stubs, docs, credit checks, or collateral are required. Only the purchase agreement is needed.
- Maximum amount: Y2 Lending provides earnest money financing up to $50,000.
- Soft deposit term: The typical term is 30 days, but it can extend up to 45 days.
- Financing fee: The company charges between 15% and 30% of the deposit amount. A part of this fee is required as an upfront deposit.
- Speed: Once approved, the deposit is provided within 24 hours. However, the approval period is undefined as it involves vetting the title company and the closing attorney.
Oakstone Lending
Oakstone Lending is a transactional lender that specializes in earnest money deposit financing, double closings, and seller carryback funding. They cater to the short-term financing needs of investors, developers, and wholesalers.
Top features of Oakstone Lending’s earnest money financing solution
- Speed: They can get funds released within 48 hours
- Accessibility: They require that the purchase agreement have the necessary contingencies.
- Upfront fees: They charge an upfront fee of $250.
- Return: In addition to the upfront fee, they demand a 40% return on the deal, which must equal to a minimum of $2,000.
- Funding amount: Minimum of $1000. No stated maximum.
Levine Capital
Levine Capital is a private equity firm that provides varied forms of financing for real estate investors, developers, and wholesalers, including EMD financing, new construction loans, Debt-Service Coverage Ratio (DSCR) loans, bridge loans, transactional funding, gap funding, and joint venture equity, among others.
Top features of Oakstone Lending’s earnest money financing solution
- Speed: The application can be completed in minutes, and approval happens 24 hours after the application.
- Term: The maximum term for EMD financing is six months.
- Minimum deposit: There is no stated minimum (or maximum) deposit.
Duckfund provides the best combination of accessibility, cost-effectiveness, timeliness, and flexibility.
More importantly, it allows developers excel in competitive markets by enabling them to propose higher EMD rates and chase multiple deals at the same time.
Furthermore, Duckfund supports developers who are involved in ground-up development, predevelopment, value-add, and redevelopment projects in various CRE sectors, including office buildings, retail spaces, data centers, healthcare facilities, hospitality, mixed-use facilities, among others.
If you have been troubled by the growing role of earnest money in commercial real estate, worry no more. With a company like Duckfund, earnest money will never be a challenge again