Hard Money Loan for Commercial Real Estate

Here is a market update on hard money loans for commercial real estate. The lenders are looking for borrowers with experience and good equity in the real estate they are looking to finance. It is important for the lender to understand how you will pay off their loan. Typically the hard money lenders are only loaning money for 6-12 months. The most common payoff for the lender is debt refinance.

Fees range from one lender to the next. Fees also range based on the type of commercial real estate being offered. Long term interest rates and the loan to value on the collateral also vary just as the fees do. Here is a general spread of what to expect.

Origination fee can be as little as 4% and as high as 12%.

Long term interest rate will range from an 8% low to a 22% high.

Loan to value will range from a 50% low to a 80% high.

Second lien positions could be an option but are not guaranteed.

Raw land is extremely difficult to get financed; however, I have had two deals go through in the last year.

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