Different Types of Commercial Real Estate Lenders

There are several different types of commercial real estate lenders that are providing capital for all of those multifamily units, office buildings, warehouses, distribution centers and multi-use shopping centers that are sprouting up across the nation. Here are a few that borrowers in the commercial real estate industry are turning to.

Commercial banks are, by far, the most commonly used commercial real estate lender. Their commercial loans usually range anywhere from $150,000 to over $50 million, and they acquire borrowers to have very good credit scores along with a low debt-to-income ratio and enough money in the bank to cover expenses for a definitive length of time. Various banks may have preferences in commercial lending projects such as construction, multifamily units or large-scale developers.

Life Insurance Companies like to invest all the money coming in from all those policy payments in real estate; however, they only invest in low-risk projects with a loan-to-value ratio right around 50 percent and with borrowers that have both high credit scores, low debt-to-income ratio and have a stockpile of money in the bank. Basically, if you don’t have 50 percent to put down on the proposed project or your credit score has taken a hit, look to another commercial real estate lender.

Commercial mortgage-backed security (CMBS) lenders prefer large commercial loans on properties such as multifamily, office, industrial and retail. These lenders package loans together into a security which is then sold to investors in the form of bonds, and they are the second-largest source of commercial real estate debt. They tend to have a 10-year lifespan, at which point the debt matures and refinancing is required. Real Estate Investment Trusts (REITs) are for experienced borrowers with big projects needing large loan amounts. According to National Real Estate Investor, Crowdfunded REITs are gaining momentum with Fundrise, the first firm to launch a crowdfunded REIT, raising $90 million in less than a year.

Private Hard Money Lenders

This type of commercial real estate lender provides short-term quick capital. There are investors that specialize in various projects such as multifamily, industrial, office space, multi-use and even hospitality. Rates can be higher than a traditional bank loan, but they are not bound to the same stringent underwriting standards. These lenders supply funds based on the collateral or hard-asset of the project. In some instances, you can also use collateral from another source such as your personal home or another business. They do not place as much emphasis on credit scores and debt-to-income ratios. Their funding is fairly rapid and many offer an average loan-to-value ratio in the 75 percent area.

At Level 4 Funding, we specialize in private hard money loans for commercial projects.

We fund private hard money loans for all types of commercial endeavors. As hard money loan mortgage brokers, we work with both banks and private investors and can often find the capital you require when you’ve been turned down by other institutions. Call us to enquire about our many options and to see if we can provide the capital you need. We are upfront and honest and, if lending is a problem, we can share with you the steps you need to take in order to get your project funded.

Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.