Commercial Bridge Loan, Commercial Lenders, Hard Money Lenders
Dreaming of an Investment Property? Well, find out if a commercial bridge loan is your dream come true or a nightmare.
In any industry things can move quickly, commercial real estate or investment properties are no different. Sometimes, it is your best interest to move quickly with a purchase. For instance, say you are interested in a foreclosed property time is usually of the essence i.e. you need to move quickly in order to purchase said property before someone else does. This particular scenario is when most commercial buyers consider applying for a commercial bridge loans. Other instances where many companies looking into bridge financing is when their current mortgage is due and they have yet to find or rather secure a replacement mortgage or if a company needs to cover shortfalls in regards to general capital say for an upcoming balloon payment.
Before you consider a commercial mortgage, it is important to know what you need to qualify for one. Lender requirements are often just the beginning.
Commercial Lending i.e. commercial real estate loans. are nothing to sneeze at. In other words, you’d be surprised how much of an impact commercial bridge loans have on the overall financial future of companies. Consequently, when it comes time to enter the vast world of non-residential mortgages, it is extremely important to your eligibility. Of course, you may be asking yourself, aren’t non-residential mortgages loans similar to most mortgage loans? Well, obviously the answer to that question is no.
If you haven’t done your research yet, it may behoove you to know that there are several different types of commercial real estate lenders. However, our focus will be on joint venture loans, participating mortgages and your standard real estate purchase loans. These particular commercial loans tend to be the most common choice when it comes to business ventures. Thus, with that being said, let’s go over what each of these loans can do for you and your next business venture.
For starters, a joint venture loan is what you want when all parties (generally two partners) are willing to share equally in the losses and profits of the property. Moreover, this particular commercial loan is extremely beneficial to those parties that cannot or may not be able to qualify for financing separately. A real estate purchase loan, on the other hand, requires one party or rather one borrower with excellent to near perfect credit along with the saving to back it up. Additionally, when it comes to collateral, in general, lenders tend to expect more with these purchase loans.
Lastly, participating mortgages, in essence, are when your joint partner is actually your lender. In other words, the lender receives the standard monthly payment plus interest, but because the lender is also a partner they ultimately share in the commercial property’s proceeds or income. This third option is definitely something to look into if you have potential tenants with financial stability and long-term goals.
Who are Commercial Hard Money Lenders and What do They Offer
You may be new to the commercial investment property business or you may be a seasoned vet. Regardless of which category you fall under it never hurt to consider all your lending options and be clear on what they all have to offer.
Commercial hard money lenders are generally non-banking institutions i.e. private individuals or small groups that solely provide fast financing for such individuals as house flippers, developers and so on. Typically, most people that venture into the world of commercial real estate and investment properties are familiar with the term hard money. But, more than likely do not know exactly what a hard money loan is. This may sound strange, but the fact is unless you are in the business of flipping houses or a developer, hard money is a hard concept to follow.
In other words, you are not alone when asking the question just who exactly needs hard money? Moreover, how does hard money differ from standard financing? Well, the obvious answers are listed above. But, the in-depth answers are that hard money is for individuals who for a variety of reason cannot qualify or obtain conventional or rather standard loans/ financing and hard money differs from standard financing because there is simply less red tape.
All in all, this may sound like these particular individuals have bad credit or are just from a bank standpoint a bad investment, but the truth is this isn’t always the case. Nine times out of ten, the people that need hard money are those that need to move quickly on a property and often times need to borrow the full purchase price. Consequently, these people are often far from a “bad investment” as most commercial hard money lenderrequire their borrowers to back up hard money with real assets i.e. the collateral and credit are often more than there. In reality, it is often the banks that simply cannot move at the required speed necessary to allow the borrower to make a profit
Private Money Lenders vs. Commercial Hard Money Lenders
We know that commercial hard money lendersaren’t banks or other traditional institutions that are in the business of loans, but are they private money lenders? Moreover, if hard money lenders are not private money lenders, then you may just be asking yourself, well who are they?)
There are often so many interchangeable terms when it comes to the world of commercial lending that it is easy to forget that not all interchangeable terms always mean the same thing. For instance, it is not uncommon to hear the phrase private money lenders and naturally think non-bank lenders. Moreover, when people think of commercial hard money lender, they are also inclined to think non-bank lenders. Are you confused yet? Well, it is okay if you are because you are definitely not alone.
The reality is both private money lenders and commercial hard money lenders are traditionally not banks. But, that doesn’t mean that both of these non-bank lenders are the same nor do they offer the same loan options. So, now that that’s a little clearer, let’s go over just how these two particular commercial money lenders are different.
For starters, you will learn very quickly that hard money loans meet a very specific need. For example, let’s say you are a house flipper or a commercial developer and you need quick, short-term financing without a lot of red tape. These two instances are generally when you want a hard money loan. In fact, these instances really make up the bulk of hard money loans. Moreover, it is because of this fact that hard money lenders appeal to a certain niche market. Private money lenders, on the other hand, are more relationship-based and offer loans for real estate transactions—plain and simple. In other words, there really are not any specific scenarios where you absolutely need to contact a private money lender to provide financing rather private money lenders are basically just another non-bank financing outlet.
Pitfalls to Avoid with a Commercial Bridge Loan
In the fast pace world of commercial real estate and investment properties, a commercial bridge loan can be just the type of funding you need to keep your investment plan running smoothly and many loan scammers are aware of that fact. So, in order to avoid being scammed let’s go over a few red flags.)
If this is your first time applying for a commercial bridge loans, you may be surprised to know that you are actually not alone. Up until recently, many people simply did not use bridge loans due to the fact credit was once upon a time much easier to get. But, unfortunately, we no longer live in a world where that is the case i.e. it is much harder to obtain financing and even harder to maintain good credit.
Since bridge loans were somewhat of a foreign concept until recently, many people simply do not understand how they work, which means many do not know when they are actually getting scammed. Clearly, this is one of the main reasons to do your homework when it comes to applying for a commercial bridge loan. If you are like most businesses, much of your financial future depends on not being a party to a loan scam.
Typically, with a commercial bridge loan, the most common pitfalls and scams are the bait-and-switch loan scam, the upfront fee loan scam and of course the old-fashion identify theft loan scam. Out of all three of these particular loan scams, the one you time and time again is actually the upfront fee scam since actual lenders generally charge an upfront fee. So, you may be asking yourself, if actual lenders charge upfront fees how will you know if you are being scammed or not? Well, the answer, of course, lies in the details—the actual details i.e. pay attention to email addresses being spelled correctly and lender addresses.
Commercial Hard Money Lenders—Who are they for?
You hear it all the time—commercial hard money lenders are here to help when traditional funding lenders can’t. In many ways they do help, but generally, it’s the seasoned real estate investors that benefit most.)
Commercial hard money lenderare a great option when looking for short-term financing and when you do not have the picture perfect requirements (stellar business credit scores, excellent financial conditions and so on) for traditional lending institutions such as banks or credit unions. But, what nobody tells you is that commercial hard money lenders are not for the timid or for the unseasoned real estate investors that are new to the commercial investment game. Of course, this fact doesn’t mean hard money itself is any more complicated than private money or traditional funding (soft money); rather it just means that those who have been in the business for a minute know the tricks that commercial lenders like to play.
For instance, commercial lenders are still in the business of making the most on their investment. Thus, with hard money, these particular lenders aren’t afraid to charge a higher interest rate. For those individuals that know hard money is for moving quickly on a lucrative investment, these higher rates are not really an issue. In other words, they see a great investment, they find a reputable commercial investor and in less than a few business days the deal is done. With unseasoned real estate investors, you need time to get your feet wet as well as time to weigh all the pros and cons—this is, of course, perfectly okay and generally just the nature of the beast. But, nevertheless, if you need extra time to make your move that’s still extra time you are essentially sitting on a lucrative investment, which in the long run generally means more costs and higher fees.
Similarly, if this is your first or second time utilizing a commercial lender for a hard money loan, you need to make sure that you have enough capital to pay back the loan and that you are working with a reputable lender i.e. check their credentials. These are generally things that a seasoned real estate investor can do seamlessly. So, remember if you are new to the game, that’s okay, just make sure you find the right lender, the best rate and move quickly on your investment.
Why A Commercial Hard Money Lender May Be Right For You
Ready to move on with business, but your traditional bank loan officer may not be? A Commercial Lenders may just be the right solution for you. Find out why this is the real deal.
So, you’re ready to move on with business, but in need of a timely loan? Let’s go as far as to say that you’re ready to make your move and acquire that piece of commercial real estate, and are hard-up for funding? The good news is that you don’t have to be hard-up for hard money. A Commercial Lender is a very viable, attainable option for you and here is why.
1)Commercial Lenders are able to provide commercial hard money loans in a timely and efficient manner. They have the depth of understanding that the time to act on your piece of potential real estate is now, while others like yourself are competing with dueling bids. You simply may not have time for the traditional bank loan application approval process and funding that can sometimes take up to several weeks.
2)If you’re concerned about being denied a traditional bank loan or have currently been denied one, Commercial Lenders are likely more willing to work with you than other banking institutions. While there are many reasons why you may have been denied a bank loan, a Commercial Lender will often let your history of denial be just that, history. They deal with you in the “here and now”–meaning, equity invested and will the loan be repaid.
What Are Other Things To Consider When Contemplating Using A Commercial Lending?
You understand that the commercial real estate opportunity of a lifetime could be passing you by as you wait and wait for a potential bank loan approval and related funding. In addition, you should know that Commercial Lending aren’t what they used to be. They are on the up-and-up, helping folks like you on a daily basis. Long gone are the days of risky loan practices and extraordinary interest rates. Today’s Commercial Lending wants to work with you and see that you succeed! Your success is their success!
For A Successful Loan And Funding Process,
Commercial Lending Is Something For You To Research And Consider
At the end of the day, your goal to secure a potential commercial real estate property is a loan. Because Commercial Lenders are willing to work with you, focusing on the value of the property and not on your history and credentials, researching and considering this type of lender may be just right for you. You will stand a much better chance of reaching your goal, so get started now!
Consequently, here is something you should definitely keep in mind when determining what kind of lender you should be working with. Above all else, it is important to note that residential hard money financing is appropriate in a variety of scenarios such as impaired credit, liens or judgments, time constraints, pending foreclosures and Foreign Nationals—just to name a few. Thus, if you are still interested in your residential hard money options, it helps to focus your lender search on niche lenders that can meet your needs (whatever they may be) and vice versus.
Dennis Dahlberg Broker/RI/CEO/MLO Level 4 Funding LLC Private Hard Money Lender Arizona Tel: (623) 582-4444 Texas Tel: (512) 516-1177 Dennis@level4funding.comhttp://www.Level4Funding.comNMLS 1057378 | AZMB 0923961 | MLO 1057378 22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027 111 Congress Ave |Austin | Texas | 78701 About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.