Investors Look at the Commercial Mortgage Loan

January 1, 2011 by In The News  
Filed under Internet Marketing Orlando

 Hard money loans earned their name based on the simple fact that they are loans backed by a hard asset, a property. Private lending has evolved into a mainstream business, and the fastest growing segment of finance for real estate, either residential and commercial. Professional real estate investors are familiar with and assisted daily by the option of private money. A private commercial mortgage loan will generally be for a shorter term, and have higher interest. The benefit is it is available very fast , so investors are able to finalizea deal and offer cash to the seller, often helping them to get property at a reduced price. Because these are short term loans, it is necessary for the borrower to have a well thought-out exit strategy. The private lender expects the hard money to be paid back on schedule , and presenting them with a realistic payback plan is critical . Private lenders are usually successful business people themselves, and they like to work with other professional individuals. Demonstrating a successful track record will help the borrower secure the private commercial mortgage loan. We are experiencing a global credit crunch, so a conventional commercial mortgage loan is increasingly difficult to get, even for seasoned investors. Hard money loans are filling the gap, and provide quicker access to cash for many investors, who realize that fast money wins. Often sellers are more open to reducing list price if the deal can be finalized quickly with cash. There is better opportunity for the investor to move on and lock up profitable properties if they can avoid the long approval process so typical of the traditional commercial mortgage loan. With millions of dollars of potential profit at stake, hard money lending has been a huge benefit in investment situations Most hard money lenders are equity based, and focus less on the borrower’s credit and with more weight on the property and the amount of equity it provides . If the borrower has an income-producing building, a hard money lender is inclined to take a serious look at the opportunity, and approve you for a private commercial mortgage loan.

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