Commercial Hard Money Loans

Commercial real estate transactions are a great way for a number of real estate professionals to diversify their offering and business. Like the residential industry, commercial real estate is being affected by the residential credit crisis. However, a number of options exist for commercial borrowers who need some financing flexibility.

It is important to understand why a current or a potential owner of a commercial property would use a Hard Money / Equity lender:

• No Prepayment penalties: most commercial loans and even some Hard Money ones, have hefty prepayment penalties. In some cases, they have a lock out period and a prepay up to 10 years.
• Underwriting Flexibility: Hard Money lenders will need as much documents as possible, however, they don't require a perfect situation. An under leased building or low credit borrowers are acceptable situations.
• Faster Funding: While banks, even once a loan approved, can take some times to deliver funds, hard money lenders are in genearl a little faster.
• Flexible Loan Terms: This is really important hard money lenders are able to customize loan terms to reflect a borrower's need.
• Payment Structure: Interest only will be the standard loan payment.
• Loan Position: A Hard Money lender is able to offer first and second position loans.

Commercial Borrowers / Corporation do not have the same motivations as residential borrowers. In addition, methodologies, loan documentations and properties valuations are not done the same way as in residential transactions. If as a real estate professional you have not done a commercial transaction, contact a lender or go to a training and read this Blog to learn some of the basics.