How To Get A Hard Money Commercial Loan
You have an impaired credit history and banks have turned down your short term commercial loan application for your real estate project. You think you are not eligible for getting a loan anywhere? We have got good news; hard money commercial loans are perfectly suited for you. Yes, if you own a real estate property? You could get a loan on your hard real estate asset.
As compared to the traditional commercial bank loans, hard money commercial bank loan refers to a non-bankable, short term loan for real estate financing. You might have an excellent credit history and income to envy but its lenders would look into the value of your real hard assets rather than digging into your tax returns, credit records and income. To your surprise, you might land up getting these loans on your real estate property even if you have an impaired credit history. Now isn’t that an attractive proposition?
You have been denied of a traditional commercial loan and need to avoid foreclosure, experiencing a partner buyout, need to pay for your utility bills, tax liens etc., and these hard money commercial loans could just be what you need.
Although these loans have a high rate of interest, they get sanctioned quickly. With a high rate of rejected traditional commercial loan applicants, hard money commercial loan lenders seem to be thriving. This opportunity for the borrowers is not bad either, who would have otherwise and elsewhere been rejected.
With private investors taking keen interest in hard money lending, it is not very difficult to find a lender. Moreover, there are numerous brokers who would connect you to the appropriate lending agencies. And, as compared to other financial institution the whole process can be completed in a few days. These lenders are more concerned about your asset valuation and the loan to value ratios. Ranging from 50% to 70% of the real estate properties value, these ratios can go up to 80% to 90% depending upon the funding authority.
Also referred to as commercial construction loans, one should be well prepared before applying for such loans and have a sound exit strategy beforehand. Lenders would be interested in the right valuation and safety of your property. It is the image of your hard asset that will get you the loan. Since these are short term loans, you should clearly state your plan for repayment and whether you have plans to sell or refinance the property in the near future.
Though your personal history is of less importance, however you should be ready with all the necessary documents as they would supplement the ingenuity of your application. It is always a smart move to choose a borrower who has already invested in the area and is getting good returns. You should always carry a construction budget and how the money invested by the commercial loan lender would be recovered. Taking the help of a contractor in preparing these documents is highly advisable. These lenders are likely to prefer people with existing experience in the real estate sector. So, if you have ever had an experience worth telling, do it.
The financial institutions have a higher profitability on hard money commercial loans as compared to the traditional commercial loans. They keep less capital in hand than in banks. So, keep following up and make timely submissions of required documents, because you would not want these lenders to extend the loan to another borrower.
About The Author: Raj Tulshan
With over a decade of experience in the real estate financing consultancy, the writer is an expert in hard money commercial loans, emergency loans, business loans, short term loans and investment opportunities for financial institutions and individuals. Writing comes as hobby and educating people is a motto.