Monday, January 29, 2007

Real Estate Loans - New Source

Just had lunch with two colleagues in the real estate mortgage business - they wanted to tell me about some new private funding resources for real estate loans that they could make available to my clients. Let me share with you a quick summary about the products they have to offer.

One product is a "soft-money" mortgage focused on the California market that is historically served by "hard-money" lenders. This private money product provides first trust deeds only on most real estate types including residential, apartments, commercial, industrial, special purpose properties and entitled land. Loan amounts range from $500 thousand to $10 million (larger on an exception basis). Advance rates for these bridge loans (up to 18 months) range from 50% to a maximum of 75% which varies by property type. Interest rates for improved property are currently 9.90% and many of these deals can close in a week or less.

Their newest private money offering for real estate mortgage business allows them to finance properties outside of the California market as well as un-entitled land, hotels, condo conversions, and construction loans. While the interest rates will be a bit higher, I expect this private money offering to be very competitive when compared to traditional "hard money" loans. Besides, this money is also intended to be a "bridge" loan - hopefully, it is replaced with a more cost effective solution within a year or two. By the way, this private money source will provide second trust deed financing for the same property types.

Need help finding the right lender for your bridge loan? Read "Matchmaking for Business Loans" and give me a call!

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