Commercial hard money loans are known to have a higher interest rate than conventional commercial loans and for that reason, many business owners shy away from this type of lender or loan. But there can be several times when choosing to use commercial hard money loans is a very smart business decision.
There are often occasions when time is your biggest enemy. In the case of commercial real estate this can be very true. Finding the perfect property at a great price means that there is likely to be a lot of interest in it. So you need to be able to begin the purchase process quickly to ensure that you get the property. But waiting for two or more months to get a conventional commercial loan processed is just not going to work. Commercial hard money loans can normally be processed much more quickly than that and sometimes as quickly as just a day or two. Paying more for the loan to secure the property is better than losing the property.
And even if time is not a factor, there could be other reasons that you are not able to qualify for a conventional loan such as lack of liquid assets, income issues or the age of your business. Many new businesses are not able to provide the long term income statements and cash flow documents that a conventional lender such as a bank would require. But hard money loans do not have the same qualification criteria that conventional loans do. So this could be a great way for you to get the loan that you need even as a new business.
In most cases you would think that having another mortgage would be good for your credit. It demonstrates that you have been found to be creditworthy and that you are in good standing with another lender. But in the case of commercial loans having existing mortgages can put you into a high risk category. This means that other lenders will not finance a loan until you have paid off the existing one. So using a hard money loan is a good way to be able to hold both loans at the same time.
Even though a hard money loan can cost more than a conventional loan, it is much better to pay for the financing than to face foreclosure. If you have been unable to make the payments on your property then you could be very close to defaulting on the loan and facing the loss of the property. This could also mean that your business could be in jeopardy as well. If this is your situation, then it is very smart to use a hard money loan to pay off your commercial property loan and seek new terms for the loan. It is much better to lengthen the term of your loan and pay more interest than to lose your property and your business.
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.