Avatar's Blog
» Borrower Equity in Hard Money
When purchasing commercial real estate property, hard money lenders, such as Avatar Financial Group, can generally lend with the following parameters:
- 65% Avatar Loan
- 20% Borrower Equity
- 15% Additional Equity or 2nd lien loan, such as a seller carryback
Borrower's equity is a crucial part of this equation. It is importnat that each party to the purchase have a stake in the project - especially the buyer. Hard money lenders want buyers to have at least 20% equity so that, in the event of a 'bump in the road', the buyer is encouraged to work things out. If a buyer has no equity in the project, the tendancy to drop off the keys is significantly higher. While the balance of equity from lenders can vary, the 20% borrower equiity is a standard.
Borrower equity can come in the form of cash, additional collateralized real estate, or stock in publicly traded companies, etc. For further information, contact Avatar at 888-886-0097.
