Unlocking Opportunities with Commercial Hard Money Lenders
- Philip Bennett
- Jun 3, 2023
- 12 min read
Updated: Nov 24, 2024
Are you an investor seeking financing options for your commercial property investments, but finding obstacles with traditional banks? Hard money commercial lenders could be the solution you need. Unlike traditional lenders or bank loans that focus heavily on credit scores and income verification, these lenders are more concerned with the asset's value.
At Bennett Capital Partners, with our extensive experience in commercial hard money lending, we've successfully guided numerous clients through the intricacies of this alternative financing option. Our expertise is not just in finding loans but in finding the right loan for your unique investment scenario.
In this blog post, we will delve into the advantages of working with Mortgage Brokers such as Bennett Capital Partners and how they can assist you in securing funding for your next investment project.
Key Takeaways
✅ Rapid Access with Hard Money Loans: Commercial hard money lenders provide swift financing, a key advantage for first-time investors and those facing delays with traditional banks.
✅ Flexibility in Financing: These lenders offer creative commercial real estate financing solutions, making them ideal for unconventional properties like gas stations.
✅ Opportunities in Key Markets: Commercial hard money lenders in Florida and New York open doors for investors to rapidly capitalize on dynamic real estate opportunities.
✅ Strategic Financial Solutions: Hard money commercial loans offer strategic benefits like quick closings, especially valuable for time-sensitive investments.
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Introduction to Hard Money Lenders For Commercial Poperty?
Commercial hard money plays a crucial role in the real estate financing landscape, offering an alternative to traditional loans for investors seeking funding opportunities.
A commercial hard money loan can differ from traditional bank loans in several key ways, including faster approval and funding times, flexible loan terms, and more accessible qualifications.
For instance, a spec home investor looking for quick funds could greatly benefit from partnering with a commercial hard money lender. These professionals offer creative loan programs designed with investors' unique needs in mind – ideal for those working on time-sensitive projects or requiring financial flexibility outside of standard lending practices
The Role Of Commercial Real Estate Hard Money Lenders
Hard Money plays a crucial role in the lending landscape. by offering alternative solutions to investors looking for spec home financing.
These lenders cater to borrowers who need quick funding because property owners may or may not qualify for traditional bank loans due to low credit scores, incomplete documentation, or unique property types.
By providing asset-based lending solutions with flexible terms and faster approval times, commercial hard money lenders help investors seize time-sensitive opportunities that could otherwise be lost due to bureaucracy or strict lending regulations.
For example, an investor might need immediate funds to close rapidly on a distressed commercial property before other potential buyers can swoop in.
Understanding Hard Money Loans
Hard money loans offer a unique financing solution for investors seeking spec home financing. These loans are short-term in nature, typically ranging from six months to three years, and are secured by real estate assets such as commercial properties or investment homes.
With a hard money loan, a borrower can access funding quickly due to their streamlined approval processes and minimal underwriting requirements. For instance, an investor looking to purchase a fix-and-flip property may receive funding within 7-14 days after submitting their loan application.
The main advantage of using a hard money loan is its flexibility—these types of loans enable borrowers with poor credit scores or irregular incomes to secure financing that would be otherwise difficult to obtain through traditional channels.
However, investors need to understand that a commercial hard money loan comes with higher interest rates than conventional mortgages due to their inherent risk profile and short-term nature.
Understanding the nuances of hard money loans can be challenging. At Bennett Capital Partners, we provide clear guidance, ensuring our clients make informed decisions and capitalize on the opportunities these loans offer.
Success Story
"Bennett Capital Partners faced a challenge when a client needed to refinance a loan on a 20-unit apartment building. The client had seven loans with First Republic Bank, but couldn't find any other banks to refinance the loan. With less than three weeks left before the note came due, the client came to us for help.
Understanding the urgency, our team acted quickly. We used our network and expertise to arrange short-term financing for the client. Surprisingly, we didn't need any income documentation or debt service coverage ratio calculations. We closed the deal in just 7 business days. The funding not only helped the borrower meet the deadline but also provided cash out. With this capital, the client was able to renovate and improve the property, leading to a significant increase in rental income.
Because of our success, the client came back to us for long-term financing. We helped them get a Fannie Mae Multifamily loan, which provided a stable financial structure for the property. This story highlights Bennett Capital Partners' timely and effective solutions in complex situations. It further establishes our reputation as a reliable and resourceful mortgage brokerage."
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What Is A Hard Money Loan?
A hard money loan is a short-term financing option that relies on the value of the property rather than the borrower's credit history, making it a flexible choice for investors.
How Does A Hard Money Loan Work?
A hard money loan works by providing investors with quick access to funds for purchasing or refinancing a property, particularly when traditional financing options may not be available.
Unlike conventional loans that focus on the borrower's creditworthiness and financial history, hard money loans are asset-based, primarily relying on the value of the real estate itself.
For example, an investor looking to fund a spec home project might turn to a hard money lender instead of a traditional bank due to the flexible terms and expedited timeline these lenders offer.
The process typically involves submitting an application with details about the property and the requested loan amount. Once approved, funds can be disbursed in as little as 2-3 weeks—significantly quicker than traditional mortgages that often take months for approval.
Benefits And Drawbacks Of Hard Money Loans
Hard money loans offer numerous benefits and drawbacks for real estate investors. One of the primary benefits is that they provide quick financing for investment properties without requiring the same level of creditworthiness as traditional loans. Fannie Mae Multifamily Mortgages can take months to close in some cases. Hard Money is an ideal alternative for deals that do not have that much time to close.
Also, this makes them an ideal option for those who may have poor credit or lack a lengthy financial history.
However, there are also drawbacks to consider when it comes to hard money loans. Interest rates tend to be higher on private money mortgage loans than on traditional loans, which increases overall borrowing costs.
Borrowers generally have to put down 25-35% on purchases or 65-75% on refinances and cash-out refinances. Some asset classes require larger down payments, it's important to speak to your broker to find out the current LTV's.
Also, since these types of loans are typically short-term, borrowers must have a viable exit strategy in place before taking out the loan to ensure they can repay it when due.
Exploring Commercial Hard Money Lending
A Commercial hard money loan is specifically designed for real estate professionals and investors looking to purchase or refinance commercial properties. What makes these types of loans different from other financing options is that they rely heavily on the property's value rather than the borrower's bad credit history.
When it comes to commercial properties eligible for hard money loans, almost anything goes retail spaces, office buildings, warehouses, condos, single-family homes, residential subdivisions & more!
Whether you're a seasoned investor or new to real estate investing altogether, seeking out creative lending solutions can help you secure funding for investment projects where banks won't lend or be approved in time.
One example of a successful commercial hard money loan project involved an investor who secured $5 million in just 10 days using a bridge loan to acquire an industrial building in New York worth $10 million.
The short-term hard money loan allowed the investor to complete renovations quickly before refinancing into a longer-term conventional loan at a lower rate after increasing its value by 50%.
What Makes Commercial Hard Money Loans Different?
Commercial hard money differs from traditional commercial loans in several ways. Firstly, they are more flexible and innovative, allowing borrowers to access financing for properties that don't meet the strict requirements of big banks or other traditional lenders.
These alternative lenders often lend on special-use properties such as gas stations and car washes that traditional lenders avoid due to their unique nature.
Additionally, commercial hard money loans focus primarily on the property's value rather than the borrower's or income documentation like tax returns.
These loan providers won't deny funding based merely on a borrower's credit score since their interest is primarily tied up with collateralizing using real estate assets as opposed to analyzing an individual’s perceived risk associated with their past financial histories.
Types Of Properties Financed By Commercial Hard Money Loans
Commercial hard money loans can be used for a variety of property types, including multifamily buildings, mixed-use properties, office buildings, retail spaces, industrial facilities, storage and warehouse spaces, hotels and motels, mobile home parks and even vacant land zoned for commercial use.
These loans may also cover special-purpose properties such as gas stations or car washes. With creative financing options available through direct private money lenders like Bennett Capital Partners, borrowers can find funding solutions that cater to their unique needs without the stringent requirements demanded by traditional commercial lenders.
Eligible Property Types
Office buildings
Retail properties
Industrial properties
Multi-family 5+ Unit residential buildings
Undeveloped land
Mixed-use properties
Storage and warehouse spaces
Hotels and motels
Mobile home parks
Special-purpose properties like gas stations and car washes
Whether it's financing for multi-family properties or a large commercial complex, our team at Bennett Capital Partners customizes lending solutions to fit the unique needs of each property and investor.
The Process Of Securing Hard Money Loans
To secure a hard money loan, borrowers typically go through a pre-approval process that involves providing basic information about the property and their credit history, with an average funding time of just a few days to one week.
Pre-approval Process: What To Expect
Before securing a loan, you will have to go through the pre-approval process. This involves submitting an application and providing basic information to the lender, such as the guarantor's personal information, property information and driver's license.
Unlike traditional lenders, they look at the property's value instead of your credit history when determining eligibility. After assessing the asset's worth and feasibility of the project, the lender will present you with various loan scenarios that fit your needs best.
It's important to note that due diligence is crucial during this phase since these hard money commercial loans are riskier than traditional loans. Make sure you're working with a reputable broker who provides honest information about their fees and interest rates upfront and answer any questions before moving forward with signing any agreements.
Average Funding Times For Hard Money Loans
Bennett Capital Partners offers one of the fastest funding times in the industry, with most Commercial hard money closed within 14 days. Compared to conventional or portfolio bank loans, which can take months to process, working with a hard money lender like Bennett Capital Partners means investors can secure the financing they need quickly and without extensive underwriting requirements.
This is especially important for those looking to invest in time-sensitive opportunities or who want to avoid foreclosure on their current properties. With an asset-based loan like a hard money loan, borrowers don't have to worry about their credit history as much as they would with a traditional bank loan – this makes it an ideal solution for those who have bad credit or less-than-stellar financial histories.
Understanding Loan Terms And Interest Rates
As an investor, understanding loan terms and interest rates is crucial when securing financing for your real estate investment property. Hard money loans typically have shorter loan terms than bank term loans, ranging from 6 to 36 months, with higher interest rates due to their riskier nature.
It's important to carefully review the terms of the loan offer before accepting it since these types of loans usually require a larger down payment and balloon payments at the end of the term.
Direct private money lenders can provide more flexibility in structuring loan terms tailored to meet your needs as an investor direct lender.
Choosing The Right Commercial Hard Money Lender
Consider several factors when selecting a commercial hard money lender, such as their experience in the industry, transparency and honesty in lending practices, reputation in the market, and the types of properties they finance. For example, Bennett Capital Partners has an information page as well as a complete BIO of the Principal Broker, Philip Bennett.
Factors To Consider When Choosing A Lender
Choosing the right commercial hard money lender is crucial for investors looking for spec home financing. Some factors that should be considered when selecting a lender include their level of experience and reputation in the industry, transparency with fees and loan terms, and overall communication skills.
Additionally, it's important to look at the types of loans offered by potential lenders as well as their eligibility requirements. The website offers flexible loan options with competitive interest rates specifically designed for real estate investment properties beyond traditional loans.
Ultimately, choosing a trustworthy commercial hard money lender can make all the difference in securing successful financing for spec home investments.
The Importance Of Transparency And Honesty In Lending
Transparency and honesty are vital qualities to look for when choosing a commercial hard money lender. You want a lender who's upfront about their loan terms, interest rates, fees, and prepayment penalties.
For instance, some lenders may disclose everything they need from you in advance while others might keep you guessing till the last minute. Additionally, some lenders may promise low-interest rates only to hike them up later on in the lending process.
How To Spot A Reliable Commercial Hard Money Lender
When looking for a reliable commercial hard money lender, it's important to check their website and see if they offer a range of loan programs for both residential and commercial properties.
A good mortgage broker will find the best lender and find the right loan program that fits all their needs, whether it's bridge loans or creative commercial real estate loans for purchase or refinance needs.
Additionally, success stories of clients who have used their loan programs should be featured on the website as evidence of their expertise and trustworthiness.
Information about how to get a commercial real estate loan in six steps is also crucial to ensure transparency and understanding of the lending process. Other factors include emphasizing flexibility with loan requirements and having a mortgage broker run the numbers.
Choosing Bennett Capital Partners means opting for a partner who understands your investment goals. Our deep market insight and personalized approach ensure we match you with the most suitable hard money lender for your specific project.
📞 Give Us A Call Today 1-800-457-9057
Conclusion: Unlocking Opportunities With Hard Money Lending
In conclusion, hard money lenders offer a valuable alternative to traditional financing for investors looking for spec home financing. Private money loan programs can help unlock opportunities for those with low credit scores, controversial business dealings or risky properties. Commercial hard money loans in Florida are typically used to finance real estate investments, such as fix-and-flips, bridge loans, and short-term loans. With the flexibility and speed of these loans, borrowers are able to secure funding quickly without the lengthy underwriting process of traditional banks.
For more detailed answers and personalized assistance with commercial hard money loans, reach out to the experts at Bennett Capital Partners.
📞 Give Us A Call Today 1-800-457-9057
FAQ's
What is Commercial Hard Money?
Commercial hard money is a type of financing where funds are lent to investors by private companies or individuals based on the value of the commercial property being used as collateral, rather than the borrower's creditworthiness.
How Do Commercial Real Estate Hard Money Lenders Operate?
Commercial real estate hard money lenders provide loans for property investment based on asset value. They focus less on credit history and more on the property's potential, offering faster approvals and flexible terms.
Can You Share Some Hard Money Commercial Loan Tips?
For hard money commercial loans, it's essential to understand the higher interest rates and shorter repayment terms. Ensure the investment property offers enough potential return to cover these costs and have a clear exit strategy.
What Makes a Good Commercial Hard Money Lender?
A reputable commercial hard money lender offers transparent terms, quick funding, and flexible loan options. They understand local markets, like New York and Florida, and cater to unique investment properties, including gas stations.
What's the Process for Obtaining a Commercial Hard Money Loan?
To obtain a commercial hard money loan, present your investment property as collateral, showcasing its value and potential. Lenders will evaluate the property's worth and offer financing based on that assessment, often within a shorter timeframe than traditional loans.
Why Choose Hard Money Commercial Lenders for First-Time Investors?
Hard money commercial lenders are ideal for first-time investors due to their less stringent credit requirements and quick funding, allowing new investors to seize opportunities in the real estate market swiftly.
What Are the Benefits of Commercial Private Money Loans for Real Estate?
Commercial private money loans offer benefits like rapid funding, flexibility with property types, and less emphasis on borrower credit history. They're particularly useful for unconventional real estate investments where traditional financing may not be available.
For more detailed answers and personalized assistance with commercial hard money loans, reach out to the experts at Bennett Capital Partners.
Sources
Philip Bennett
Philip is the owner and Licensed Mortgage Broker at Bennett Capital Partners, Bus. NMLS # 2046828. He earned his degree in Accounting and Finance from Binghamton University and holds a Master's Degree in Finance from NOVA Southeastern University. With more than 20 years of experience, Philip has been a leader in the mortgage industry. He has personally originated over $2 billion in residential and commercial mortgages.
Learn more about Philip Bennett's background and experience on our Founder's page. Whether you're a first-time homebuyer or a seasoned real estate investor, our team is here to help you achieve your real estate goals. Don't wait any longer, contact us today and let us help you find the right mortgage for your needs.
