Dellovo Capital is not a lending source. Dellovo Capital is not an equity fund. Dellovo Capital is a "consulting firm" that guarantees nothing but an LOI that does NOT have to match their lenders LOI. Dellovo Capital is a "loan" broker who takes a $15,000 deposit and shops your loan packet to numerous lenders. The LOI you get from their "shopping" does not have to match their terms. According to Dellovo Capital if they get any LOI, no matter the terms, it fulfills their obligations.
Dellovo Capital fine prints states "The Lender Terms presented below are not guaranteed as a result of this LOI, and are subject to change. DCCs Fee and this LOI are not contingent on any changes to the Lenders Final Offer to Fund this transaction." (the LOI I signed only stated "The Lender Terms presented below are not guaranteed as a result of this LOI, and are subject to change")
Dellovo Capital makes verbal commitments on the phone about commitments; terms and days to get funding. However, their LOI states that nothing outside of the LOI matters.
Dellovo Capital states "this LOI is not a commitment or a guarantee that a loan will close, nor should it be construed as such." It goes on to state that the Dellovo Capital LOI "shall supersede all prior agreements, negotiations... Whether oral or written."
Dellovo Capital states "within sixty (30) days of the Clients presentation of all the loan documentation required by DCC, DCC is unable to secure a Lender willing to provide a Term Sheet for this transaction with lender terms as reasonably presented on Page One of this LOI, or as otherwise agreed upon, either verbally or in writing by the Client, then upon written notice from the Client, DCC will discontinue processing this transaction and refund the Processing & Due Diligence Fee in full." Key phrase is "Term Sheet" - it doesn't matter what the term sheet states. If Dellovo Capital
gets ANY term sheet they will NOT refund your money.
Personal experience with Dellovo Capital:
Dellovo Capital issued a letter of intent stating they could assist on obtaining financing for a multi family real estate deal.in the LOI it had stated terms and conditions which were verbally reiterated. Dellovo Capital stated this would be no problem to secure financing and if it couldn't get it done they would refund my deposit. The loan Dellovo Capital issued in LOI was for:
Purchase & Rehabilitation of a multi family complex. Projected Value: $2.2m upon completion; Purchase Price: $1.4m; Loan Amount: $1.26m $225,000.00 for renovations Lender Terms: Between 6.00 and 7.00% fixed, 30 to 35 year am, 1 point, no prepayment penalty. Processing Fee not to exceed $5,000.00.
(Email from Nellie Bloedoorn (loan broker) quoting Dellovo Capital "We can offer your client a rate of between 6.00 and 7.00%, financing up to 90% of purchase price development costs. This is a 30 year loan with a 30 year amortization, self - liquidating, similar to a home mortgage, and no prepayment penalty. A longer loan period and amortization may also be available whereas this is for an apartment complex. Total Points are 5. Processing & Due Diligence Fee is $15,000.00, and is refundable IN FULL if
the client does not obtain an acceptable Term Sheet from our Investor.")
The LOI Dellovo Capital delivered from a third party was a bridge loan: 12% interest; loan amount of $1.12m and $250k rehab; 12 month term; 2 points; processing fee $7,000.00.
Email from Raymond Dellovo to Nellie Bloedoorn: *Notice Ray Dellovo states that "12.99% is an extreme rate for a transaction like this" and the Due Diligence Fee is "refundable IN FULL if the client does not obtain an acceptable Term Sheet from our Investor."
Original Message
From: Raymond Dellovo
To: [email protected]
Sent: Tue, Aug 25 10:27 am
Subject: RE: scenario
We can offer your client a rate of between 6.00 and 7.00%, financing up to 90% of purchase price development costs. This is a 30 year loan with a 30 year amortization, self - liquidating, similar to a home mortgage, and no prepayment penalty. A longer loan period and amortization may also be available whereas this is for an apartment complex. Total points are 3. Processing & Due Diligence Fee is $15,000.00, and is refundable IN FULL if the client does not obtain an acceptable Term Sheet from our Investor.
12.99% is an extreme rate for a transaction like this, so if there is something else to know, please tell me now. I dont want to take the client down a blind path if there are extenuating circumstances associated with this transaction. Other than that, if your client is interested, please submit complete details and we will review in order to provide our Letter of Intent.
Ray Dellovo, President
Dellovo Capital Corporation
394 Lowell Street Suite 13
Lexington, MA 02420
Tel: 781.274.9800 x. 111
Conference Room: 308-344-6400. Code is 1085639#
Fax: 781.645.1372
www.dellovocapital.com
Dellovo Capital promised a conventional loan and delivered a bridge loan.
Dellovo Capital refused to refund the $10,000 retainer verbally stating that the bridge loan was better than a conventional loan. However, Dellovo Capital would not provide this comparison in writing.
Investor beware. Dellovo Capital has ZERO obligation to secure you a loan. Dellovo Capital has ZERO obligation to match their LOI.
On 9/28 I sent this to Dellovo Capital. On 9/26 this their response (my
response is in brackets):
From: Raymond Dellovo
Date: Tue, 29 Sep 2009 09:50: 47 -0400
To: Nathan Tabor
Cc: Harry Saul
Subject: RE: For clarity
I don't see the following facts in your assessment:
1) The property is in a depressed state, and requires extensive renovations in order to bring it to a conventional loan status. (this was fully disclosed to Dellovo Capital in writing and conversation)
2) Prior to DCC providing an LOI, you neglected to tell us about one unit that was completely burned out and two were smoke damaged. Also, none of this was covered by the seller's insurance. You expected this to be covered under the rehab costs. (this was fully disclosed in verbal conversations with Dellovo Capital and the repairs were covered in the $250k renovation budget)
3) Prior to DCC providing an LOI to obtain funding for your project, you professed that the property was 50% rented when, upon reviewing updates to the rent role, we discovered that the occupancy was never as high as 50%. (this was fully disclosed to Dellovo Capital. 28 of 58 units were leased. It was 48.2% occupied, not 50%)
4) You agreed to go forward if we dismissed the fee that was due to us upon your acceptance of the lender's Term Sheet. (I agreed to go forward if the fee could be paid at closing and if a writing explanation was provided detailing how a conventional loan was the same as a bridge loan. Both were denied by Dellovo Capital.)
5) You insisted the referring broker drop her commission for the transaction, even though you signed our LOI Agreeing to pay her 2 points. (Nellie Bloedoorn introduced me to Dellovo Capital. During this discussion she wasn't present for 3 days. I emailed Dellovo Capital about dropping her fees. Dellovo Capital wrote back that they had no issue with this if Nellie Bloedoorn sent it to them in writing)
6) The long term rate offered by DCC's lender was 1% less than what DCC's LOI indicated it could be, which means a savings of 14,000.00 per year, or $70,000.00 for 5 years. (the rated offered by Dellovo Capital was 6 to 7%. The LOI presented by the bridge loan lender was 12% with interest payment only for the first year of approximately $180,000.)
7) There was no prepayment penalty on the 12% interest rehab loan, and you indicated you could complete the renovations in less than 60 days, so your total cost for the construction portion of the loan would only have been 2% at most. (Dellovo Capital provided an LOI and didn't secure an LOI to match their terms. Dellovo Capital violated their own agreement and refuses to refund deposit)
Ray Dellovo, President
Dellovo Capital Corporation
394 Lowell Street Suite 13
Lexington, MA 02420
Tel: 781.274.9800 x. 111
Conference Room: 308-344-6400. Code is 1085639#
Fax: 781.645.1372
www.dellovocapital.com
From: Raymond Dellovo
To: [email protected]
Sent: Tue, Aug 25 10:27 am
Subject: RE: scenario
We can offer your client a rate of between 6.00 and 7.00%, financing up to 90% of purchase price development costs. This is a 30 year loan with a 30 year amortization, self - liquidating, similar to a home mortgage, and no prepayment penalty. A longer loan period and amortization may also be available whereas this is for an apartment complex. Total points are 3. Processing & Due Diligence Fee is $15,000.00, and is refundable IN FULL if the client does not obtain an acceptable Term Sheet from our Investor.
12.99% is an extreme rate for a transaction like this, so if there is something else to know, please tell me now. I dont want to take the client down a blind path if there are extenuating circumstances associated with this transaction. Other than that, if your client is interested, please submit complete details and we will review in order to provide our Letter of Intent.
Ray Dellovo, President
Dellovo Capital Corporation
394 Lowell Street Suite 13
Lexington, MA 02420
Tel: 781.274.9800 x. 111
Conference Room: 308-344-6400. Code is 1085639#
Fax: 781.645.1372
www.dellovocapital.com
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