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.”
“The truth is,” according to Wolfer, “there are many highly-educated people out there in our industry who don’t know the first thing about bridge loans.” The loans are often dismissed out of hand by those with deep pockets, corporate partners or some combination of the two. But there are many situations where traditional sources of finance simply aren’t there. In those cases using ‘textbook’ financial solutions may not cut the mustard. The price of having a project end up in bankruptcy is simply too high.
Kennedy Funding Financial, LLC, one of the largest direct private lenders in the country, specializes in bridge loans for commercial property and land acquisition, development, workouts, bankruptcies, and foreclosures. The principals of the company have closed more than $2.5 billion in loans to date. The firm’s creative financing expertise enables the closing of equity-based loans of up to a 70% loan-to-value ratio, from $1 million to more than $50 million, in as little as five days.
“Don’t underestimate the value of an experienced partner in closing these loans,” Wolfer says. “Work with an experienced lawyer in this area and follow up on everything requested by the lender. This is no time to play fast and loose and hope for the best.” Wolfer likens the process to preparing for a big test. And while Bridge Loans 101 may not be part of Harvard’s MBA curriculum any time soon but knowing about them could pay dividends for real estate investors.