How to Evaluate if Commercial Hard Money Loans Are the Right Option for You

1page_img3The more research and education you receive on commercial hard money loans, the more benefits you will see from it. It is important to always have a clear understanding and plenty of communication throughout the entire process so you know exactly what is going on.

Retipster really defined it best, commercial hard money loans are just short term loans secured by real estate and funded by private lenders instead of banks or credit union. Most of these loans are for around a 12-month period but sometimes these loans can have an extension of anywhere between 2 to 5 years. The value of the property usually plays a large role when it comes to the time length of the loan along with the amount of the loan.

The borrower’s credit score doesn’t weigh heavily on the approval of commercial hard money loans. Most loans require an excellent credit score and impressive cash flow. But commercial hard money lenders are more focused on collateral which includes the value of the property. This is helpful for borrowers who may not meet the strict requirements that most banks and credit union set.

It doesn’t matter if your property is land, industrial, residential or commercial. Any property can be used for a borrower to get this type of loan. Keep in mind that there are some lenders that will only focus on specific types of property, it just depends on what they have the most experience in. It is best to be clear and upfront with what you are looking for at the beginning of the process to avoid any misunderstandings.

Most of the benefits from obtaining commercial hard money loans outweighs the extra cost

Commercial hard money loans are not only faster, they also have less requirements. But they usually come with a higher price tag because of it. Even though interest rates and fees will vary based on certain factors like the region you are in, expect to be paying much more with these loans. These types of loans are much riskier, so the interest rate will range between 10 to 15%, which is usually much higher than most conventional loans.

Commercial hard money loans are easier to obtain, but there are still some eligibility requirements

These types of loans may not have strict guidelines like the banks do, but there are some needs that need to be met. Remember that the focus is usually only on collateral and not the credit rating or cash flow. Even if there’s a record on foreclosures in the past, they could be overlooked if you are willing to pay more in interest rates and fees. Designing a plan for the property is important because you want to show a plan for long-term goals to be able to provide improvement to impress investors.


Dennis Dahlberg
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177 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.

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