Loan Types

A residential non-owner cash out is designed for purchasing an investment property or refinancing an existing property, with the funds being used for business-related expenses. If the loan is for business purposes, the property can be non-owner occupied. This type of loan is ideal for real estate investors and business owners looking to purchase new properties or improve their current ones.

Many small business owners face challenges securing approval from large institutions like banks, making it advantageous for them to work directly with you. A non-owner cash-out loan is a refinancing option that allows property owners to tap into the equity of their home by taking out a larger loan than their current mortgage. The cash-out from this loan must be used for business purposes—such as funding a new venture, expanding an existing business, or other entrepreneurial endeavors—not for consumer debt. This allows business owners to leverage their home’s equity to invest in their business while still maintaining ownership of their property.

A hard money 2nd loan is a specific type of asset-based loan financing through which a borrower receives funds secured by the value of a parcel of real estate. Hard money 2nd loans are typically issued at much higher interest rates than conventional commercial or residential property loans, and are rarely issued by a commercial bank or other deposit institution. Hard money 2nd is similar to a bridge loan, which usually has similar criteria for lending as well as cost to the borrowers. The primary difference is that a bridge loan often refers to a commercial property or investment property that may be in transition and does not yet qualify for traditional financing, whereas hard money 2nd often refers to not only an asset-based loan with a high interest rate but possibly a distressed financial situation, such as arrears on the existing mortgage, or where bankruptcy and foreclosure proceedings are occurring. But this is not always the case. A hard-money 2nd loan can be deeded for repairs or deferred maintenance that needs to be accomplished to acquire more tenants.

A good deal of hard money 2nd mortgages are made by private investors, like Saxe Mortgage Company, and generally in their local areas, like San Francisco. Usually, the credit score of the borrower is not as important, as the loan is secured by the value of the collateral property. Typically, the biggest loan one can expect is between 65% and 65% of the property value. That is, if the property is worth $100,000, the lender would advance up to $65,000 against it. If there was already a first loan of $50,000, then a hard money second for $15,000 would be attainable. This low LTV (loan to value) provides added security for lenders, like Saxe Mortgage Company and their investors, in case the borrower does not pay, and they have to foreclose on the property.

Hard money 2nd lenders structure loans based on a percentage of the quick-sale value of the subject property. This is called the loan-to-value, or LTV ratio, and typically hovers between 60 and 70% of the market value of the property. For the purpose of determining an LTV, the word "value" is defined as "today's purchase price." This is the amount a lender could reasonably expect to realize from the sale of the property in the event that the loan defaults and the property must be sold in a one- to four-month time frame. This value differs from a market value appraisal, which assumes an arms-length transaction in which neither buyer nor seller is acting under duress.

Below is an example of how a commercial real estate purchase might be structured by a hard money 2nd lender:

Total LTV 65% of Quick Sale Value

50% First Loan (Conforming Loan)

15% Hard Money 2nd

People use hard-money equity loans for a variety of reasons. As mentioned previously, conventional and government lenders are continuing to further tighten their credit and underwriting guidelines, making it more and more difficult for investors and homeowners to get access to the equity in their homes. Some of the most common scenarios we encounter from people using hard money equity loans include:

• Inherited a property that is free and clear and has no credit or bad credit to get approved to pull cash out of it.
• Paid cash for property recently and need to get cash out of it (conventional and government loans require 12 months of seasoning on the title, whereas hard money loans have no seasoning requirement at all).
• Already have more than four properties financed (conventional and government loans will now allow more than four properties to be financed, or they will not approve a loan; hard equity money loans have no financed property limitations).
• Property types and conforming and government loans are allowed with hard money equity loans such as mobile homes, raw land, condos, and town homes.
• Investors looking to purchase a home and need to close fast (conforming and government loans can take 30–45 days, but hard money loans can close in 3-5 days).

What is a hard money bridge loan?

A hard money bridge loan is a short-term loan made by a private lender, like Saxe Mortgage Company, as opposed to a traditional financing institution, such as a bank. A hard money loan occurs when circumstances are not favorable for a borrower to obtain a bank loan for various reasons.

Why would a borrower choose a hard money loan instead of conventional bank financing?

The answer is usually time-based, such as when a borrower has applied for a conventional commercial bank mortgage, but the house closing date is rapidly approaching and the bank is still completing its due diligence, yet the borrower must close in a timely fashion in order to avoid losing a hefty contract deposit. Or there is deferred maintenance that needs to be completed before the bank will lend on the property. The borrower therefore chooses to finance with a hard money bridge loan, and then after this “bridge loan” closes, the borrower can take as long as necessary to arrange permanent commercial financing.

Another scenario in which a borrower would choose a private hard money bridge loan involves the purchase of a vacant property that the borrower plans to convert to another use (i.e., office to residential). A bank would rather finance the deal AFTER the borrower has executed his business plan, rented the property, and created cash flow. A hard money bridge lender is willing to get more deeply involved than most banks, evaluating the borrower’s track record, the viability of the borrower’s current business plan to convert/improve the property, as well as the borrower’s guarantee or other collateral. The borrower is also fully aware that he is only going to have the private hard money loan outstanding for approximately 12 months, and that paying a higher rate of interest for a brief period is much less expensive than bringing in much more expensive equity partners for the long haul.

What is a mixed-use hard money loan?

Mixed-use hard money loans are a type of borrowing instrument utilized by those wishing to invest in commercial and residential properties for money-making purposes. An example of a mixed-use property is an apartment building with stores on the bottom floor, or a church with a school. These loans are usually provided via private lenders like Saxe Mortgage Company rather than via banks and mortgage companies. The interest and payback terms may be a bit higher and shorter than those of traditional lenders as far as the level of interest rate and number of years required to pay off the balance.

For example, banks may provide money for mixed-use purposes for 6–8%, while private hard money mixed-use lenders may ask for 9–14% interest. These types of mixed-use loans are not meant to be long-term loans, although terms as long as 5 years out can be obtained. Rather, these types of mixed-use hard money loans are also sometimes called bridge loans and are for investors needing cash right away for the short term.

Uses for mixed-use hard money loans

One example of mixed-use hard money loans is for investors buying apartment buildings that will be rehabbed and then put right back onto the market and sold for a profit. The borrower is only interested in obtaining the cash to purchase and flip the property, hopefully selling it off before the terms of the mixed-use loan become due. Some investors will want to buy vacant land or commercial property that will be used for a variety of reasons: retail, storage, health, etc. These types of investments are considered non-conforming and are more suitable for mixed-use private or mixed-use hard moneylenders.

For investors interested in new construction, mixed-use hard-money loans can be the solution. The funds are usually put into an escrow account to be used as needed in the form of draws as the construction is completed stage by stage. A mixed-use bridge loan may not work here because if the property being built is a large apartment complex, most likely it will take two to three years to complete all the phases, and most bridge loans are for no longer than two years. Therefore, a lending instrument will need to be obtained that will be sure to cover all the months of build-out needed for the project.

Bad credit? No problem! We've got you covered.
Bad credit loans are provided to individuals with a low credit score or no credit at all. Generally, borrowers use these loans when they face financial emergencies, including medical bills, car repairs, or the termination of their employment. At Saxe Mortgage Company, we've made it easier than ever to access the right bad credit loan to suit your needs. All you have to do is reach out to one of our knowledgeable representatives. We'll take care of the rest!

Our experienced team will explore the equity you have in your property and ensure you're able to properly service your loan. Just think of us as an online shopping center for all your hard-earned bad credit loans. Whether you have good credit or bad credit, our staff members are here to help. Best of all, we're recognized as one of the region's trusted private moneylenders, so you won't have to deal with any questionable brokers.

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

Commercial lending hard moneylender and bridge lender programs are similar to traditional hard money in terms of loan-to-value requirements and interest rates. A commercial lending 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 lending property, it usually does not conform to a standard commercial lending loan guideline either. The property and/or borrowers may be in financial distress, or a commercial lending 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-leaseback requirements for the riskiest transactions that have a high likelihood of default. Private investment groups may temporarily offer a 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 lending hard moneylender may keep the property at the agreed price.

How do I know if a commercial lending loan is right for me?
There are numerous circumstances in which a hard-money commercial lending loan is the best option for a client.

00001.Borrowers with impaired credit
00002. Tax Liens/judgments/unpaid utility bills, etc.
00003. Partner Buyout
00004. Owner-occupied properties
00005. Time-constrained borrowers
00006. Foreclosure avoidance
00007. Foreign nationals
00008. Complex loans with multiple pieces of collateral
00009. Deferred maintenance

What is a private moneylender?
When people speak of a private moneylender or hard moneylender, they are usually referring to a person or company (such as Saxe Mortgage Company) who has a large sum of money and is willing to lend the money to people as long as the loan is secured by real estate. The private moneylender is concerned with the borrower’s ability to pay but less with regard to creditworthiness. The company is mostly concerned with lending a set amount of money according to the value of the property. The private money loan used to be designed to help people who were in a financial crisis of one sort or another, but today it is more for the savvy business or real estate investor.

There is no shortage of people who need to borrow money immediately. There are thousands of people who are facing the prospect of losing their homes or commercial buildings due to fluctuations in the economy and local real estate market. A private money loan can be a good solution for both the lender and the borrower; it can also be a viable option for the savvy business or real estate investor in the right instance.

Benefits of working with a private moneylender
When it comes to financing options, working with a private moneylender can offer several distinct advantages. Private moneylenders, also known as hard moneylenders, are individuals or companies that provide loans based on the value of real estate collateral. Here are some of the benefits that you can enjoy when you work with a private moneylender:

• Quick Approval: The approval process for private moneylenders is generally much more streamlined compared to traditional lenders. We focus primarily on the value of the collateral rather than your credit history or financial situation. This makes it easier to get approval and funding quickly, often within days.
• Flexible Terms: Private moneylenders offer more flexibility in terms of loan structures and repayment options than other types of loans. We can tailor your terms to meet your specific needs, allowing for more personalized and creative financing solutions. If you are a real estate investor or if you have unusual financial circumstances, working with a private moneylender might be particularly helpful for you.
• Access to Non-Traditional Properties: Traditional lenders often have strict guidelines and restrictions on the types of properties they finance to protect themselves. Private moneylenders, on the other hand, are more open to funding non-traditional properties such as fixer-uppers, distressed properties, or properties that do not meet conventional lending criteria. This makes it easier to invest in properties that might not be available through traditional financing options.
• Less Stringent Credit Requirements: Private moneylenders focus primarily on the value of the collateral rather than the borrower's credit history. This means that anyone with a less-than-perfect credit score or a difficult financial history could still be eligible for a loan.

Hard Money Commercial Lending vs. Traditional Lending

Traditional loans from banking institutions rely heavily on the borrower’s 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 underwritten on the collateral as opposed to the borrower’s credit. Along with different underwriting standards, 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 in 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.
00001. Borrowers with impaired credit
00002. Tax liens, judgments, unpaid utility bills, etc.
00003. Partner buyout
00004. Owner-occupied properties
00005. Time-constrained borrowers
00006. Foreclosure avoidance
00007. Foreign nationals
00008. Complex loans with multiple pieces of collateral
00009. Deferred maintenance

What is a multifamily hard money loan?

Multifamily loans are a great tool for new real estate investors as well as seasoned professionals. Multifamily properties consist of four to five or more separate family dwellings. These properties have a higher upfront cost but provide a greater investment opportunity, as the amount paid in rent typically far exceeds the costs.

Advantages of multifamily hard money loan

Multifamily loans offer a great investment opportunity as they help investors develop a large portfolio of rental properties. Beyond that, it is more efficient to acquire a large multifamily property than to acquire several single-family properties. This allows you to work with one seller and acquire one loan, rather than working with a variety of different sellers and developing a variety of different loans. On top of that, multifamily properties generate healthy cash flow each month, even if some vacancies or tenants are late on their monthly payments. In comparison, a single-family property would generate no cash flow if unoccupied or if the tenant is late on their monthly payments.

What is a no-seasoning private money loan?
The question of how to get and what a no-seasoning private money loan comes up quite often. This type of loan is needed when a person is acquiring a property to flip or rehab or inheriting a property that needs to be refinanced at the market value. It is very common for an investor to need a no-seasoning private money loan when purchasing a property for rehab. In a flip or rehab project, the purchase price is well below the after-repaired value. Some lenders will lend you a no-seasoning private money loan in the future or after repair value. It is often customary for the lender to hold back some money for the repairs and give them out for each phase, ensuring the repairs are completed. This frees up the needed cash to do the repairs and flip the property (using another person’s money).

Are no seasoning private money loans available in the San Francisco Bay Area?
The answer is yes! There are no seasoning private money loans available in the San Francisco Bay Area. There are loan officers ready to help you today. Just be ready when you make the call to have a contractor’s list of what needs to be done and priced accordingly. The more detailed you are, the smoother the transaction will go.

What if I just inherited a home or building and need money quickly to cover other debt or past taxes?
No problem; a no-seasoning private money loan is right for this situation. If you just inherited a home or building and require cash to cover expenses, call us today.