Trapped in a credit crunch, traditional lenders are unable or unwilling to make the number of commercial mortgage loans that they once did, and have raised qualifying standards significantly. Major financial markets are experiencing the lack of liquidity, and increasingly investors are choosing to approach hard money lenders for funding on their deals. These hard money, or private, lenders have become a mainstream resource for serious investors and offer many benefits. Private can be funded in a matter of days, as opposed to conventional loans where the process may wind on for months. There are less severe requirements for paperwork and documentation, with these lenders mainly concerned about the physical property: its equity, condition, repair and location. A strong cash-flow property commands their attention and consideration. The private lender may be simply an individual with money to lend , or could be a hedge fund, portfolio lender or equity firm. Don’t discount any hard money source with a preconceived idea of their ability to provide capital through commercial mortgage loans. Many of these private lenders have more readily available cash than many federally charted banks, and are prepared to loan on excellent deals with potential for high returns on their funds . Generally these private commercial mortgage loans are for short term, maturing in three years or less, which makes them ideal as a bridge loan while the borrower qualifies and closes a conventional loan. The hard money lender will finance up to 70% of property value on a collateral property that generates enough cash to cover its own mortgage payments. The greater the equity position in the property, the more favorably the hard money lender will feel about the risk of the loan. High equity properties are always favored for commercial mortgage loans. Private lenders make their own decisions and have availablecash to loan, and an be the investor’s smartest choice for financing fast and finalizing their deal.
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