Archive Monthly Archives: November 2013
Commercial Property Bridge Loan
“Commercial Property Secured Bridge Loans”
When someone needs capital for a short period of time, one solution can be to get a commercial property bridge loan if you have equity in commercial real estate that you can leverage.
The use of funds do not have to relate directly to the property such as a purchase, refinance, or investing in some type of improvements.
The funds can be required for just about anything. The key is that commercial real estate property is being provided as security to a lender.
Some of examples where a short term loan is required is 1) someone needs to close a sale quickly, 2) a business has an order they need to fill and need to supplement their working capital to get it completed; there is some sort of cost that someone is trying to avoid by having capital provided on time within the parameters of an agreement.
The financing amount is typically $500,000 or higher and the money is required quickly, or more quickly than can be arranged through a conventional bank.
When individuals or businesses come to us with this type of financing request, we arrange financing through our private lender net work and work towards getting the financing in place right away.
One of the benefits of this type of commercial mortgage financing is that the loan is fully open for repayment. So as soon as the need for funds has passed, the principal can be repaid right away without penalty or further obligation to the lender.
Bridge loans can be for several months, up to a term of 2 years for the most part.
In some cases, funds may only be required for a couple of weeks to close a transaction and the proceeds from the transaction will in turn be used to repay the loan.
How Quickly Can A Commercial Property Bridge Loan Be Put Into Place?
When we get bridge financing inquiries, one of the first questions we get asked is how long will it take to get a short term loan in place?
Depending on the situation, the faster placements are in one to 2 weeks. On average, we can get funding completed from the time of application to cash advance in 2 to 3 weeks.
Part of the speed to getting deals in place is the getting the deal assessed quickly and immediately matching up the deal with an interested bridge lenders so most of the time is spent with the closing process.
If you’re looking for short term capital and have equity in commercial property to leverage, then I suggest that you give me a call so we can quickly go over your situation on the phone and provide options for your immediate consideration.
Click Here To Speak Directly To Toronto Mortgage Broker Joe Walsh
commercial mortgage financing alternatives
“There Can Be Many Commercial Property Mortgage Financing Alternatives For A Given Property”
When it comes to commercial mortgages, the first thing you need to understand is that “A” lenders love to do commercial real estate deals.
The Second thing you need to realize is that they also love turning them down.
Commercial real estate provides larger scale financing placement for banks, financing institutions, and other commercial lenders so the attraction to a commercial deal is obvious from an opportunity to put money out into the market.
But institutional lenders such as banks, credit unions, and life insurance companies are also low rate, low risk lenders that are really interested in only the cream of the crop of the commercial real estate financing market.
To qualify with an institutional lender on an investment properly, you’re going to need near zero vacancy, triple net tenants, strong security value, etc.
But if you fail to qualify with an “A” lender, that certainly doesn’t mean that you can’t get financing for either an investment property or owner occupied piece of real estate.
The reality is that there are many different types of commercial real estate financing sources. So much so that the amount actually provide by your “A” bank type options can be pretty small in many situations.
Alternative Commercial Mortgage Lenders
Immediately below bank type financing options are the alternative mortgage lending options which can include lenders such as trust companies, mortgage investment corporations, mortgage investment funds, all the way down to private mortgage lenders.
And because the majority of financing scenarios do not qualify for “A” lending options, the alternative mortgage lenders are always on the look out for the deals that the bank can’t do.
They are especially interested in deals that generate good cash flow as cash flow by itself is arguably the single biggest way to mitigate risk of loss with existing cash flow much more interesting than potential cash flow being promised after certain actions are taken.
Deals that fall below bank grade, for whatever reason, are going to be considered higher risk which equates to paying more in rates and fees. But in many cases, the difference in rates and fees compared to a bank can be minimal and still very appealing as a mortgage option.
From a lender’s point of view, many of the alternative lenders are primarily into residential mortgage financing, but love to place commercial deals where there is higher margins available to extract from the market.
The key to remember that every commercial lender out there is going to assess a deal on its merits including the value of the property, cash flow, borrower credit and so on. So the more risk associated with the deal, the higher the rate and the tighter the lending criteria. As risk goes up, the number of financing options are likely going to decline.
Its just important to remember that can potentially be all sorts of options in the market that could be a good fit for your deal, or even a better fit for your deal than your local bank.
If you’ve been turned down for commercial mortgage financing, or want to better understand your potential options, then I suggest that you give me a call so we can discuss your situation in some detail.