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  • Bridge the Gap

    Posted on 12/9/2004
    Constructing a new building? When it comes time to pay off the construction loan, look to Avatar Financial Group to help you bridge the gap between completing the project and profitability or sale of the project. If you are building an apartment/condo complex, Avatar can even arrange to release units as they are sold and the loan is paid back incrementally for those units. Flexibility makes working with Avatar a pleasure.
    Posted in Miscellaneous

  • Hard Money vs Rehab

    Posted on 12/8/2004
    Hard money loans are not rehab loans - rehab loans may or may not be hard money loans. A hard money loan is a loan based on the existing equity in the current condition of real estate. Rehab loans are made based on the borrower's credit worthiness and the estimated resale value of the real estate once rehab is completed. Hard money will get you about 65% of the purchase price of a property and cost you less. Rehab lenders will lend you up to 70% of the after-fixup price and will cost you substantially more.
    Posted in Miscellaneous

  • What Kind Of Appraisal?

    Posted on 12/7/2004
    There are real estate appraisals and business appraisals. Hard money lenders will fund based on the value of your real estate. Do not get a business appraisal and expect to be funded on that number - it will include equipment and perhaps the value of existing clientelle, etc. The hard money lender needs to know the real estate resale value of the building and land it sis on.
    Posted in Miscellaneous

  • Purchase Price / Appraisal Price

    Posted on 12/6/2004
    Hard money loans are made based on the 'street value' or 'quick sale' value of property. Therefore, the actual purchase price is used as 'value' when determining the loan to value ratio. In the event that a borrower defaults on a loan, the property will need to be sold at a quick sale cost and the lender must protect their assets by using that number as a reasonable value in calculations. Appraised values are usually much higher than the actual purchase price on commerical and ivestment real estate transactions - after all, everyone is looking for a good deal.
    Posted in Miscellaneous

  • Location, location, location

    Posted on 12/5/2004
    Just as hard money lenders have varying lending criteria, they lend in different locations as well. Before floating your loan and sending all your supporting documents, etc. check to see which states the lender serves. For outside the US, the list is smaller and you may need a seasoned broker to help you locate the right lender for your needs.
    Posted in Miscellaneous

  • Hard Money Lender or Broker?

    Posted on 12/4/2004
    Almost everyone claiming to be a hard money lender, on the web or in print media, is, in fact, a broker, not a lender. How do you determine the truth?

    Look for words like "loan originator" or "loan origination specialist" - a loan originator is a loan broker. If you see that the firm does both brokering and lending, ask under what circumstances the loan will be brokered and under what circumstances will the loan be funded inhouse.

    Look to see how the 'lender' is funded. If you see that a lender is institutionally funded, you have a real lender. If you see investor funded, you probably have a lender. Ask again, whether the lender will broker or "cooperate" with other lenders on some projects. These are words that means that your loan is being brokered - and points are added to it to cover those costs.
    Posted in Miscellaneous

  • Why 20% Borrower Equity?

    Posted on 12/3/2004
    The biggest stumbling block in obtaining a hard money loan for most borrowers is the requirement to have at least 20% personal equity in the project. So many people believe they can get 100% financing or more and spend months searching for what does not exist. The reason lenders want a borrower to have a reasonable personal equity in a project is as follows: in the event that the borrower hits a 'bump in the road', the lender does not want the keys to be dropped off with the flippant words, "Oh well, I didn't have anything in this anyway. It was a good try." Believe me, it's happened!
    Posted in Miscellaneous

  • Hard Money on Residential Properties

    Posted on 12/2/2004
    Lending on residential properties requires special licensing and is subject to regulations that vary from state to state. However, in some circumstances, hard money commercial lenders can lend on owner occupied residential property, if the proceeds are used for business purposes. If in doubt, submit your loan request and find out.
    Posted in Miscellaneous

  • Why Get a Commercial Bridge Loan?

    Posted on 12/1/2004
    Commercial bridge loans are used to bridge the gap between the purchase of a commercial property and long term financing. It is advisable to get a hard money commercial bridge lender "in your back pocket" in case you need them when preparing to purchase a commercial property. BAnks are notorious for taking a long time to fund and if your purchase is time sensitive - even if you have left yourself many months leeway - you may find at the last moment that the bank is still not ready to fund by your closing date. Having a hard money commercial bridge loan ready to close at a moment's notice is a good hedge against losing the property entirely after all your efforts.
    Posted in Miscellaneous

  • What Can I Collateralize for Hard Money?

    Posted on 11/30/2004
    Hard Money lenders have differing collateral requirements, but you will find a hard money lender who can collateralize:
    * raw or improved land
    * income producing properties
    * boats, yachts, floating hotels, casinos, etc.
    * investment residential properties
    * medical and other special use real estate
    Posted in Miscellaneous