Financing Commercial Real Estate
Financing commercial real estate has become an increasingly interesting topic. In this post market crash decade of reemerging growth, there has been an influx of private money looking for a return. Commercial real estate represents a viable investment opportunity for private investors to return a sizable return on their investments. On the other side of the table, borrowers are faced with an increased regulatory framework when seeking a conventional mortgage loan from commercial banks. Here lies the market for private money in commercial real estate.
The topic of commercial lenders has changed shape to include commercial property private- or hard money- lenders. Over the past few years, private (or hard money) lending has seen a significant increase in volume of loan requests. The housing market crisis in 2008 forced the government to tighten its grip on credit and increase the quality of underwriting on commercial and residential mortgage loans. As a result, commercial hard money loans have filled the gap between non conforming borrowers and lenders. The market for hard money loans includes direct lenders, brokers, and borrowers.
A true direct lender funds its own loans without working as an intermediary between its brokers and investors. It is often the case that direct lenders designate themselves as such, while they work with their investors to fund private-money deals. Lenders of this type broker deals to their investors, meaning that once the rate is quoted, the lender dials investors in an attempt at raising money to finance the deal. When analyzing the business model, time is a significant factor when making the transaction and closing the deal. No matter the case, commercial real estate private loans offer borrowers the flexibility in moving ahead with their commercial real estate obligations.
Contact the specialists at HML Investments to receive further information regarding financing commercial real estate.