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Hard Money Lending: the new game in town
As I’m sure you have heard conventional lenders are not lending to most borrowers for various reasons. To get a conventional loan borrowers have to jump through many more hoops for a very straightforward loan. If a borrower cannot fully show their income there is no hope with a conventional lender. For example if someone were self employed they can almost forget a conventional loan. What is a borrower to do that is financially capable of a loan?
Hard Money Lenders:
Hard Money lenders are no longer the lenders of last resort. They are one of the few groups with cash available to lend. A hard money lender, since they are typically not banks, has the capability to do loans that conventional lenders no longer can fund.
How is Fairview different than other hard money lenders?
Hard Money lending is the wild west of lending. It is largely unregulated so borrowers & brokers need to beware. Many hard money lenders charge up front fees and basically make a large portion of their profit on these fees. Fairview is different; Fairview never charges upfront fees or other due diligence fees prior to loan commitment. Fairview strictly lends its own money so when you call you talk directly to the lender.
How can I learn more about hard money lending?
Fairview has multiple websites with an abundance of information on hard money loans and hard money lenders:
www.fairviewlending.com : General information on hard money lenders; hard money questions, and hard money information
www.cohardmoney.com: Denver Colorado hard money lenders
www.georgiahardmoney.com: Atlanta Georgia hard money lenders
Hard Money Lenders
I am commonly asked how does a borrower go about selecting a hard money lender? This can be a tricky task in today’s economy. There are many folks on the internet claiming to be hard money lenders that are actually brokers or loan arrangers. The questions to ask are as follows:
1) Do you fund with your own capital? Fairview strictly lends its own money
2) Are there upfront fees? Fairview does not charge any fees prior to commitment
3) Have there been complaints against the lender? Google the lenders name and see what comes up, look at various message boards, etc…
4) Does the lender actually fund loans? Talk with the lender and ask them about their recent fundings
5) Can you talk with the decision makers? Fairview makes all decisions in house and performs its own property inspections
6) Does the deal sound too good to be true? Do you for example have a 580 credit and a lender offering you a 3% non-recourse loan?
Fairview Lending is a direct hard money lender. There are no upfront fees or games. We strictly lend our own money and close loans quickly. More information can be found at www.fairviewlending.com. For Denver and Colorado hard money: www.cohardmoney.com for Atlanta hard money www.Georgiahardmoney.com
Do you know your loan broker?
There was an interesting article in the Wall Street Journal (www.wsj.com ) regarding mortgage brokers / Loan arrangers. In this article the author discussed a drastic rise in the fees that borrowers were being taken for without actually getting a loan. Within the lending industry this is a huge problem where a handful or lenders, brokers, loan arrangers, etc… promise the moon to folks and take their money without producing results.
Fortunately Fairview is different. Fairview is a direct hard money lender that funds its own loans, underwrites its own loans, and services the closed loan. There are no upfront fees for Fairview to evaluate a loan and let the borrower/broker know whether the transaction will fit into our hard money lending guidelines.
As a borrower, how do you protect yourself? First Google the broker/loan arranger/lender to see what comes up (i.e. lawsuits, negative postings, etc…). Second, call the lender directly to ask about their programs. Finally, if a transaction smells to good (borrower has a 500 credit and is promised a 3% interest rate) then it likely is too good to be true.
Fairview Commercial Lending is a direct hard money / private money lender. We have offices in Georgia (www.georgiahardmoney.com) as well as in Colorado (www.cohardmoney.com). We never charge any upfront fees and guarantee an honest answer quickly. Fairview also services loans for both our own portfolio and others (www.fairviewservicing.com) and can be reached at 404.634.1270 or http://www.fairviewlending.com/contact.htm
Chicago Hard Money: Recent Transactions
Fairview is still lending on all of your Chicago Hard Money loans. Below are some recently funded Chicago Hard money transactions.
1) Lyons Hard Money: Light Industrial
· Borrower owned property free and clear
· Borrower needed quick cash for working capital
· Borrower self employed and needed to tap equity in property
2) Batavia hard money Light Industrial
· Borrower needed cash quick
· Borrower self employed and lived out of state
· Borrower’s credit below 550
3) Countryside hard money warehouse
· Borrower’s business not operating to fullest potential
· Borrower had a free standing commercial property that his business occupied
· Borrower’s credit impaired and borrower had a number of outstanding credit card bills that needed to be resolved
Fairview is a direct lender funding hard money loans in both Chicago and throughout the Chicago metro area. We can fund commercial properties both in Chicago and throughout the suburbs of Chicago. We have funded hundreds of Chicago hard money transactions and look forward to funding your next Chicago hard money transaction. We are experts in the various markets and submarkets throughout the Chicago metro area including, Oak Park, Oak Brook, Lyons, Batavia, Countryside and everywhere in between. We are experts in Chicago hard money and look forward to handling all of your Chicago Hard money needs. Call us today at 303.459.6061 to discuss your Chicago hard money transaction. Also please visit: www.fairviewlending.com for more details on our programs.
Chicago Hard Money: Alternative financing
Has your bank called your loan? Have you been turned down for a real estate loan? Are you in need of cash for working capital? Are you tired of jumping through the hoops of a bank? Are you frustrated with upfront fees? Are you sick of getting the run around from your lender?
If you answered yes to any of the questions above, Fairview can help. We are a direct lender with no upfront fees. We have closed hundreds of hard money loans in Chicago and can provide an honest answer fast. Call your direct Chicago hard money lender today to discuss your transaction and get your loan closed fast.
Fairview is a direct lender funding hard money loans in both Chicago and throughout the Chicago metro area. We can fund commercial properties both in Chicago and throughout the suburbs of Chicago. We have funded hundreds of Chicago hard money transactions and look forward to funding your next Chicago hard money transaction. We are experts in the various markets and submarkets throughout the Chicago metro area including, Oak Park, Oak Brook, Lyons, Batavia, Countryside and everywhere in between. We are experts in Chicago hard money and look forward to handling all of your Chicago Hard money needs. Call us today at 303.459.6061 to discuss your Chicago hard money transaction. Also please visit: www.fairviewlending.com for more details on our programs.
Colorado Hard Money recent closings (www.coloradohardmoney.com)
Fairview is pleased to announce the closings of the following hard money deals in Colorado
1) Fort Collins hard money non-owner single family (SFR) cash out refinance
· Borrower owned property free and clear
· Borrower had low scores since he did not use credit
· Borrower self employed and needed to tap equity in a rental home for working capital
2) Boulder hard money non-owner single family (SFR) cash out refinance
· Borrower needed cash quick
· Borrower self employed and lived out of state
· Borrower’s credit below 550
3) Colorado Springs, Colorado hard money commercial cash out refinance
· Borrower needed cash quick
· Borrower had a free standing commercial property that his business occupied
· Borrower’s credit impaired and borrower had a number of outstanding credit card bills that needed to be resolved
In the month of March and now April; there are no inspection/appraisal fees: http://cohardmoney.com/press/co_hard_money.html
Fairview is a direct lender funding hard money loans in both Denver and throughout the state of Colorado. Above are just three of the many recent Colorado hard money fundings. We can fund both non-owner single family homes as well as commercial properties both in Denver and throughout the state of CO. We have funded hundreds of Denver hard money transactions and look forward to funding your next Colorado hard money transaction. We are experts in the various markets and submarkets throughout the state of Colorado including Denver, Fort Collins, Colorado Springs, Front Range, mountain towns, Breckenridge, Aspen, Vail, Steamboat, roaring fork valley, and everywhere in between. We have a local office in Denver Colorado to handle all of your Colorado Hard money needs. Call us today at 303 459 6061 to discuss your Colorado hard money transaction. Also please visit: www.cohardmoney.com for more details on our programs.
Atlanta Hard Money: inspection/appraisal fees waived in March (www.GeorgiaHardmoney.com)
Fairview is pleased to announce that all inspection/appraisal fees in Atlanta are free in March
Many Atlanta Hard Money lenders charge inspection/appraisal fees. These fees can run from $500-$5,000 dollars. Fairview is in the business of actually closing Atlanta hard money loans as opposed to other lenders that are more interested in collecting fees as than actually closing loans. Fairview is waiving all inspection/appraisal fees the month of March in Atlanta. Fairview’s process is simple; fill out our one page application online (www.GeorgiaHardmoney.com) and Fairview will call/e-mail to discuss your transaction. During the month of March all inspections/appraisals are free so the borrower has nothing to lose. Call Atlanta’s leading hard money lender today to discuss your specific transaction (404.634.1270).
Fairview is a direct lender funding hard money loans in both Atlanta and throughout the Atlanta metro area. We can fund both non-owner single family homes as well as commercial properties both in Atlanta and throughout the suburbs of Atlanta. We have funded hundreds of Atlanta hard money transactions and look forward to funding your next Atlanta hard money transaction. We are experts in the various markets and submarkets throughout the state of Georgia including Atlanta, Dunwoody, Sandy Springs, Druid Hills, Decatur, Marietta, and everywhere in between. We have a local office in Atlanta, Georgia to handle all of your Atlanta Hard money needs. Call us today at (404) 634 1270 to discuss your Atlanta hard money transaction. Also please visit: www.georgiahardmoney.com for more details on our programs.
Colorado Hard Money: inspection/appraisal fees waived in March (www.cohardmoney.com)
Fairview is pleased to announce that all inspection/appraisal fees in Denver are free in March
Many Denver Hard Money lenders charge inspection/appraisal fees. These fees can run from $500-$5,000 dollars. Fairview is in the business of actually closing Denver hard money loans as opposed to other lenders that are more interested in collecting fees than actually closing loans. Fairview is waiving all inspection/appraisal fees the month of March in Denver. Fairview’s process is simple; fill out our one page application online (www.cohardmoney.com) and Fairview will call/e-mail to discuss your transaction. During the month of March all inspections/appraisals are free so the borrower has nothing to lose. Call Denver’s leading hard money lender today to discuss your specific transaction (303.459.6061).
Fairview is a direct lender funding hard money loans in both Denver and throughout the state of Colorado. We can fund both non-owner single family homes as well as commercial properties both in Denver and throughout the state of CO. We have funded hundreds of Colorado hard money transactions and look forward to funding your next Colorado hard money transaction. We are experts in the various markets and submarkets throughout the state of Colorado including Denver, Fort Collins, Colorado Springs, Front Range, mountain towns, Breckenridge, Aspen, Vail, Steamboat, roaring fork valley, and everywhere in between. We have a local office in Denver Colorado to handle all of your Colorado Hard money needs. Call us today at 303 459 6061 to discuss your Colorado hard money transaction. We are the leader in Denver hard money transactions. Also please visit: www.cohardmoney.com for more details on our programs.
TIC-tenant in common
There have been many articles recently on TICs. First, what is a tenant in common (TIC)? A TIC is a tax structure that allows investors to pool their funds with other investors to purchase real estate. For example if I had 20k that I got from selling a commercial property. I could take these funds to a TIC and purchase a share of a commercial property. For example 35 or 40 investors might purchase a shopping center in Phoenix. By rolling your money into another like property (1031 exchange), the investor can avoid paying capital gains taxes. This all sounds nice and like a great idea except there are major risks that are not fully apparent.
According to a WSJ article (www.wsj.com ) DBSI (http://blog.dbsi.com/ ) recently filed for bankruptcy protection. DBSI was one of the largest TIC providers in the country. My theory for what brought DBSI down is as follows. The theory is true for most TICs that I have evaluated. Most small individual real estate investors are fairly unsophisticated. They have little experience in valuing large commercial properties (cap rates, average vacancy rates, leas-up rates, etc…) and therefore they relied on the expertise of the TICs for valuation and management of their investment. About six months ago we were approached to finance a TIC investment on a shopping center in Georgia. The fundamental assumptions were flawed. The TIC provider sold partial interests to investors all over the country. The property was valued on a 6% cap for a class A/B retail in a nice area of Atlanta. The trouble occurs because the property was purchased on a 6 cap, as opposed to a 7.5 or 8% cap. This cap rate continues rising which means the value of the property is less than what the investors originally paid for it.
As the economy shrinks, tenants begin to renegotiate their leases (or move out like circuit city did of many locations). This further deteriorates the value of the property. At the same time the small TIC investors get restless, the property is managed by a consensus vote of all 35-40 investors in that particular transaction. Imagine trying to get 35+ people who all have different motives, risk tolerance, etc… on the same page to make a unanimous decision. This decision making further deteriorates the value of the property since decisions are very slow and can seem erratic.
It will be interesting to see how other TICs fare in this economy. If I were investing my money in real-estate, I would think twice about utilizing a TIC.
For more information on commercial lending valuation,
please see: http://www.fairviewlending.com/underwriting.htm#4 as well as my recent blog on cap rates:
I am frequently asked about capitalization rates (Cap Rates). The questions range from what is a Cap Rate, how is it determined, and which direction the cap rate is moving.
1. What is Cap Rate?
This is the rate of return that a reasonable investor would expect to receive as a result of their investment
.2. What Cap Rate do you utilize when valuing a property?
Each property and market is unique. There is no blanket cap rate used in our underwriting.
3. How is cap rate utilized?
The cap rate is utilized in underwriting to determine the value of the property based on the income approach.
4. What is the formula to calculate value based on the income approach?
One method to determine the value of the property is to take the net operating income/cap rate.
Cap rates are rapidly changing in today’s market. Various factors go into determining the cap rate (vacancy, market conditions, expectations on future inflation and interest rates, property condition, property location, etc…). The value of the property moves in inverse to the cap rate; the higher the cap rate, the lower the value and vice versa. In today’s market, I have been seeing cap rates rising by a couple hundred basis points. For example a small retail center 12 months ago might have been trading on a 7 cap; that same property today is likely trading closer to a 9 cap. As a result the value of the property has declined and lenders will likely lend less on the property today due to its decrease in value. More information on cap rates can be found at http://www.fairviewlending.com/underwriting.htm#4 or on our resources page http://www.fairviewlending.com/resources.htm .Contact us at info(at)fairviewlending.com if you have questions about small balance commercial lending, hard money lending, or private commercial lending. Fairview is the expert in all of these areas.