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Ray Wateska on Private Hard Money Commercial Mortgage Loans

What Private Hard Money Commercial Mortgage Lenders Want To See
 

With conventional lenders caught up in the credit crisis and unable to make loans, commercial real estate investors and developers are turning to private hard money commercial mortgage loans. But even private hard money commercial mortgage lenders have tightened their underwriting criteria, and private hard money commercial mortgage loans are more difficult to get than it used to be. 

Anyone considering applying for a private hard money commercial mortgage loan should understand just what hard money lenders look for in a deal.

Equity

Private hard money commercial mortgage lenders are equity lenders. Their lending decisions are not credit driven but are based mainly on the amount of equity in the building or project being financed. Generally, a private hard money commercial mortgage lender will not lend more than about 50% of the value of unimproved land, 60% of the value of an underperforming building and 65% of the value of a stabilized, income producing building. These low LTV (loan-to-value) ratios mean that borrowers must have exceptional properties or be prepared to inject plenty of cash into a deal.

Experience

Hard money lenders are sophisticated real estate professionals who prefer to work with other pros. They look for borrowers or project sponsors that have a track record of success and a wealth of experience. In today’s economy, few private lenders are willing to fund first time developers or new investors.

Cash

Virtually no 100% financing is taking place today. All borrowers are now required to make significant cash investment in every deal. Private commercial hard money lenders have a reputation for being flexible but they won’t make a loan to someone with no “skin-in-the-game”.

Exit Plan

Private hard money commercial mortgage loans tend to be short term loans with maturities rarely exceeding 36 months.private hard money commercial mortgage Before a deal is approved for funding it must have a viable exit plan. In-other-words, the private hard money commercial mortgage lender must be convinced the loan can be paid back when it comes due. 


The commercial real estate industry runs on borrowed money; without the free flow of capital the industry would shut down. Private hard money commercial lenders are fulfilling a very important role in our economy right now. They are filling the lending void that has been created by this credit crunch. Thanks to private hard money commercial lenders, experienced investors with quality deals will find the funding they need.

Find out more about international private hard money commercial mortgage loans at CaribbeanMortgageLoans.com and by contacting Ray Wateska directly. You can also visit WestshoreMortgage.com for specific, domestic private hard money commercial mortgage loan information. You can also find helpful information about choosing a private hard money commercial mortgage loan lender.