The financial world are in dire straights amid the current real estate crisis. Funds are tight across the board, and many institutions have completely stopped lending.
One of the few liquid sources of funding these days is hard money lenders. With the tightening of the credit markets, many people are turning to hard money as a source of funding. What may make things worse is the impending demise of the commercial real estate market.
Throughout this real estate downturn, commercial real estate has escaped with only minor scrapes. With companies going bankrupt and commercial property sitting vacant, the commercial real estate market is poised for a fall.
A number of smaller institutions have stopped making commercial loans, and others may not be far behind. Cue the hard money lenders. With backing from private individuals, there is still money available for residential and commercial projects.
The flip side to using hard money lenders is the higher fees and interest you will pay for the money you intend to borrow. When looking to obtain funding, however, it could very well make sense.
Even though private money is still a viable funding channel, the financing has become more difficult to obtain. Loan to value ratios are much lower than they have been in the past. A typical loan to value just last year may have been 65%. Today, however, you may be staring at investors wanting to be at fifty-five percent or better as a loan to value.
Financing has become very difficult to obtain, and what people need to understand is that there are a great deal more people looking for money than institutions lending it. Once that fact is clear, accepting the reality of the new face of finace could be easier to swallow.
If you are looking for a loan in todays marketplace, the best advice I can give is to make sure you have a professional working for you that specializes in the type of money you are looking for. The last thing you want to do today is have poor representation. It is of paramount importance to have the proper individual working for you today.
Be sure to ask questions before moving forward with him or her. A good way to look into this is by browsing the internet to see what they have written. You can tell a lot about someone’s ability through their writing. Also this takes the salesman out of the conversation. When you can read what they have published, you can get a good feel for their level of expertise. Everyone in the industry is a salesperson, which is ok, just make sure that your salesperson is able to represent you well.
