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Dr. Kalinda Rose Stevenson
Commercial Banker Discusses Typical Loan Scenarios for Private Money Deals
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Commercial real estate, private money loans also known as hard money and or bridge loans are becoming more prevalent as borrowers enjoy less red tape, quicker closings and more “common sense” underwriting than conventional financing provides. Typically though, borrowers still relay on this type of financing as an option when conventional sources are not available.
The increased speed and flexible underwriting comes at a steep price with interest only rates often in the teens, 3- 6 points being the norm and loan terms being relatively short at 12 – 36 months.
Why would owners pay such high fees/rates? In short, because it makes sense for them based on their current situation. Below are examples of transactions where it made sense for our borrowers or go the hard money route.
Read more of the article by Jeff Rauth at
http://nomoneylimits.com/articles/privatemoney003.htm
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