In the business of mortgage loans, hard money commercial loans are simply a non-bankable loan. “Commercial hard money” when referred to in real estate financing, is frequently interchanged with “no doc” or private lending. For a hard money commercial loan, the lender bases their underwriting decisions on the borrowers hard assets (real estate). Commercial hard money lending plays a critical role in both the stability and volatility of the real estate market. Dating back to the housing market crisis of 2007, alternative mortgage financing options (specifically private financing such as stated income) contributed to the market meltdown as a result of unscrupulous lending of sub-prime loans. While hard money lies under the umbrella of private mortgage financing, it needs not to be associated with the destructive tendencies of irresponsible lenders.
Commercial hard money lending is a great tool for financing real estate investment deals. Understanding its many attributes will help mortgage professionals convince potential borrowers that loans from private lenders make good business sense. Commercial hard money lending is also a useful tool for those with less than perfect credit history, those who are self employed, or those faced with foreclosure. Hard money loans are essentially short term “bridge” loans that serve to bridge the gap between times when financing is needed. This type of financing allows the borrower to meet current financial obligations by providing immediate cash flow.
Hard money lenders, also referred to as private lenders, have become an outstanding source for many real estate investors looking to enter the commercial real estate space. When utilized properly, investors will find that hard money represents a viable tool for acquiring the capital and funding to move ahead with commercial real estate projects.
Contact the specialists at HML Investments today for further information regarding commercial hard money lending.