Hard Money Commercial Lenders
If you have a bad credit or own a commercial property that is currently loosing money, a hard money lender can certainly fund you with a loan that can charge your situation around one hundred and eighty degrees.
In comparison to banks, hard money lenders are willing to make risky deals that the banks are not willing to work with. They also operate faster and are willing to fund a deal in as short as three days. In exchange, hard money loans tend to run more expensive than conventional loans. A conventional loan may price a commercial property anywhere around seven percent and one point, but the standard hard money commercial lender will charge anywhere between nine to fifteen percent with three points and are repaid in a short term. Commonly, hard money commercial loans are short-term loans. Hard money lenders are able to negotiate loans with terms from one to three years.
Hard money commercial lenders are primarily concerned with the property and the source of repayment. If the borrower is unable to payback the loan, the lender is able to foreclose and sell the commercial property that was se as a collateral. This is a bad situation for the borrower and the lender. In this kind of setting the borrower can lose the property and the lender is forced to go through many regulations to recuperate the money that was primarily invested in the commercial property loan. Prior to entering into a hard money loan deal, one must be aware of exit fees and prepayment penalties. These fees tend to be fees that come in large amounts and sometimes are charged regardless if the loan was paid off early, on time or late. A borrower also needs to know about late balloon fees. These fees can go up to ten points on the payment.
Another factor to consider is value-added deals. A value added deal is when the loan money is used to improve a commercial property. The borrower may buy raw land and increase the collateral value by adding construction. In other scenarios, a retail center can be upgraded in order to generate a larger profit to pay off the loan. In this case, bridge loans are ideal due to the fact that they lack prepayment penalties or lock out clauses. The developer can them refinance, or sell the property to increase the profit.
Hard money lenders obtain their operating funds from two different sources. The company may have capital available from their home fund, or they may have a strong network of private investors that are willing to lend money for profit. Hard money funds may be risky and expensive, but they brokers can work with your situation to make funds easier to obtain and can turn a bad situation into a great profit making opportunity.