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.
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.
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
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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