The traditional lending market was already tightening its belt before COVID-19 took hold in the U.S. and around the world. With interest rates plummeting and eventually hitting zero percent, there was simply no appetite – or motivation – for banks to fund loans.
Traditional lenders are notoriously risk-averse. While a tendency toward playing it safe may seem reasonable to some lenders, this makes getting a loan much harder if you’re a borrower who doesn’t meet the strict requirements.
Hard money lending presents a viable alternative loan option for people struggling to borrow from traditional lenders. Whereas traditional lenders such as banks may decline loans to a prospective borrower based on a very specific set of criteria, hard money lenders – also known as direct private lenders – are not limited by these types of policies.
As the 2010s came to a close, the national demand for office space at the beginning of the next decade was predicted to increase, just as it has every year since 2011. These forecasts couldn’t have anticipated the COVID-19 pandemic and the economic uncertainty it has caused since March 2020.
When someone is in need of a loan to finance a commercial real estate acquisition or project, they typically turn to a traditional lender such as a bank. Not every opportunity, however, is going to be the best fit for a bank.
Traditional lenders and many private lenders are likely to reject all applications for international real estate projects. However, once you locate the rare direct private lender willing to work with you, that agency still may not be a good fit.
Investing in real estate abroad can be exciting, nerve-wracking, and highly profitable. However, in order to reap the benefits of international real estate investments, it’s important to know the proper way to go about it. Otherwise, purchasing property abroad could become a quagmire of epic proportions.
Apartments are hot commodities, as Americans are increasingly in search of apartment-style living – and they’re willing to pay more for them. The high demand for apartments shows no signs of slowing, compounded by a tight housing supply causing elevated home prices that dissuade would-be buyers. With interest rates rising and home purchases out of reach for many people, there is little sign that the need for apartments is going to slow down. Developing or acquiring an apartment complex amidst the high demand for units, then, could prove a profitable venture for those who act quickly.
Every year, thousands of brokers and borrowers descend upon Las Vegas for RECon: The Global Retail Real Estate Convention.
It’s no secret the American shopping mall is an endangered species. While the nostalgia of the shopping mall might lead some to mourn its loss, savvy commercial real estate investors should keep in mind that it’s a massive redevelopment opportunity in the making.
When you invest in commercial real estate it’s important to think big, even globally! There are plenty of great opportunities for investment here at home, but if you remain focused only on the domestic market you could be missing out on huge returns abroad.
Nothing is more nerve-wracking than a stalled commercial development project. Whether due to cost overruns, budgetary errors, or other unforeseen circumstances, it’s a heart-stopping moment when the realization sets in that work must be suspended.
Tariffs often have a ripple effect throughout the wider economy, impacting more than just the commodities they target.
The words “commercial real estate investment” might not immediately conjure images of South America, but many nations on that continent harbor immense opportunity for investors and developers alike. What is the crucial piece of the puzzle to tap into these promising markets? Access to capital.
Acquiring a new property is exciting no matter your plans. Acquisition represents the beginning of a journey, one that will hopefully culminate with a new asset and the revenue stream to match. It can also…
Picture this: you’ve got your eye set on a piece of commercial real estate in a developing, foreign market. The timing is perfect, demand for your planned project is high, and you expect a huge…
The convenience and ubiquity of ecommerce have been a game-changing force for brick and mortar retail locations, forcing household names like Toys R’ Us and Kmart to downsize or shut their doors completely in recent…
So you’ve finally found that perfect piece of real estate – but unfortunately, the bank doesn’t seem to agree because it’s not located near a population center.
For U.S.-based conventional lenders, and even for many private lenders, lending for real estate acquisition or development in Jamaica is an automatic non-starter. However, the region is an untapped opportunity in serious need of capital investment, and developers are eager to expand in the region.
Visit us at Booth F18 in Las Vegas May 20-23
In just a few short days, thousands of real estate and financial professionals will descend upon Las Vegas for RECon The Global Retail Real Estate Convention, presented by ICSC, the International Council of Shopping Centers.
Investing in real estate is attractive for many reasons: properties tend to appreciate in value, they bolster existing portfolios, and they offer a strong hedge on your riskier investments.
While it’s an excellent way to shore up your portfolio, real estate can be difficult to acquire. Property deals are often multifaceted, complex, and lengthy, and financing can be difficult to obtain from risk-averse lenders.
So, you’re ready to acquire raw land and you need a loan. The only problem is funding. Obtaining a bank loan to finance your purchase has been impossible because traditional financing institutions consider your acquisition to be too risky to invest in – too much can go wrong during the construction process. That’s when direct private lending steps in to supply the funding you need.
Retail is one of the industries hardest hit by the digital revolution. Traditional storefronts have taken a big hit in recent years, creating a pool of eager landlords who have become more flexible in their leasing terms to accommodate for the hit. In many cases, this has led to more bargaining power for retailers looking to sign a lease, but it has also created a buyers’ market; if you’ve ever wanted to own commercial retail space, there has never been a better time.
Traditional private loans, also known as “hard money” loans, generally need some sort of collateral to claim in the event of nonpayment. The amount a borrower receives is likely tied to the value of the proposed collateral.
Many potential borrowers may first turn to a bank to secure a loan, but some learn very quickly just how difficult it can be to seal the deal. Banks often have strict qualifications as to who can borrow money, the type of project they will fund, the personal financial history of the applicant, and so on.
Hard money loans used to evoke negative connotations. But in reality, a hard money loan is nothing to be afraid of as long as you understand how it works and how to move the process along so that your loan does not fall through at the last minute.
Borrowers and lenders alike want their real estate closing to go smoothly. A snag in the application process can cost precious time and money and cause a great deal of stress, so it’s imperative that the basics about the property are established and clear to all parties involved.
Borrowers should expect to fill out a lot of paperwork when applying for a loan, and for good reason. The in-depth inquiries and requests for documentation are an important part of the process. Questions about your income, assets, down payment and more provide a private investor with a good snapshot of financial history and what the borrower intends to do with the loan.
No lending institution will grant a loan to finance an environmentally-risky property — and for good reason.
Private lenders are typically willing to take on some risk where more traditional funding avenues don’t and won’t. So it’s more likely that you will find one willing to finance a property with environmental risks.
It’s every borrower’s worst nightmare: it’s 10 days before closing and the primary lender suddenly and unexpectedly reverses its decision to fund a loan. In a moment’s notice, months of hard work just disappears, with the borrower left scrambling to find a way to keep this deal afloat.
It goes without saying that time equals money, and the commercial real estate industry is acutely aware of this truism. Land or property sitting idle doesn’t generate revenue for its owners, so real estate developers work tirelessly to prepare buildings for occupancy and/or sale as quickly as possible.
While most traditional real estate lenders in the United States are fixated on domestic projects, there are significant development opportunities abroad in foreign real estate, and many developers are looking to U.S-based lenders for funding.
Despite the demand for single-family homes, many remain out of the price range of the average buyer, including potential first-time buyers, which means that renters are continuing to rent in this economy. On the flip side, these trends have ushered in a boom in the multi-family real estate market.
When you need to secure financing and it needs to be done quickly, it can seem an impossible hill to climb. Most borrowers are used to the process taking a month, two months, or even longer, and that’s assuming no issues suddenly arise.
In spite of not being very chummy with Wall Street and those who run it through much of his campaign, President-elect Donald Trump is turning to them to be a part of his administration and his agenda.
Andre Agassi once famously said, “Image is everything.”
While image may not be everything, it counts for a good deal, and hasn’t always been kind to direct private lending.
One of the side effects of the housing crash has been an increase in demand for residential rentals.
Since 2010, apartment rents have increased 26 percent as developers have been flocking to meet the need for apartments. More than 378,000 new apartment units are expected to be built in 2017.
As Donald Trump takes office, many in the financial sector are waiting to see if the promised and hoped-for changes in the financial sector happen.
For cash-strapped, borrowers looking for a short-term financing solution for purchasing a multi-family property, warding off foreclosure or quickly closing on a land deal, a hard-money bridge loan may be the smartest option.
Undoubtedly, bridge loans for commercial mortgages are more difficult to secure than a traditional home mortgage. That’s because hard money commercial mortgages assume substantially higher risk with the property becoming your collateral.
Donald Trump’s surprising Election win has consumers and market analysts alike bracing for dramatic changes in the real estate industry in 2017. Speculation and uncertainty abound on how the real estate market will be affected by Trump’s victory and Republican control of both chambers of Congress.
You’ve examined the zoning laws and chosen your desired property or plot of land. Now it’s time to find a reputable lender that’s ideal for your circumstances. Choosing the right hard money lender can be a challenging, time consuming enterprise.
More red tape is the latest sign that the the aftershock of the 2008 financial crisis are still being felt. In early 2015, new regulations for commercial real estate investing took effect for most banks. The regulation requires banks with over a half billion dollars in assets, as well as all savings and loans to set aside more capital against certain construction and development loans.
When it comes to commercial real estate loans, higher risk, means a higher rate. It’s one of those ‘unwritten laws’ of business. One that’s followed because even experienced, professional developers can have trouble getting new development projects started. Which is why traditional lenders like banks tend to run away from land deals.
After years in the real estate business, Charles Flanagan thought he knew all the ins and outs of the borrowing game. The upstate New York-based investor had experience with traditional lenders as well as using bridge loans for building up his portfolio of shopping centers and other projects.
Why couldn’t the prominent real estate investor get banks to return his calls when he needed money the most? And it can take months to hear the inevitable answer: “no.”
Banks may be saying ‘fold’ on raw land deals but that’s doesn’t mean they’re completely off the table. Many banks in the current financial climate consider land deals too risky. After all, raw land isn’t known for producing cash flow.
According to the American Monetary Institute, borrowing money is though to be as old as the idea of money itself. The practice dates back at least to 300 B.C. But many ideas about commercial real…
Time, as the saying goes, is money. To commercial real estate investors, every day where a project sits idle can mean thousands of dollars down the drain. It’s times like these when the real value of a direct lender can be seen clearly.
The comedian Bob Hope once joked that “a bank is a place that will only lend you money if you can prove you don’t need it.” Today’s risk-averse banking environment means many real estate investors in need of a quick infusion of capital face a choice: keep a project in a holding pattern or try to land a partner or other investors.
When it comes to borrowing for commercial real estate, the school of hard knocks may offer better lessons than the Ivy League.
“The fact is, there are many more options than traditional bank financing out there.” Kevin Wolfer, CEO/President of the Englewood Cliffs, NJ-based direct private lender, Kennedy Funding Financial says getting creative isn’t in most bankers’ DNA. “Bridge loans aren’t for every situation, but they can be a great tool in commercial real estate investors’ tool box.”
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