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.
Often times, when a traditional lending source won’t do the job, a private lender is willing to step in and fund the opportunity. From the get-go, private lenders are not faced with the same restrictions as traditional banks, which gives them the flexibility to consider atypical or less-than-favorable applications that traditional lenders simply will not take on. You may want to consider going straight to private lender such as Kennedy Funding if you need a loan for any “atypical” project, including:
1. Land loans
Land loans are notoriously difficult deals for which to find funding. Even experienced and professional developers can experience problems with jump-starting a project; legal issues, permits, and even the weather can hold up a construction project, and a delay in construction creates delays in the ability to repay the loan as well. In these cases, the land can be used as collateral, a consideration which private lenders are willing to make.
2. Loans based on future value (construction loans)
Sometimes, a loan may need to be based on the future value of a project upon completion. Acquiring favorable terms for a development project, for example, can hinge on its successful completion and sale or rental of the associated units.
Private lenders like Kennedy Funding can fund loans based on future value because they have the flexibility to approve applications on a case-by-case basis so they can evaluate the opportunity at hand based on its completed value, while most traditional lending institutions would categorically reject this type of loan application without further review.
3. International land deals
Traditional lenders shy away from funding international land deals because there’s apprehension around property which they cannot easily access. The rules and regulations regarding financing and development vary widely from country to country and certainly differ from United States regulations, so lenders are often hesitant to get involved in such unfamiliar territory.
Unfortunately for traditional lenders, they’re missing out on some worthwhile opportunities overseas. Private lenders such as Kennedy Funding know how valuable this real estate and development market can be, so they familiarize themselves with the government, regulations and land values so they can fund projects in several growing and lucrative countries, such as the Caribbean, Jamaica and Canada.
“Private lenders are willing to focus on the value of the real estate and ultimately work through other problems that may exist,” according to Kevin Wolfer, CEO of Kennedy Funding. “Every single hard money deal stands on its own, and for these lenders, nearly any deal is possible, so long as there are assets involved that have value.”