How Hard Money Loans Can Fund Time-Sensitive Commercial Real Estate Deals

Need quick cash for a real estate deal? Hard money lending can be your answer. It offers fast funding that banks often can’t match. This post will break down how hard money loans work. Learn when to use them and what to watch out for.

In the fast-moving world of commercial real estate, timing is everything. Missing out on a deal because of financing delays can be incredibly frustrating—and costly. Traditional loan processes often involve weeks or even months of paperwork, credit checks, and underwriting, which might not work when time is tight. That’s where hard money loans come in as a practical, speedy solution for securing funding. Let’s explore how these loans can make all the difference in time-sensitive situations.

What Are Hard Money Loans?

Hard money loans are short-term loans secured by real estate assets rather than a borrower’s credit history. Unlike conventional loans offered by banks, these loans are funded by private lenders or investors who prioritize the value of the property as collateral.

One of the key traits of hard money loans is the ability to bypass the lengthy approval process of traditional loans. They’re commonly used by developers and investors who need quick access to capital. Commercial Hard Money Loans can be particularly useful for larger projects like purchasing or renovating commercial real estate.

Photo by Jakub Zerdzicki

Characteristics of Hard Money Loans

Here’s what sets hard money loans apart:

Short-Term Duration: Loans typically range between 6 months and 3 years.
Higher Interest Rates: Rates are often higher than those of traditional loans (sometimes ranging from 8% to 15%), reflecting the ease and speed of approval.
Collateral-Based Approval: The focus is on the property’s value rather than the borrower’s credit score or financial history.
Flexible Terms: Private lenders can structure the terms to meet your specific needs.

Typical Use Cases for Hard Money Loans

Hard money loans shine in situations where speed and flexibility are critical. Common use cases include:

Fix-and-Flip Projects: Investors who purchase properties to renovate and sell quickly rely on this fast financing.
Bridge Financing: Temporary loans to cover immediate cash needs while other long-term funding is being arranged.
Distressed Properties: When banks won’t finance a property in poor condition, these loans are a perfect alternative.
Time-Sensitive Opportunities: Quickly closing deals to outpace competitors in competitive markets.

Check out more details on how these loans work.

Advantages of Hard Money Loans for Time-Sensitive Deals

When you’re racing against the clock, hard money loans can be a lifesaver. Let’s dig into why they’re ideal for expedited transactions.

Speed of Approval and Funding

The primary benefit? Speed. Hard money loans can be approved and funded in mere days, putting cash in your hands when every moment counts. Unlike banks, private lenders skip the drawn-out application and underwriting processes. According to Rocket Mortgage, property value takes precedence, drastically cutting down the approval timeline.

Flexible Underwriting Criteria

Traditional lenders tend to look at credit scores, debt-to-income ratios, and lengthy financial histories. Hard money lenders focus almost entirely on the property you’re purchasing or leveraging. This flexibility makes it easier for those with less-than-perfect credit to secure funding.

Less Bureaucratic Red Tape

Hard money lending involves fewer hoops to jump through. With no excessive documentation or detailed credit reviews, these loans simplify the borrowing process. If you’re thinking of exploring this financing option, learn what you need to know.

How to Secure a Hard Money Loan

Getting a hard money loan doesn’t have to be intimidating. Follow these basic steps to access funding for your next real estate project.

Finding the Right Hard Money Lender

Start by researching lenders with solid reputations. Look for lenders with experience in commercial real estate, favorable reviews, and competitive terms. Trusted sources like First Financial Depot specialize in fast, efficient funding for these types of deals.

Preparing Your Application

While hard money loans (Investment loans) require less paperwork, having key documents ready can expedite the process. Some essentials include:

Property appraisal or valuation
Purchase agreement or project plan
Personal financial statement
Proof of property ownership (if refinancing)

Meeting these requirements ensures your application moves swiftly.

Closing the Deal

Once approved, the closing process is typically fast. Ensure your lender has clear communication and that all legal agreements are reviewed thoroughly. Time-sensitive deals can’t afford delays at this stage, so staying organized is critical.

Potential Risks and Considerations

As helpful as hard money loans are, they aren’t without risks. Here’s a closer look at the challenges you should keep in mind.

Higher Interest Rates

One key drawback is cost. Interest rates are significantly higher than traditional loans, which can eat into your profits if the deal doesn’t pan out as expected. Incorporate these extra costs into your budget before committing. The article Pros and Cons of Hard Money Loans provides a balanced breakdown.

Shorter Loan Terms

With repayment periods rarely exceeding three years, borrowers need a solid exit strategy. This might involve selling the property, refinancing with a conventional loan, or using rental income to cover payments.

Property Risk Assessment

Lenders gauge risk based on the collateral property. Flawed appraisals or overlooked issues can lead to disputes or financial challenges later. Consider hiring your own independent inspector to ensure accuracy.

Conclusion

Hard money loans stand out as a quick, flexible financing solution for time-sensitive commercial real estate deals. Whether you’re flipping a property, seizing a last-minute opportunity, or bridging a financial gap, these loans offer the speed and adaptability you need when the clock is ticking.

While they come with higher costs and shorter terms, the advantages often outweigh the risks for investors facing tight deadlines. Explore your options, assess your project goals, and see if a hard money loan could be the key to unlocking your next real estate success story.

What Is an Executive Summary and Why Is It Important to a Hard Money Lender

What Is an Executive Summary and Why Is It Important to a Hard Money Lender?

When applying for a hard money loan, one of the key pieces of documentation you’ll need is an executive summary. This document serves as a brief snapshot of your loan request and is pivotal to helping lenders make informed decisions quickly. But what exactly is an executive summary, and why does it hold so much weight in the hard money lending process? Let’s break it down.

Understanding the Executive Summary

An executive summary may seem like just another document, but its purpose is far-reaching. It’s the first impression your proposal will make on a lender, and in the fast-paced world of hard money lending, first impressions matter.

Definition of an Executive Summary

An executive summary is essentially a high-level overview of your proposal or business plan. It highlights the most important information a lender needs to know, such as your goals, the financial details of your project, and how the funds will be utilized. Think of it as a concise sales pitch tailored to your audience’s needs.

In various industries, executive summaries are used to save time. They allow decision-makers to understand the essence of a proposal without having to sort through lengthy documents. In lending, especially hard money lending, this quick synopsis is invaluable.

Key Components of an Effective Executive Summary

A well-written executive summary doesn’t just skim over the details—it focuses on delivering the right information with clarity and purpose. Some of the essential elements include:

Project Purpose: Clearly state the reason for the loan and the specific project details.
Goals and Objectives: What will this money help achieve? Be direct.
Financial Information: Include numbers that matter, such as the loan amount, repayment terms, and expected ROI.
Key Figures: Highlight who is involved in the project, their background, and why they’re qualified to execute it.
Risk Analysis: Show awareness by briefly mentioning risks and how they’ll be managed.

Lenders don’t have time to waste, so the key is to deliver all critical information upfront.

Relevance of an Executive Summary to Hard Money Lenders

Why does an executive summary matter so much to hard money lenders? Simple—they operate differently from traditional lenders. Hard money lending focuses on speed, property value, and risk management. An effective executive summary is a tool that facilitates these goals.

African woman in a pink suit counting money seriously at an office desk, showcasing work and finance.
Photo by MART PRODUCTION

Assessing Financial Viability

Hard money lenders need to determine financial feasibility quickly. An executive summary provides a snapshot of the borrower’s finances, the project’s value, and anticipated returns. It bridges the gap between “sounding like a good idea” and being a solid financial opportunity.

Highlighting Investment Potential

Lenders need confidence that their investment will yield returns. A compelling executive summary emphasizes the property’s potential and how it aligns with the lender’s goals, such as high ROI or quick turnaround times.

Risk Mitigation Through Transparency

Hard money loans focus heavily on mitigating lender risk. A transparent executive summary outlines how risks like market volatility, budget overruns, or property zoning issues are planned to be managed.

Best Practices for Creating an Executive Summary for Hard Money Loans

Creating an executive summary for a hard money loan application requires a tailored approach. Below are some practical tips to make yours stand out.

Focusing on Clarity and Conciseness

Hard money lenders deal with numerous applications, so being clear and concise isn’t just recommended—it’s necessary. Cut out fluff and stick to the information that matters. Imagine explaining your project in 60 seconds. What would you say? That’s the level of brevity to aim for.

Including Pertinent Financial Data

Hard numbers are what lenders focus on most. Include details about loan amounts, property appraisals, repayment schedules, and projected returns in an easy-to-read format. Avoid vague estimates—specificity builds trust.

Tailoring the Executive Summary to the Hard Money Lending Industry

Hard money lenders aren’t interested in generic proposals. They’re looking for real estate deals with solid collateral or value propositions. Tailor your executive summary to include what they care about most, such as the property’s location, condition, and market value.

Common Mistakes to Avoid in an Executive Summary

Even the best ideas can get lost in translation if an executive summary has glaring issues. Avoid these common pitfalls to ensure yours packs a punch.

Overloading with Irrelevant Information

Packing too much detail into your executive summary can be counterproductive. Highlight only the key points relevant to a lender. Leave non-essential or overly granular information for supporting documents.

Neglecting Visual Appeal

Unorganized blocks of text are hard to read. Use bullet points, headers, and white space to make your executive summary visually appealing. Don’t underestimate the power of a clean design—it shows professionalism and attention to detail.

Failing to Address Key Lender Concerns

Leaving out critical details, like repayment plans or potential risks, raises red flags. Lenders need to know you’ve thought through the loan and what could go wrong. Address these points head-on to instill confidence.

Conclusion

An executive summary isn’t just a formality in the hard money lending process—it’s your case, presented in under a page. It’s the document that will either capture a lender’s attention or leave them uninterested. By focusing on clarity, relevance, and transparency, you can create an executive summary that positions you as a strong, reliable borrower. As with any important document, take the time to refine and tailor it to meet the expectations of hard money lenders. A well-crafted summary isn’t just useful—it’s your ticket to a successful loan application.

Example of an Executive Summary Click here.

What Is a Real Estate Asset Based Loan?

What is real estate asset based loan

What is Real Estate Asset Based Loan?

Real estate asset base loan is a vital part of the financial sphere, offering borrowers the chance to access larger sums of money by leveraging property as collateral. Unlike unsecured loans, which are based solely on creditworthiness, these loans tie their security to real estate, making them less risky for lenders and potentially more accessible for borrowers. They’ve gained popularity among homeowners, investors, and even businesses for their flexibility and reliability in financing significant projects or expenses.

A real estate asset based loan is exactly what it sounds like: a loan that is secured by real estate property. This means the property serves as collateral, reducing the lender’s risk and influencing the loan terms. For many, these loans open financial doors that might otherwise remain closed.

Money for Commercial Real estate
Photo by Robert Armstrong

Definition and Key Features

Real estate asset base loan is backed by tangible property, making them inherently more secure for lenders. Here are some of the standout features:

Collateral Dependency: The value of the real estate directly impacts the loan approval and amount.
Risk Factors: If the borrower defaults, the lender can seize and liquidate the property.
Common Uses: These loans are often used for buying investment home, funding renovations, or financing business expansions.

How They Are Different from Other Loan Types

What sets real estate asset base loans apart from personal loans or credit cards? It’s the collateral requirement. While personal loans rely mainly on credit scores, real estate loans are tied to the value of a physical asset. This distinction often results in lower interest rates and longer repayment terms.

Common Types of Real Estate Loans

Mortgage Loans: These are designed to help buyers purchase a property.
Learn more about different types of mortgage loans at Bankrate.
Home Equity Loans: These allow homeowners to borrow against the equity they’ve built up in their property.
For a detailed guide, check out LendingTree.
Bridge Loans: Temporary financing used to bridge the gap between buying a new property and selling an old one.

The Benefits of Real Estate- Asset Based Loans

Real estate based loan offers numerous advantages for borrowers, making them an appealing choice across various financial scenarios.

Lower Interest Rates

Since these loans are secured by real property, lenders face less risk. This typically translates to lower interest rates compared to unsecured borrowing options. Borrowers can save thousands over the life of the loan due to reduced interest payments.

Flexible Loan Amounts and Terms

The value of the collateral determines the borrowing limits. Whether you need funds for a modest home improvement or a large-scale investment, real estate-based loans can be tailored to your requirements.

Accessibility for Borrowers with Lower Credit Scores

One of the most significant perks of these loans is accessibility. Even borrowers with less-than-perfect credit may still qualify, thanks to the added security of collateral.

Potential Risks and Drawbacks

While the benefits are many, real estate-based loans also come with risks that borrowers need to consider carefully.

Risk of Foreclosure

The primary risk is losing the property. If a borrower defaults, the lender has the legal right to seize the property used as collateral.

Market Fluctuations and Property Value Impact

Real estate markets can be unpredictable. Falling property values could reduce your equity, leaving you with less ownership and financial flexibility.

Fees and Additional Costs

Real estate based loans often come with extra costs like appraisal fees, origination fees, and legal expenses. It’s essential to factor these in when deciding if this loan type is right for you. Learn more about this at First Financial Depot.

Who Can Benefit from Real Estate- Asset Based Loans?

These loans aren’t one-size-fits-all. They’re ideal for specific scenarios and types of borrowers.

Homeowners Looking for Leverage

Homeowners can use these loans to finance home renovations, consolidate debt, or handle unexpected expenses. The flexibility they provide can be a financial lifesaver during tough times.

Real Estate Investors and Developers

For those in real estate, these loans can help finance large projects or acquire more properties. They’re an indispensable tool for expanding portfolios.

Business Owners Requiring Capital

Businesses often use real estate asset based loans to secure the capital needed for expansion or operational expenses. By leveraging owned property, companies can fund growth more effectively. Learn more about real estate-based financing options at Investopedia.

Conclusion

Real estate asset based loans are a powerful financial tool when used wisely. They offer lower interest rates, flexibility, and accessibility that appeal to a wide range of borrowers. However, they come with risks like foreclosure and additional fees, making it crucial for potential borrowers to weigh the pros and cons carefully.

If you’re considering a real estate-based loan, consulting with a financial advisor or real estate professional can help you navigate the complexities and make an informed decision. As always, understanding your financial situation and goals will be key to choosing the loan that’s right for you.

Contact First Financial Depot at 855-505-5363

What is asset base lending

What Is Asset-Based Hard Money Lending in Commercial Real Estate?

Hard Money Loans aka Asset-based lending (ABL) is gaining traction among commercial real estate investors as a practical and flexible funding solution. Unlike conventional loans, ABL focuses on leveraging tangible assets, like real estate or inventory, to secure funding—making it unique and accessible to a wider range of investors. Whether you’re working on a real estate development or need quick financing, ABL can be a game-changer for your business strategy.

Understanding Asset-Based Lending

What Is Asset-Based Lending?

At its core, asset-based lending is a type of financing where the loan is secured by tangible assets. In commercial real estate, the collateral is often the property itself or other valuable assets owned by the borrower. This type of lending shifts the focus from credit scores and business histories to the actual value of the borrower’s assets. This setup makes ABL an enticing option for those who may not qualify for traditional bank loans.

Here’s a more detailed explanation of asset-based lending and how it works.

Hard Money Loans
Photo by Habib

Key Characteristics of Asset-Based Lending

Asset-based lending stands out due to its reliance on collateral. Here are its core elements:

Collateral Focus: Loans are secured by physical assets like real estate or equipment.
Quick Approval: Decisions are made based on asset value, often streamlining the approval process.
Flexible Terms: Borrowers can negotiate repayment terms and loan structures.

For a deeper understanding of its mechanics, see this resource on ABL from First Citizens Bank.

Benefits of Asset-Based Lending for Real Estate Investors

ABL offers numerous advantages for investors:

Flexibility: Funds can be used for various purposes, including property acquisition or renovations.
Faster Funding: Since collateral reduces lender risk, approvals are quicker.
Easier Qualification: Borrowers with inconsistent cash flow or lower credit scores can still qualify.

Want more details on the benefits? Check out this article on the advantages of asset-based loans.

How Asset-Based Lending Works in Commercial Real Estate

Evaluating Collateral Value

Before approving an asset-based loan, lenders evaluate the collateral. When it comes to commercial real estate, factors such as property location, value, and revenue potential play a crucial role. The lender’s focus is on the quality and liquidity of the asset in case repayment isn’t met.

Loan-to-Value (LTV) Ratios

Lenders typically use loan-to-value (LTV) ratios to determine how much funding you can receive based on the asset’s worth. For commercial real estate, LTV ratios often range between 50% and 80%. This means you can borrow up to 80% of the property’s appraised value.

Repayment Terms and Structures

Most asset-based loans in commercial real estate come with short to medium-term lengths. Interest rates may be higher than traditional loans, but flexible structures often allow investors to align repayment plans with cash flow cycles.

Learn more about the loan approval process in this guide.

Types of Asset-Based Loans for Commercial Real Estate

Bridge Loans

Bridge loans or Hard Money Loans are short-term loans designed to “bridge the gap” until long-term financing is secured. They’re ideal for investors needing immediate funds for property purchases or renovations.

Hard Money Loans

Hard money loans are high-interest, short-term loans that leverage real estate as collateral. These loans are often utilized by those needing quick funding or working on high-risk projects.

Construction Loans

If you’re looking to finance a new building or renovate an existing property, construction loans fall under the umbrella of asset-based lending. These loans provide funds gradually as different stages of construction are completed.

Pros and Cons of Asset-Based Lending

Advantages of Asset-Based Lending

Here’s why ABL can be a good fit for your business:

Access to Quick Financing: Great for time-sensitive transactions.
Easier Qualification: Stressed credit scores are less of an issue.
Preserves Cash Flow: Allows businesses to maintain liquidity.

According to Texas Capital Bank, ABL offers unmatched financial flexibility for businesses in various industries.

Potential Drawbacks of Asset Based Hard Money Loans

However, it’s not without its downsides:

Higher Interest Rates: Can make loans costly in the long term.
Collateral Risk: Failure to repay could result in asset forfeiture.
Limited Loan Amounts: Funding is restricted by asset value.

Is Asset-Based Lending Right for You?

If your business owns valuable assets and you need flexible funding, ABL could be a great choice. However, higher costs and the possibility of losing collateral mean you’ll need to weigh risks carefully.

Conclusion

Asset-based or Hard Money Loans lending is a powerful tool for unlocking funding, particularly for commercial real estate investors. By focusing on tangible assets, it opens the door for those who may struggle with traditional financing options. But like any financial decision, it’s crucial to evaluate the benefits and risks. Consult a financial advisor or lender to explore how ABL might fit your needs.

Looking to take the next step? Dive deeper into the advantages of ABL financing to make informed choices.

Real Estate Investment Hacks You Can Start Using Today

Andrew Carnegie once famously said, “Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.”

Real estate is a tried and true way to build wealth. This is as applicable to everyday people as it is to real estate investors. After all, growing your nest egg through owning a home is part of the American Dream. For investors, finding the right property at the right time is tantamount to winning the lottery and striking gold at the same time. So, what are some real estate investment hacks you can start using today?

You’re in luck because you have First Financial Depot on your side. Our founders have been helping clients find and secure the right funding for over forty years. In the decades between then and now, we have learned what works and what doesn’t. More importantly, we have learned simple real estate investment hacks you can start using today.

Keep reading to learn what they are and don’t hesitate to call us today at 423.388.2670 to get your loan process started. We’ve helped thousands of investors and earned our reputation as the nation’s premier private commercial real estate lender.

Find a Mentor:

These real estate millionaires, investors or savvy homeowners, all have one thing in common – they have a mentor. They have someone to show them what works and to warm them about what doesn’t work. They have someone in their corner, guiding them through trials and helping make successes even sweeter.

So, the first real estate investment hack you can implement today is to find a mentor. They don’t have to be an investor. In fact, veteran Realtors®, mortgage brokers, and real estate appraisers often make the best mentors. They’re in the market firsthand and can show you the types of properties and deals that work.

House Hacking:

While the term house hacking itself is relatively
recent, this idea has been around for centuries. House hacking is when you have tenants pay for your primary residence’s mortgage. Sometimes this is done directly through taking a small guest room and renting it out on Airbnb. We’re more interested in the idea of rental properties as a way to house hack, though.

This is when you purchase a rental property in a hot market and use the capital made through it to pay off both your mortgages. This requires a keen eye for investment and, truth be told, will require you to look at many properties to find the right one. House hacking might sound complicated at first, but that’s one reason you’re going to want to have a mentor in your corner to help you along the way.

Make Use of Hard Money:

We’ve saved the best real estate investment hack you can start using today for last because we’re particularly passionate about hard money lending. That makes sense, after all we’ve been in the business for decades. We have seen firsthand the agility and competitive edge that hard money offers.

Hard money offers a number of real estate investment benefits, including:

· The ability to secure funding quickly, which leads to more closed deals.
· A reduced amount of paperwork & no financial hoops to jump through.
The ability to stand out from the crowd with cash-in-hand.
No prepayment penalties.

These benefits, and many more, make hard money an attractive option for real estate investors. If you’re an experienced fix and flipper, or just starting out or any type of real estate investor, who needs someone to help you complete your project –

Call First Financial Depot today at 423.388.2670.
Our team of dedicated loan professionals can help you get the capital you need exactly when you need it.

New York Asset Based Real Estate Loans: A comprehensive Guide

New York Asset-Based Real Estate Loans: A Comprehensive Guide

Are you considering investing in New York’s real estate market but struggling to secure financing? Asset-based real estate loans might be the solution you need. These loans offer flexibility and a pathway to finance properties based on their value rather than your credit score. Let’s explore what these loans are, how they work, and why they can be a game-changer for real estate investors.

What Are Asset-Based Real Estate Loans?

Asset-based real estate loans are financing options that rely on the property’s equity rather than traditional credit evaluation methods. This means that your loan eligibility stems largely from the value of the property itself. If you’re purchasing a property that has significant value or you already own a property with equity, these loans may provide a smoother application process.

Why Choose Asset-Based Loans?

Choosing an asset-based loan can simplify your financing efforts. Here are some reasons why they are appealing:

Less Focus on Credit Scores: If you have a low credit score, asset-based loans can still be accessible.
Faster Approvals: The evaluation primarily centers on the property, which often leads to quicker decisions.
Flexible Terms: Many lenders offer varied terms, allowing you to tailor the loan to your investment strategy.

How Do Asset-Based Loans Work?

Understanding the fundamentals of asset-based loans is crucial before diving into your investment. Here’s a closer look at the process:

Step 1: Property Evaluation

Lenders first assess the value of your property. This could be a residential or commercial property you plan to buy or already own. The appraised value determines the maximum loan amount you can receive.

Step 2: Loan Application

Once the property’s value is established, you submit your loan application. This generally includes details about the property, your financial situation, and overall investment goals. Expect to provide financial documents, though the focus remains on the property’s value.

Step 3: Funding Process

After approval, the funds are typically disbursed directly to you. You can use these funds to purchase new properties, renovate existing ones, or even refinance current loans.

Photo by Engin Akyurt

Types of Asset-Based Loans

Not all asset-based loans are created equal. Here are some common types you might encounter:

1. Hard Money Loans

These are short-term loans often used by real estate investors for quick financing. They typically come with higher interest rates but can be beneficial in competitive real estate environments.

2. Bridge Loans

If you need temporary financing until securing permanent funding, bridge loans can be a good option. They allow you to buy a property before your current property sells.

3. Portfolio Loans

This type encompasses various real estate loans rolled into one. They’re often issued by banks that keep the loans on their balance sheets. Portfolio loans are ideal for investors with multiple properties.

4. Construction Loans

Planning to build? Construction loans can provide the capital needed for new builds or major renovations, financed based on the future value of the completed project.

Risks Associated with Asset-Based Loans

Every financial decision comes with its challenges. Asset-based loans have some risks to be aware of:

Higher Interest Rates

Because these loans serve a specific niche, they often carry higher interest rates compared to traditional financing. Make sure to evaluate your potential returns against these costs.

Shorter Terms

Most asset-based loans have shorter repayment periods. If you’re not prepared for this, it can put added financial pressure on your investment goals.

Potential for Foreclosure

If the property’s value declines or if you fail to meet payment obligations, lenders can foreclose on the asset. Be cautious and fully assess your property’s market condition.

Tips for Securing an Asset-Based Loan in New York

If you’re convinced that asset-based loans could work for you, consider these tips on securing the best financing:

Research Lenders

Not all lenders are the same. Take time to find those like First Financial Depot who specialize in asset-based loans. Look into their reputation, terms, and customer reviews.

Understand Loan Terms

Before signing any loan documents, fully understand the terms. Ask questions about fees, interest rates, and repayment structures.

Have a Solid Business Plan

Whether you’re flipping houses or renting properties, a clear Summary of your business plan can help convince lenders of your project’s viability. Show them how you plan to succeed financially.

Conclusion

Asset-based real estate loans offer a unique opportunity for investors in New York. These loans focus on the property’s value, making financing more accessible for many. By understanding how they work, their types, and the associated risks, you can make informed decisions about your investments. Your goal is within reach; asset-based loans may be the key to unlocking it. Whether you’re looking to buy, renovate, or develop, take the first step and explore your options.

If you are in need of a New York Asset-Based Real Estate Loans

Hard Money vs Private Money Lenders

Investors who work in the real estate industry frequently use the terms private money lender and hard money lender interchangeably. It’s true that there is some overlap between the two types of lending. First Financial Depot, LLC is very active in the Hard Money Lending Business.

Similarities Between Lenders

Both types of lenders share the following features:

Streamlined hard money lending processes relative to traditional bank, frequently requiring less paperwork for much faster approval and funding times.
The qualification process that is tied to the strength of the underlying real estate asset rather than focusing on the strength of the borrowing financials.
The ability to lend on “non-traditional” assets. Both types of lenders are frequently viewed as go-to sources for value-add or speculative properties that offer higher returns than more traditional stabilized investment assets.
Slightly higher interest rates and fees than traditional lenders. In exchange for these higher costs, private and hard money loans are usually much more flexible.

While hard money and private loans have a lot in common, there is a fundamental difference between them. A private lender can be just about anyone. They can be a family member, a business acquaintance or a stranger. They’re people with money using it to make loans to those in need of cash.

Hard money Loans From First Financial Depot, LLC, are very experienced. And ready to make hard money loans, on purchase or refinance of multi-unit apartment building, mixed-use , or any kind of commercial project. First Financial Depot, LLC staffed with professionals waiting to help fund your next project using common sense underwriting.

Hard Money Lenders Offer Experience

Due to a larger number of loans and their experience, they often know of issues with certain areas, certain agents, escrow, title companies, as well as building departments, and appraisers. This means that you can do business with us in confidence.

The best hard money lenders are established businesses. For example, we’ve been working with asset-backed loans for over 35 years. we can do loans in all states across the US. We can also fund loans on residential, multi-family, retail or industrial investment properties as an example.

When you work with a hard money lender, you’re also getting the benefit of many years of experience. Private lenders are motivated to make loans, rather than reject them. They’re frequently real estate investors that understand what you’re doing. A privately-funded hard money lender can give you all of those benefits with the added professionalism of a real lender.

First Financial Depot, LLC commercial hard money lenders make loans solely on the value of property. And accept all credit scores. If you think your property qualifies for a hard money loan, Call 1-855-505-5363.

What is LTV and Why it Matters Hard Money Lending

What is LTV and Why it Matters is an important aspect of all lending decisions.

WHAT IS (LTV)? Hard Money Lending

Loan-to Value Ratio (LTV): a comparison between the value of your loan amount and the estimated value of your property. To determine a loan’s loan-to-value, the lender will take your desire loan amount and divide it by the value of your commercial real estate . Hard money lenders sometimes require two opinions of value to ensure they’re making a good financial decision to fund the loan. Lenders can get their values from appraisals, broker’s price opinions (BPO) or tax appraisal value.

The loan-to-value ratio or LTV is key in real estate. LTV links the mortgage amount to the home’s value. Banks use LTV to judge lending risk. It is found by dividing the mortgage by the lower of the sale price or appraised value. For instance, a $200,000 mortgage on a home valued at $250,000 yields an 80% LTV. A lower LTV often means better loan terms. This is because it shows less risk for the lender.

WHY IT MATTERS?

LTV is a risk assessment tool. Failure of the borrower to repay a mortgage is the driving risk factor behind all decisions made by a lender. LTV is one of key aspects that lenders keep in mind when approving loans. Hard money lenders, who assume a riskier position in the loans, usually have a max LTV. Most hard money loans are never based on credit score, but instead are based on the value of the commercial real estate.

The more desirable the commercial real estate is, the more comfortable the lender is funding the loan. The LTV percent is determined by lenders when evaluating risk factors.

Some of the factors but not all are based on examples below.

Property condition:
- A well-maintained property with “curb appeal” that needs no improvements or rehabbing will obviously be more desirable and marketable than one needing repairs and in poor condition. Surrounding properties in below average condition will result in a neighborhood “eye sore” and decrease sale opportunities and ultimately result in a low LTV.

Demographics:
- A cities demographics graph and group basic information of the people living in the city, for example age, annual income, gender, race, etc. The types of people, age brackets, stage of life, family structure, education level, and employment and occupations in an area affect the type of property in demand, which can ultimately add or decrease property value.

Foreclosure rate:
- The risk level is high when lending on commercial real estate in an area that is surrounded by properties that are for sale due to foreclosure. Frequent foreclosures in an area throws up a red flag to the lender that this mortgage could also go into default. Also, the chances of the lender being able to sell a property and getting back what they put in are slim when similar properties are for sale due to foreclosure listed at a cheaper price. Properties located in a high foreclosure area will usually be approved at a lower LTV.

Use of funds:
- Giving your lender solid proof of where the money goes could mean a better loan-to-value ratio. Lenders need to know how you plan to use the funds. For instance, show contracts for home upgrades. Share invoices for business gear. Without proof, lenders see more risk. They cannot fully trust where their money goes. Title documents prove ownership and reveal current mortgages. They also show outstanding liens. Liens are claims against the property for unpaid debts. Without this info, lenders lack full confidence. Lenders must gauge risk. Loan-to-value ratio is tied to risk. A lower LTV means the borrower has more skin in the game. This lowers the lender’s risk. At its core, LTV depends on how safe the lender feels.

Crime rate:
- If the area surrounding the property isn’t safe or has a high violence or crime rate, this will indirectly affect the value due to a borrowers hesitations to buy. Criminal behavior increases chances of damage, theft, or other potential costs to the property owner.

Submit your loan application here or call us to speak directly with a First Financial Depot account executive with over 40 years of experience in Hard Money Lending.

Call: (855) 505-5363

Commercial Hard Money Lender vs Traditional Lenders

How Commercial Hard Money Loans Differ From Traditional Loans.

Commercial hard money lenders vs Traditional lenders offer a way for people to receive a loan that do not have strong credit scores or financials. Hard money loans are secured by real estate. Many people who are buying real estate use non traditional lenders to help them pay for the purchase or refinance of their property, because these loans are much easier to qualify for than the loans of traditional banks.

Hard money or asset-based loans are used to purchase or refinance real estate. These loans can be used to buy or refinance most all commercial real-estate.

Borrowing From Commercial Hard Money Lenders

Traditional bank loans require applicants to have a very high credit scores and strong financials; asset-based financing with hard money loans requires no credit score for approvals. This is because the loan is not based on the applicant’s credit, but rather on his/her real estate property.

These commercial hard money lenders fund applicants much more quickly, usually between 1-3 weeks. This process is much quicker due to less stringent requirements in the approval process. Traditional bank loans can take months to process, and there’s always a high chance for loan denial at the last minute. On the contrary, asset-based loans offer shorter loan terms, usually ranging from 1-5 year, while traditional bank loans are usually in the 10-40 year range.

Advantages Over hard money loans vs Traditional Loans

Hard Money Loans

You don’t need a high credit score or financials to qualify
Loan terms are much shorter
Easily used for a variety of property types (single family homes, Multi family, apartments, mixed use, condominiums, and more)
Borrowers receive loans much quicker.

Traditional Loans

You need high credit scores.
You need strong financials.
Long and drawn-out process causing you to lose that investment opportunity.
Limited on the type of asset being purchased or refinanced.

Why Borrow From Non Traditional Lenders?

Commercial hard money lenders provide a great option for people wanting to buy or refinance real estate quickly, That lack high credit scores or strong financials. Hard money loans are based strictly on the asset (real-estate.)

Financing Properties With Commercial Hard Money Loans vs Traditional loans.

Buying any real estate requires one thing – having funding available for the transaction. It’s just like any other transaction; you must either have capital available or a line of credit made available to you. Additionally, financing commercial properties is a little more complicated than funding residential properties as they adhere to different regulations.

When Are Commercial Hard Money Loans vs Traditional loans Appropriate?

For some deals, commercial hard money loans are an appropriate way to get the deal underway. Hard money loans are more lenient in the kind of requirements that you normally associate with real estate financing. The collateral is the property. If you are making a purchase of a distressed property that has an inherent value, a hard money loan may be feasible while a more traditional mortgage loan may not be.

Hard money lenders may be interested in a property that requires rehab. while a more traditional lender will most likely decline such a loan application. The intent of hard money lenders is to provide bridge financing options that allows borrowers to expedite their transactions.

How Are Commercial Hard Money Loans vs Traditional loans Different Than Regular Real Estate Financing?

Commercial hard money loans usually carry a higher interest rate. Because of that, hard money loans tend to be of shorter duration. This makes it a healthy option for those looking to take advantage of short lived real estate opportunities that quickly come and go.

Is A Commercial Hard Money vs Traditional Loan The Right Way To Finance Your Project?

A hard money loan can be a perfect answer for a short term deal. It is a great solution for purchasing a commercial property with the intent of rehabilitating the structure and or flipping the building. There are other ideal borrowing situations that call for the quick turnaround of funding as provided by First Financial Depot. Such opportunities for bridge financing can be an essential element in any speculators plans for real estate purchases or refinances.