Basic Types Of Commercial Loans Real Estate Investors Should Know About

Commercial property loans are for the acquisition or rehabilitation of commercial premises known as owner-occupied commercial property. At least 51% of the property is always inhabited by the company. Office towers, shopping parks, mixed-use buildings, manufacturing warehouses, apartment complexes, car wash that Walt and Skyler purchased at Breaking Bad—are all commercial properties (though that last one was, ahem, a cash deal requiring no commercial loan; not the best example).

Any land that is built to make profits is commercial real estate. It is not the same as a home, and commercial real estate mortgages are separate from residential mortgages.

Let’s talk about the basic types of commercial loans available for real estate investors.

Conventional Commercial Mortgage Loans

Unlike some of the other two forms of loans to be discussed here, conventional commercial mortgages really aren't guaranteed by the federal government—the loans made solely between the borrower and the lender. As such, these mortgages do not have a mandated cap; it is up to the lender to determine the full value of the loan.

Usually, this maximum balance is determined to be from 65 to 85 per cent of the loan-to-value real estate (LTV) ratio, with just a down payment of 15 to 35 per cent of the fair market value of the land. The interest rate on conventional business loans ranges from 4.75 per cent to 6.75 per cent, and annual instalments are amortized over the lifetime of the loan.

SBA 7(a) Loans

If you're turned down for a conventional commercial mortgage, a government-backed SBA (Small Business Administration) loan will be a feasible alternative—in reality, refusing a regular bank loan is one of the perquisites for an SBA loan. The interest rates for SBA loans are relatively lower, as are the criteria for credit ratings, but the qualifying standards are tighter.

The 7(a) is the most popular SBA loan and has the largest variety of applications. The bulk of SBA 7(a) loans are issued to existing companies to build up their working resources, but they can also be used by younger firms to buy commercial real estate. The overall value on this form of loan is as high as 85 percent to 90 percent of the selling price, up to 5 million, with a down payment equal to 10 percent to 15 percent. Interest rates vary from 5 percent to 8.5 percent.

Hard Money Loans

Hard money commercial loans are provided by institutional investors or private banking agencies. Loans are solely secured by the valuation of the property against which the capital is borrowed. Hard money loans are typically given to businesses with less than stellar credit – who may find it impossible to secure a loan from a financial institution, a credit union, or other conventional lenders – or to businesses that may face financial difficulty.

Wrapping Up

In this article, we talked about the types of commercial loans for real estate investors.

In case you’re looking for commercial loans San Antonio, please get in touch with Capital Concepts!

 

How to Find the Right Money Lender for All Your Investing Needs

 

With the economic boom, there were a lot of changes in the financial sector that saw private money lenders and institutions entering the field. In this day and age, they have become a suitable option for a lot of people looking to secure money easily to make an investment or increase it. If you are thinking about getting a loan from a money lender, then you should be very clear in your ideas and purpose.

Once, you know where you want to invest the money and how will you go about it, you can begin looking for options to approach for money lending.

Since it can be challenging to find the right one, here are some factors that might be able to help you with your search.

Industry Experience

While reviews and testimonials can give you a good idea, they are not always reliable. Sometimes, you can find helpful reviews that can lead to a positive decision, however, you should be able to go one step ahead and look through their experience. While it may be difficult to get information from their other clients, your best interest would be served by a money lender that is trustworthy and reliable. How do you guarantee this? Well, they should be experienced and working actively in the sector for some time.

Types of Loans and Lending Services

Basically, you will come across a lot of different kinds of loans, investing programs or lending services being offered by money lenders. The right one for you will be able to match your needs and accommodate your financial situation. For example, if you are looking for hard money lenders, you should try finding a money lender offering the loan on suitable conditions. This way you can make a well-informed choice that doesn’t land you in trouble.

Compare Multiple Choices

Once you have made a list of choices that are close to what you want, you should get around to comparing their interest rates and terms with each other. This way you end up narrowing down your options and are left with the best pick. Usually, people will select money lenders that are close by and within their reach and if you manage to find one, then you can benefit from competitive pricing. Those who are in the area can search for hard money lenders Houston and choose the option with the most suitable rates.

Should Be Transparent in Their Dealings

This seems like a given for most institutions in the money lending sector, however, you can never be too careful. The money lender that you choose should be able to maintain transparency and provide you with the honest information. There should be an openness in business dealings from the beginning so you can make the right decision and avoid sudden financial pitfalls. Sometimes, you can have misunderstandings or have the wrong idea about something, the lender should be able to satisfy your concern and help you solve any problems.

 

In the End

Choosing a reliable money lender does require effort and good judgment but once you have your loan, you can turn your investment plans into a reality. Good money lenders such as the hard money lenders in Houston are those which help their clients benefit without creating a financial burden on them.

Tips To Get Successful With Hard Money Loans

Hard money loans are of great importance to a real estate investor due to their quick approval process and less stringent terms. The real estate environment is quite competitive, in the sense that you need funding ready if you want to book a lucrative deal. The failure to produce funds would result in saying goodbye to a property that could have made you a lot of money.

Therefore, real estate investors may consider getting hard money loans for their deals in residential or commercial properties. Here, we give you a few tips to get hard money loans with ease and being successful with it.

Find Direct Lenders

Sometimes, people who claim to be hard money lenders are actually brokers who do not disclose that they are brokering to another party. Therefore, it is crucial that you verify that the person or team you’re associating with is a direct lender that gives loans and not a broker.

Be Up Front About Issues

Whether you have tax issues or other problems, be sure to disclose the information to your lender. When you’re up front regarding an issue, your team can help you in resolving it. Hiding issues, on the other hand, can lead to the situation getting worse or even mistrust between you and your lender, which you don’t want.

Get Loans And Terms And Conditions In Writing

Another crucial step in ensuring that your hard money deals are successful is to have all the terms and conditions in writing. Take your time in reading all the conditions before you make your decision to borrow money. It is important that you discuss terms beforehand so that both of the parties are protected later on.

Choose A Good Lender

Consider choosing a lender that has a good reputation. You may think about asking your family, friends, or colleagues for references. Moreover, you may ask your accountants, attorneys, or real estate brokers for recommendations as well.

Keep Communication Open

If things don’t go as planned, be sure to communicate openly with your lender. Timely and open communication is crucial to keep things on track between the lender and borrower.

Wrapping Up

Hard money loans are a great tool for real estate investors. This article discussed a few tips that you can follow to make your hard money loan successful.

In case you’re looking for hard money loans Houston, be sure to check out Capital Concepts!

 

Hard Money Loans—Everything You Need To Know

If you’re a real estate investor, you may have heard about hard money loans. Unlike loans that are from conventional financial institutions, hard money loans are given by private investors and have slightly different terms and conditions than conventional loans.

In this article, we’ll discuss what hard money loans are and what benefits they offer to real estate investors.

What Are Hard Money Loans?

Hard money loans are short-term, high-interest loans given by private investors. They are given against a collateral, usually real estate. They are usually for 12 months; however, the loan term can be extended to a longer term. Borrowers have to pay interest, or interest and principal each month with a balloon payment at the end.

The lender usually gives loan on the basis of the value of the real estate that is stated as the collateral. This real estate may be the one the borrower already owns or one that they wish to acquire.

The best thing about hard money loans is that they are not given based on the borrower’s credit score, but on the basis of real estate. Some lenders may still be interested to know the borrower’s credit score or their income, but none of those are as important as the value of the property. This is advantageous to a real estate investor because when they can’t get a loan from a bank, they can still get it from a hard money lender.

Benefits Of Hard Money Loans

These are the benefits of hard money loans:

Quick Process

These loans are characterized by a quick approval process, which is very beneficial for a real estate investor since they require cash to secure a real estate that is up for auction.

Easy Approval  

As mentioned previously, hard money loans are given against a real estate, and are not based on the borrower’s credit score or income. This makes for an easy approval process that other conventional lending institutions don’t offer.

Flexible Terms

Since you’re dealing with private lenders, you can avail of flexible terms of repayment of the loan. This flexibility is not available in big financial institutions as they have stringent terms and conditions for loan repayment.

Wrapping Up

In this article, we discussed hard money loans, what they are, who provides them, and what their benefits are.

In case you’re looking for hard money loans Houston, we highly recommend getting in touch with Capital Concepts!

How To Find Private Mortgage Lenders In Your Area

 When you look for mortgage, be it for anything, your home, your car, your business, etc. you may turn towards a financial institution, such as bank. However, the mortgage banks give often have a lot of regulatory hurdles and agreements.

In this case, it is better to seek private mortgage lenders. In this article, we’ll give a few tips to find them in your area.

How To Find Private Mortgage Lenders

Here, we’ll discuss how to find private mortgage lenders in your area.

Turn To Referrals

Before looking for mortgage lenders online, try to get referrals if possible. Referrals are very important as they ensure that you’ll get quality and customer service, as the person who is recommending you would have had a good experience with the business.

Ask Your Friends, Family, And Colleagues

You may also ask your friends, family, and colleagues who have been associated with private mortgage lenders to recommend you the same. Asking your close ones will ensure that you get trustworthy advice and recommendation.

Google It!

Of course, search engines will find you anything anywhere! Look for private mortgage lenders near me to see all the lenders available in your area. You may look at their website and their reviews to have an idea of their business and services.

Reviews

Reviews are a great way to know how other people are liking the service. You may look for reviews for a particular business or in general and find comments regarding people’s experience with private lenders.

Website

When looking for a private lender, make sure you visit their website to learn about the kind of business they are, what their expertise lies in, how long they have been in the field, their success rate, and other things to make your decision accordingly.

Meeting With The Lenders

Lastly, it is very important that you talk to the lender or lenders before signing a deal. You may schedule a private meeting or talk to them on call to know in-depth details regarding their service, any regulations they have, their expertise, etc. Also make sure that you are comfortable in working with the lender as you’d be working with them on your financial situation and deals.

Wrapping Up

Private mortgage lenders can offer you financial help with your business, your home, your property, etc.

In this article, we gave you a few tips on finding private mortgage lenders in your area. In case you’re looking for private mortgage lenders san antonio, we highly recommend you get in touch with Capital Concepts. 

Hard Money Loan — A borrower’s guide!

Hard money loans are loans backed by real estate property in the form of collateral. These loans are short termed usually take around 12 months as repayment period however, they can be extended upon evaluation of request. As any other form of loan, hard money loans are also meant to be repaid within the specified period along with monthly repayment plus an interest charge.

None of the shady lending techniques are involved with hard money loans these days. Although this type of lending is done by private lenders, there is a lot that has changed since the past and now, hard money loans have become a reliable short termed loan borrowing facility for people with great aspirations.

Hard money loans prove to be as saviors in uncertain times when all else fails and banks refuse to lend the loan. Hard money lenders will accept the loan request as long as the backup property has sufficient equity to repay the loan if the borrower fails to pay on his own.

Hard Money Loans As Ideal Borrowings

There is no pressure on the borrower to go for a hard money loan when he is credible to acquire a bank loan. Possible scenario for a bank loan to be an ideal borrowing is when one has no issues with the loan taking a month or two to be funded while they have a great credit history, healthy income, years of employment at the same place and a lot more. Bank loans are good mostly for residential payment purposes.

Whereas, a hard money loan will be anybody’s no.1 choice if they need an immediate loan, for an urgent payment or most likeably for a real estate investment when acting on the right time is significantly essential for an investor.

Most properties get many bids which make the property difficult to purchase however, with a hard money loan that can be funded super quickly like in a matter of 2 to 3 days or even on the same day the investor is likely to win the bid over other bidders offering conventional financing for the same property.

People with unstable or new employments are still free to acquire a loan form a hard money lenders in Dallas. A person’s income does not restrict them from borrowing as long as they have a property to be placed as a collateral. Basically this property value is also a determining factor of the loan that can be obtained. Work stability or income history is yet another limiting factor that acts as a prerequisite for loan approval from banks, making hard money loans a simpler choice.

How Are Interest Rates Charged On Hard Money Loans?

Interest rates charged on hard money loans tend to vary from lender to lender and state to state. Interest rates are determined by the competition in the market as well as depend greatly on the loan to value ratio. So the charge one might be getting on his borrowed loan can be either high or as low as 10 to 15 percent along with mortgage points that can be anywhere around 2 - 4%.

So if you are planning to get a quick loan with simple terms and conditions and short repayment period, then discuss your plan with the hard money lenders Dallas who offer all these than make no delay and live up your plans for a successful business today and tomorrow.

How can Hard Money Lenders in Dallas help you with your real estate investment?

Hard money loans are the best friend of real estate investors. These loans are the quickest way to secure a deal. However, hard money lending might be complicated and therefore you should know what you are receiving before making decisions. The more you know about hard money lenders Dallas, the better for you. Hard money loans are the biggest source of capital these days.

What are Hard Money Loans?

Hard money loans are loans that are issued to investors based on property or hard assets. Though hard money lenders consider some factors such as credit, income, and experience of the individual borrower, they are not a high priority while deciding the eligibility of borrowers and the loan amount. These loans are available with higher interest rates and they have a shorter-term period of say 12 months. Hard money lending is a quicker kind of funding and the loans are issued within days and weeks rather than months.

Need for Hard Money Loans

Real estate investors focus on fix and flip properties and rental properties and they turn to these loans as their means of financing at a time when they have failed to get conventional loans from banks. The investors, who are unable to meet the bank standards including income and high credit score, find hard money loans a great alternative kind of funding.

Finding hard money lenders

Many new investors want to know how they shall find lenders of hard money for financing their projects. There are a few simple ways you can get these loans including the following:

·         Traditional Lenders or Real Estate Agents- Ask the mortgage broker or the realtor whether they know any hard money lenders

·         MeetUp meetings- Hard Money lenders speak at real estate events. You can ask fellow members whether they know trustworthy lenders or not.

·         Google Hard Money Lenders- You can google and find them. However, be careful as there are many rogue individuals. Talk to people and ask for references to receive their opinion.

Using hard money loans

Hard money lenders issue loans related to all kinds of property, however, there are certain kinds of investments that are made for hard money. Construction loans, rehab projects, and land loans are financed through hard money.

It does not indicate that other investments cannot be financed by hard money. When the buyer of any property has to act quickly or has credit issues, he should seek hard money loans due to the convenience and speed offered by this loan.

Hard money lenders versus other lenders

The main difference you will find between hard money lenders and other lenders is that hard money financing does not give importance to credit history or your income. Rather, hard money lenders Dallas see the value of the property as its deciding factor and puts emphasis on the after-repair value.

Some other differences are:

·         Hard money loans are for a short term. The borrowers cannot have a repayment period of 15-30 years. These loans have 6-18 months repayment period.

·         A hard money lender does not invest in owner-occupied residences as these properties have many rules and regulations.

·         Hard money lenders give their own money or they raise it from investors. This loan amount is based on property specialization and the risk they are comfortable with.

·         Hard money lenders have flexible negotiating terms. They have specific interest rates, upfront points, and defined durations.

Hard money loans for real estate are common nowadays in housing sectors. These loans give investors an edge over traditional financing. The borrowers can get capital faster and thus if you want to fund any deal, it is difficult to ignore hard money loans. 

Qualifying for hard money loans is always an easier option

Hard money loans are asset-based loans. The biggest factor that affects approval for traditional loans is income and credit history. Hard money lenders use the property as collateral and “hard” asset. When borrowers want loans rapidly or when traditional lenders shall not approve loans, hard money loans Houston are the only option.

Reasons for using hard money

Hard money loans are for those borrowers who cannot receive traditional funding.

•               Speed

As money lenders are focused mostly on collateral and less concerned with the financial position, these loans are closed quickly compared to traditional loans. These hard money lenders will not take a lot of time to process the loan application such as reviewing bank statements, verifying income, and others. The loan process moves quickly and they close the deals that traditional lenders cannot do.

•               Flexibility

Hard money loans are more flexible compared to traditional lenders. Here, a standardized underwriting process is not used rather each deal is evaluated separately. According to the situation, the repayment schedules are tweaked.

•               Approval

One important factor for hard money loans is collateral. The lender shall lend as much as the worth of the property. If there are negative items in the credit report and you have a foreclosure then some lenders do not look at your credit.

Requirements for hard money loans

For real estate, hard money loans have very fewer requirements than traditional bank loans. These are asset-based loans, which mean that lenders are mainly concerned with the property’s value and the equity of borrower in the property. If the borrower’s equity is larger, the loan shall be safer for the lenders.

Down payment

The main qualification to obtain hard money loans is having the essential equity or down payment in a property. For residential properties, the minimum amount ranges between 25-30% and for commercial properties, the range is between 30-40%.

Hard money loans with a higher down payment have a great chance of getting approved than a minimum down payment. When the borrower invests a larger amount, the risk is lower for the lender.

•               Cash Reserves

Another requirement is having cash reserves for making monthly loan payments and holding costs. The holding costs include taxes, insurance, HOA payments, etc. If the borrower can show a higher amount of cash reserves then there is a greater chance of getting approval for hard money loans.

Borrowers without adequate cash reserves might have a difficult time obtaining hard money loans. In many cases, lenders can enhance the loan amount and use the borrower’s funds for covering taxes, loan payments, insurance, and holding costs. This way lenders shall be assured that all necessary payments shall be met.

These lenders want to work with very strong borrowers. If there are higher chances of borrowers to default on a loan payment, the lenders are exposed to higher risk.

 Exit Strategy

Hard money loan lenders want to know about the experience of borrowers in real estate. Borrowers who have many years of experience shall have an easy time to get loan compared to borrowers are trying out for the very first time.

Borrowers who have little experience, hard money lenders will want to gather the detail of the project in details. The assumptions that are made by borrowers should be reasonable such as the exit strategy.

Conclusion

Hard Money loans Houston meet a specific niche, however, when your business is the real estate development, has to act quickly, bad credit, they are a potentially powerful and fast tool. Ensure you know everything in detail before you put your signature and have a planned exit strategy. However, if you find it too risky, you might try out other options.

Boost your business with commercial loans

 Commercial loans have been specifically designed to enable investors in buying properties without facing any problems. These loans serve as a great aide to those who need funding and are available on easy terms and conditions that make very easy for the borrower to return them over a period of time. For anyone looking forward to buying a property to boost business prospects, commercial loans play a key role as self-financing is often very tough unless you have loads of money.

Commercial loans have been especially carved out for the business of buying commercial property and you will find a number of lenders who will make the process of buying property easy. You can look forward to boosting your business, expanding the operations or the premises or buying inventory with commercial loans that enable you to enjoy greater returns on investment in the long run.

The most important thing to know when applying for commercial loan is having all the documentation in proper order. You must provide all documents of business that you have to present to the lender as the lender would want to know all about what you are doing, what you intend to do with the commercial loan and how you plan to return this loan. You will have to convince the lender regarding your business income as this will help to secure a loan for buying, renovating and repairing property that would boost your business.

You must understand that commercial loans are secured loans as huge amounts are at stake and the lender does not want to face any problem in case you are unable to pay back the loan. Thus, the lender will ask you to pledge a residential or a commercial property as collateral but the good thing about these loans is their low interest rate and if you have a good credit history and repaying capacity, securing commercial loans can prove to be the best thing to boost your business.

The amount of loan that is required depends on your personal circumstances. The lender will see how much amount you can afford for timely repayment of installments. In most of the cases, the lenders are willing to offer up to 80% of the value of the property that has been pledged as collateral but if you know the lender or can get someone to vouch for you, you might get even more. But again, the lender will closely examine the business plan and the property being pledged to determine the scope of return.

The good thing about commercial loans is that they are seldom a repayment burden as you have the facility of paying the loan back in the duration of your choice. Depending on the amount of money that you are borrowing, you have the time period of 5 to 30 years to repay the money which is indeed a great benefit to investors who seek to make fortunes by investing money in property business.

Commercial loans are also a great means to boost business because having a bad credit history does not deter the lender from giving you money.  The property that you are pledging as collateral will cut down any risks or worries that the lender might have regarding the deal but the interest rate might go up so it is advised that you seek the best lender who charges reasonable interest and gives you ample time to repay the loan.

Commercial loans Houston are a great choice as they give you a chance to step into the world of investment and make some money by making wise decisions. Not having enough capital should not prevent you from seeking your dreams as commercial loans make it easy for you to enjoy the returns that investing in business offers.

Seal your deal with Hard Money lenders in Dallas

Hard money is a short-term loan that is secured by real estate. This loan is funded by a fund of investors against traditional lenders including credit unions and banks. The term of the loan is generally around 12 months, however, the term may be extended for longer terms, say 2 to 5 years. This loan needs monthly payments of interest or principal along with interest payments.

The amount of money lend by hard money lenders Dallas is based primarily on the property’s value. This property might be owned by the borrower that he wants to use as collateral or it might be the property, which a borrower wants to acquire.

Hard money lenders are concerned with the value of a property instead of the borrower’s credit. Borrowers who cannot receive traditional financing because of short sale and recent foreclosure can obtain hard money when they have adequate equity in their property used as collateral. Hard money lenders can give loans when banks say “No.”

Who are hard money lenders?

Hard money lenders, Dallas, offer capital to individuals and businesses for purchasing real estate or for financing business development projects. This loan is mainly used in real estate transactions including commercial developments or rehabilitation projects. The loan lenders finance a part of these transactions and these loans have strict terms and conditions. You will find these loan lenders on the internet instead of traditional bank branches. Several private investors offer hard money loans.

Lending Practices

Hard money lending includes rapid loan turnaround times along with strict terms. Consumers can access a huge amount of money within 24 hours. The government agencies do not regulate the lending practices and lenders can make their own rules related to how much money they can lend, who they want to lend, and under what conditions.

Hard money lenders, Dallas, offer loans to people who are considered very risky by traditional banks. Applicants do not have financial statements or verifiable income. Even some applicants have no or little credit history. Moneylenders offer loans for investments that are considered highly risky. Hard money lenders offer real estate financing, which is severely distressed or under construction. The risks accepted by these lenders are high than traditional banks.

Lending Criteria

The criteria for hard money loans depend on the kind of investment. In several cases, these lenders do not give their approval based on credit history, however in asset evaluation, which is being acquired. People who have been refused traditional financing or people with little or no credit qualify for hard money loans till the time assets meet the eligibility criteria.

Many hard money lenders of commercial property consider the building’s value while making the loan approval decision. The hard loan lenders approve loans depending on the property’s value. Depending on the terms of the lenders, applicants may expect to get loans between 50-80% of the property’s value that they want to purchase.

Hard money lenders, Dallas, provide loan terms, which are considered higher than traditional lenders. The 

interest rates on loans range between 18-26%. The repayment schedules for loans are shorter that range between 6 months to 5 years.

Bottom Line

Financing through hard money loan is a way of borrowing money and property is used as collateral. Banks are generally concerned with financial history, credit scores, and the ability to repay the loan. The loan approval and lending application process may be tedious and lengthy. However, with hard money loans, this is not the case. Borrowers can get a loan quickly as hard money lenders, Dallas, are very less concerned with credit scores and your personal finances.