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What is Hard Money Commercial Lending? (Part 4)

September 29, 2014

This is part 4 in a series about hard money commercial lending. For a bit of a review, hard money loans have quite a bit more risk involved than conventional loans, but their purpose is to help you acquire properties that you would not be able to get with a conventional loan. Keep in mind that hard money loans are also called bridge loans.

One example of a hard money commercial loan could be seen in the following scenario: an investor looking to purchase an apartment complex that only has 50% occupancy. She is interested in the  apartment complex because she can get it at a very good buy. She cannot get a conventional loan because the property would generally need to have at least 90% occupancy to qualify. She could see about qualifying for a bridge commercial loan to help her get the occupancy from 50% to 90%. Then she could qualify for a permanent loan.

In this blog we are writing about 3 types of hard money commercial loans, ranking in order from poorest in quality to greatest in quality.

The first type of hard money commercial loan is one you want to make sure you stay away from. Imagine a lender who hopes and prays you will lose your property to him. He works to set up a loan that has so much risk to it, that it’s possible the investor will lose the property.

A good bridge lender will not want to get your property. He is not in the business of acquiring property. He will work to make sure that you qualify and have a great chance of succeeding.

The second type of bridge lender does not have their own funds. They get their funds from other sources. The problem with this type of lender is that they might run out of funds, and in the loan process, possibly cause you to lose the property – this is because of the property closing deadline you have with the seller.

We recommend that you go with the third type of hard money commercial loan—and that is the hard money lender who has their own funds and plenty of funds. You will have quite a bit more certainty that they will come through with the funding you need.

Contact us to see if you qualify for our best multifamily, commercial, or bridge loan rates and terms. Keep in mind that one of our specialties is commercial bridge lending. Also, contact us if you would like to discuss your particular commercial lending needs, or if you have questions. Call or text 214-695-7310, or send an email to info@apartmentloanstore.com

To discover more about our loan products as well as rates and terms, see our Loan Products page.

Bruce Painter, Director of Marketing, Business Loan Store