Commercial Hard Money Lending And How It Works
Need funding in order to buy, build or repair commercial property? Going through the bank takes time – and if you live in an area where business is thriving, a cash-only buyer could jerk that ideal property right out from under your feet.
How do you compete with that? Using commercial hard money lending is one way. Here’s how it works.
Commercial Hard Money Loans – What Are They?
Hard money loans bypass traditional lenders like banks and credit unions, letting you work one-on-one with investors. You simply put up secured collateral (such as another real estate property) and can get the money you need quickly.
One of the best reasons to consider a hard money loan is the qualifications. There’s minimal paperwork to fill out and you can get approved much quicker than you could for a traditional loan. There are no income requirements, and no minimum FICO score necessary, although you should ideally have a score of above 600 to get the best possible rates on your hard money loan.
Types of Properties You Can Buy With Commercial Hard Money Loans
All types of commercial property can qualify for a hard money loan, including:
- Apartments
- Planned communities
- Condominiums
- Business offices
- Medical or executive suites
- Retail strip malls
- Inline retail stores
- Regional balls
- Distribution centers
- Manufacturing centers
- Warehouses
- Hotels/motels
- Restaurants and more
Our direct hard money lenders have a great deal of experience working with many types of commercial property, so even if your proposed type of commercial property isn’t in the list, don’t worry – you may still qualify for a private money loan!
How Bankruptcy And Foreclosure Can Affect Your Loan
Commercial hard money lenders care less about your financial history or credit score, and more about the value of the collateral you borrow against. This means that you could have a bankruptcy or foreclosure in your credit history – something that causes the banks to deny your loan application outright – but hard money lenders don’t judge you based on a number.
Instead, most private money lenders will look at the value of the collateral that your loan is secured against (generally other real estate). This provides you with a much fairer, less time-consuming method to get the property you want and see your commercial dreams come to fruition!
How Long Does it Take to Get Funding?
This is perhaps the best reason to consider a hard money loan for your commercial purchase. If you live in a competitive real estate market, where commercial property is bought up quickly, it can be a nightmare to wait to see if you have the bank’s “blessing” on whether or not your loan application is approved.
During this time, other commercial property buyers with cash in hand can swoop in and buy up that property you’ve had your eye on. And there’s nothing you can do about it!
Hard money lenders take out the slow, plodding pace of the bank and can get you funding in as little as 15 days or less. You can find out if you’re approved quickly and since you’ll be working directly with the private money lender, there’s no middle-man skimming off your loan payments.
With most hard money lenders, there are no pre-payment penalties, fair interest rates, and LTV (loan-to-value) of up to 70%. Origination fees are low and your commercial hard money loan is a much shorter timeframe than a traditional commercial loan – in some cases as little as 1-3 years! Compare that to the 10, 20 or 30 years it can take to pay off a commercial property like a traditional mortgage and you’ll see why hard money could be the right choice for your needs! Feel free to visit our FAQ section if you have more question or call us at (818) 584-2424
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