Commercial hard money

Commercial hard money is similar to traditional hard money, but may sometimes be more expensive as the risk is higher on investment property or non-owner occupied properties. Commercial Hard Money Loans may not be subject to the same consumer loan safeguards as a residential mortgage may be in the state the mortgage is issued. Commercial hard money loans are often short term and therefore interchangeably referred to as bridge loans or bridge financing.

Commercial hard money lender or bridge lender programs

What is a hard money commercial loan?

The definition of "hard money commercial" when referred to in real estate financing, is essentially a non-bankable loan. The name hard money commercial is frequently interchanged with "no-doc" or private loans. For a hard money commercial loan, the underwriting decisions are based on the borrower's hard assets (real estate). Hard money commercial loans typically close relatively quickly. Saxe Mortgage is the leader in Bay Area - San Francisco hard money commercial lending (NO-DOC / Private lending).

Commercial hard money lender and bridge lender programs are similar to traditional hard money in terms of loan to value requirements and interest rates. A commercial hard money or bridge lender will usually be a strong financial institution that has large deposit reserves and the ability to make a discretionary decision on a non-conforming loan. These borrowers are usually not conforming to the standard Fannie Mae, Freddie Mac or other residential conforming credit guidelines. Since it is a commercial property, they usually do not conform to a standard commercial loan guideline either. The property and or borrowers may be in financial distress, or a commercial property may simply not be complete during construction, have its building permits in place, or simply be in good or marketable conditions for any number of reasons.

Some private investment groups or bridge capital groups will require joint venture or sale-lease back requirements to the riskiest transactions that have a high likelihood of default. Private Investment groups may temporarily offer bridge or hard money, allowing the property owner to buy back the property within only a certain time period. If the property is not bought back by purchase or sold within the time period the commercial hard money lender may keep the property at the agreed to price.

Hard Money Commercial Lending verses traditional lending.

Traditional loans from banking institutions rely heavily on borrowers income, credit, tax returns, etc.. as opposed to a hard money commercial loan's primary reliance on the hard real estate asset. Along with requiring substantially more documentation, conventional lenders have minimum credit scores (typically low 700 Fico and above) as opposed to hard money commercial loans that are underwriting on the collateral as opposed to the borrowers credit. Along with different underwriting standards, loans on conventional commercial loans can take months to close; hard money commercial loans close much quicker. The final important differentiator between hard money commercial financing and conventional financing is the interest rate. Since there is more risk in a true collateral based loan, the interest rates are higher than a conventional mortgage.

When is a hard money commercial loan appropriate?

There are numerous circumstances where a hard money commercial loan is the best option for a client.

  1. Borrowers with impaired credit 
  2. Tax Liens/Judgements/unpaid utility bills, etc…:
  3. Partner Buyout
  4. Owner Occupied properties
  5. Time constrained borrowers
  6. Foreclosure avoidance
  7. Foreign Nationals
  8. Complex loans with multiple pieces of collateral
  9. Deffered maintnance