Things to Consider About Hard Money Commercial Loans

Short term commercial loans can be very useful for certain types of purchases. Learning the benefits of a hard money loan can increase your success and profit margin.

A commercial hard money loan has some different terms than you might find with other types of loans but these terms can also be seen as a great advantage if you are using the loan properly. In most cases the lender will finance up to 90% of the value of the commercial property and the loan term is 1- 3 years. This is all pretty standard, but the biggest difference is the interest rate which can be as high as 13%. But the fact that this is a short term loan helps to balance out that higher rate.

The qualifications for a hard money loan are less stringent than other loans and favor a borrower who has some experience in the commercial borrowing arena. Having a few transactions completed successfully will be a big help in securing a hard money loan and you should also have a personal credit score of 600 or more. The biggest advantage of this type of loan is that it can be processed in as few as 10 days and pre-approval could be issued to you in just a few minutes so this is a great way to act fast on a new deal.

Taking Full Advantage of a Hard Money Loan.

There are two main categories of borrower that should consider a hard money loan. The first is the commercial property buyer who is looking at buying and renovating a building prior to moving into the building. This loan offers the flexibility to get the project completed and ready to occupy prior to securing a permanent mortgage on the owner occupied space. The other borrower that can greatly benefit from a hard money loan is the investor who is looking to purchase a building, renovate the property and then resell it. The buyer could already be lined up but is also someone who is not interested in the responsibility of the renovation or it could be a standard upgrade that will then go on the market as newly updated. But either way, the borrower has no intention of keeping the property long term. Using hard money commercial loans the buyer is able to get the loan quickly and act fast on an all cash purchase to get a good deal and maximize his or her potential for return on investment when selling the property.

Knowing the Benefits of a Hard Money Commercial Loan Can Increase Your Earning Potential

A short term loan is not the best solution for everyone. The higher interest rate might not work in all budgets but for in investor, the high interest rate is worth the fast approval and turnaround time. Commercial buildings in certain areas are always in high demand so you need to act fast when one comes on the market. Being able to have pre-approval on a hard money loan lets you act fast to get the best properties knowing that you have time to make renovations and then resell the property for a nice profit.

mark-gowlovech-150x150Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com

Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701   

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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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Differences Between Residential and Commercial Mortgages Texas

What are the key differences between a commercial and residential mortgages Texaxs and how can they impact you as a small business owner? Learning these differences can help you develop a strategy to secure the financing you need.

Understanding the nuances of the commercial versus residential real-estate markets can give you as a business owner a better strategy and help you manage your expectations about the lending process. Commercial properties are valued differently and every commercial property is different. Unlike a house, where the value is determined using comparable sale methods, commercial properties are valued based on how much investors in the area are willing to pay for the potential income generated by the property. Therefore commercial lenders are not lending based solely on the value of the property, but on your ability as a business owner to generate income. Lenders know each business carries different amounts of risk. These factors impact the amount you’ll need to borrow for your mortgage, the time it takes to qualify and the way your mortgage is repaid.

Consider the context of the commercial property you are attempting to finance. Is it located in an office block? A strip-mall? Is it a big box anchor store? Whatever the case, each type of commercial property differs in its potential to generate income. Lenders will consider this, perhaps even more than your credit score, so it is important to have a well-thought out business plan detailing how you intend to make money in your new business. Additionally, know your area. Commercial lenders tend to make loans to finance properties in local markets where they know how much investors are willing to pay for commercial properties. Have a sense for how much comparable properties are selling for in your area to get a sense of how much you may need to borrow.

Financing a commercial property is considered riskier and this greatly affects the terms of the loan and the time it takes to qualify. When financing commercial properties lenders realize that they are lending to businesses and not individuals. They assume paying your residential mortgage will be your first priority. Therefore these types of mortgages are considered riskier. The loan terms are usually shorter and the interest charged is often higher. The greater risk assumed by the lender with commercial mortgages Texas means that lenders generally prefer a higher down payment on these types of loans. Consider re-financing your house to get additional money before applying. These types of mortgages are also highly specialized and the time it to qualify will vary depending on the property. C-loans recommends allowing yourself four months before you can expect your loan to be approved.

What does all this mean?

Understand that commercial real-estate is valued differently than residential real-estate. Know the type of property you are seeking to finance and be sure you understand the local real-estate market. Assume the terms of the loan will be less favorable, expect to pay a higher down payment and expect to wait a long time before your mortgage is approved. Knowing these key differences between residential mortgages and commercial mortgages Texas will give you a better understanding about the process.

Dennis Dahlberg Broker/RI/CEO/MLO
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.