Get Creative With Your Financing: Commercial Hard Money Loans
There are a multitude of ways an investor can finance his or her commercial real estate deals. Most commercial real estate purchases involve acquiring a new first mortgage to purchase the commercial property or leaving the existing first mortgage in place. Next you have the seller carry back the part of the purchase price as a second mortgage. This process is called carry back secondary financing and is just one way investors can implement creative strategies for financing their deals.
Often is the case where sellers do not agree to a carry back mortgage arrangement. In turn, buyers/ investors will seek funding in the secondary private money market for funding. One effective program that private lenders offer are commercial hard money loans. These private lenders are comfortable with real estate as an investment and are interested in safe returns on their money. Because these lenders are in second position, they are exposed to an added level of risk should there be a default scenario on the initial debt obligations under the terms of the first mortgage. This risk is reflected by higher interest rates relative to conventional interest rates.
The advantages of working with private lenders on the secondary mortgage market is that they can quickly provide the needed capital to fund the deal. This allows for investors to act quickly and purchase the commercial property before other investors seeking methods of funding.
Contact the specialists at HML Investments today for further information about commercial hard money loans.