Contrary to popular belief ?hard money? loans aren't called hard ...

Contrary to popular belief ?hard money? loans aren?t called hard 2012-04-06 at 03:48 pm admin

Contrary to popular belief ?hard money? loans aren?t called hard money loans since they?re hard to get or because their expensive conditions and terms are hard on borrowers. The name comes from the truth that hard money loans are loans which are, by definition, backed by a hard asset like a piece of real estate or even another asset like a bulldozer or a bit of manufacturing equipment.

In the current past hard money loans had a poor reputation but today the term hard money simply describes private, non-institutional, asset based financing. In fact with, the onset from the worldwide credit crunch, private lending is becoming main-stream business and is, in-fact, the fastest growing segment of commercial property finance.

Private lenders usually offer temporary (12-36 month), high interest (9-15%), bridge loans against commercial property. Private lenders might be rich individuals, small firms organized to create loans or real estate sections of hedge funds or personal equity firms.

Qualifying for a personal commercial mortgage loan isn?t difficult if certain requirements tend to be met.

Low loan-to-Value (LTV)

Most private lenders won?t lend more than 65% from the value of an income producing building that may cover its own mortgage repayment. Underperforming or vacant properties shouldn?t expect LTVs over 60% and commercial land assets won?t receive loan offers in excess of 50% LTV.

Cash Investment

Private lenders today won?t partner with investors, property owners or developers who don not have access to a significant cash investment within the target property. The days of 90-100% funding through seller financing or large 2nd mortgages are gone. I don?t care what they told you for the reason that on-line, real estate riches, boot-camp, workshop; you can not get a tough money loan with none of your money invested in the task.

Realistic Exit Plan

Private loans are short term installment loans. To secure an approval as well as close a deal, it is imperative that borrowers possess a viable, realistic plan to repay the hard money on routine. Private lenders are very intense in collection situations and usually demand an individual signature guarantee on every mortgage; you must have a practical exit strategy or you risk losing the home financed plus your personal banking account.

Experience

Private lenders tend to be successful business people who wish to work with other successful expert people. Today?s real estate environment is a lot to challenging and much to risky for lenders to consider chances on rookies and dreamers. It?s very possible to get a private loan for that purchase, development or refinance of a commercial property but you will have to demonstrate a track record associated with success.

Commercial property owners and investors who satisfy the lenders criteria will find they have no problem securing a personal, hard money, commercial mortgage mortgage.

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Click Here In order to Apply For any Commercial Mortgage.

The Author, Vincent Remealto, is definitely an analyst and real estate value specialist for MasterPlan Capital.

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