A hard money commercial real estate loan is a common approach that many in the investing and developing circles use to obtain capital. It is an asset-based loan that can be obtained quickly and with relative ease as compared to a traditional loan.
Whether you’re a fix-and-flip investor, a construction company, or just beginning to build your real estate portfolio, many in your position have turned to hard money loans for numerous purchases. Securing financing for your project can be one of the most challenging pieces to the puzzle of a real estate investment strategy, and making sure you obtain the right type of financing is critical to your success. Before proceeding, make sure you have your numbers in place. This includes your budget for renovation including contractor costs, material and other expenses. Different hard money lenders have different criteria but, in general, you will need to have, at minimum, these three items: Property value including the after repair value (ARV), budget and renovation costs, a plan and permits.
One of the main advantages of a private hard money commercial real estate loan is the speed with which you can access your funds. You may be approved in as little as 24 hours and the funds may be available in as little as two to three days. This is crucial to those contractors, investors or fix-and-flippers who need to make an immediate bid on a project that requires cash-in-hand. In a hot market, contingency offers are often ignored. These are often shorter term loans with maturities ranging from 3 to 60 months. This gives investors time to renovate and resell, get prospective tenants in place, or obtain traditional funding for the finished property.
The other aspect of a hard money loan you should be aware of is that funds are dependent on the collateral or value of the prospective property. The good news is that this type of loan is asset-based which means that most lenders look less at traditional loaning parameters such as credit scores and finances. Your project, experience and skill set are carefully considered. You will be expected to have some “skin in the game.” Many hard money lenders offer a loan-to-value (LTV) ratio that is capped at 75 percent. The LTV is determined by the amount of the mortgage lien divided by the appraised value of the property.
Private Hard Money Lenders
Private hard money lenders are just that, private individuals or a group of individuals that provide funds for commercial real estate loans and residential properties. It is an alternative source of funding commonly used by those in need of quick capital in order to move on a property or those that require funding on the full purchase price.
Private hard money loans provide access to quick capital. They are faster to funding and easier to obtain than commercial real estate loans from traditional lenders.
At Level 4 Funding, we work with over 200 individual investors and can often find capital for investors and builders that may have been turned down by banks and other traditional lenders. We fund a variety of projects including office, warehouse, multifamily, ground-up construction and residential. Call us to see if we have a loan program suited for your specific needs. We fund up to 90 percent LTV.
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.