Commercial Hard Money Loan: Is this Fact or Just Plain Fiction?

It’s okay to try to obtain a Commercial Hard Money Loan if you can justify the long-term revenue generating potential of the Real Estate Project you are under going before you apply for the loan itself. When you apply for a loan like this, you have to understand that the bank will take your property if you can’t make the payments on it. You will also be paying about a 5 points or 5% higher interest rate on the loan itself.

The basic inference of the various cases of Retail Loans can also be defined as Sub-Prime Lending, Near Prime, B-Paper or Second Chance lending options.

So with emphasis would someone take out a Commercial Hard Money Loan verses a standard Retail Loan? It’s because there are determining factors such as Very Small Credit Score, Organization Statistics, definitive prevalent Income Level that would stop someone from getting prime money financing or best rates, so the obligor in these cases will compromise for what they can get.

Some companies have a minimum amount they will lend you when helping you get a Retail Hard Money Loan. The companies we have researched start out at $300,000 and go up into the millions for Retail Real Estate Properties.

There are also what they acknowledge as Mezzanine Loans which is a type of mortgage that’s paid back subsequent to the transfer or refinance of the Retail Property. It’s possible for a lender to secure a portion of the proceeds upon sale of the Hard Loan debt. These loans tend to have critical structures such as good debt and equity ratios.

Getting a Commercial Hard Money Loan is another option. It seems to be for people who have a very pressing Real Estate Development project on the plate and need to move forward with their business ASAP. You will pay a bitmore for one of these types of loans. You can borrow all you need to with this breed of loan as well. When getting a loan like this think of it this way. Will your project or opportunity disappear if you don’t get the loan. This is the money financing litmus test you should follow before deciding one way or the other. Whatever you do make a decision based on careful forethought.

There are also Hard Money Construction Loans, which is different Money Financing alternative that can be applied to for minute home projects to larger Retail Property projects such as the development of a strip mall or tract home development project. In most cases for construction projects there is a reserve account setup to make sure that money is allocated properly as the project keeps moving forward.

A Commercial Hard Money Loan is typically used in both Urban & Suburban areas. The current Prime Rates are from 11 - 16% verses the 6-7% for a standard loan. Usually all associated Points & Fees are included in the type of mortgage and payments from these are dispursed upon closing the type of mortgage. Also note these are Short Term Real Estate Loans that are usually transferred over from 1-3 years.

I could write a small 100 page book detailing all the features regarding all the types of Commercial Hard Money Loans. The the main point you need to be aware of is that you should pay around 11-17% interest on one of these. If you are paying 20% upwards, that could be considered Predatory Lending. I was in a court room once where the judge and an attorney from a nationwide hard lending firm were battling it out for almost 40 minutes on what is and what wasn’t appropriate interest rates to charge for these types of loans. Be careful and always investigate before making your move.

Let Brian Garvin & Jeff West teach you More about Commercial Real Estate Loans and learn more about the Commercial Hard Money Loan today. You can always call us for Free Real Estate Advice as we have a lot of resources to help you find what you need, with no obligation.