Wednesday, August 27, 2008

Hedge Funds Providing Real Estate Bridge Loans

With fewer banks making commercial real estate loans due to the credit crunch, hedge funds are becoming increasingly willing to fill the gap by providing commercial real estate bridge loans.

In today's The Wall Street Journal (subscription required), it is reported that as many as 140 hedge funds are actively pursuing providing "hard money" loans at rates ranging from 10% to 20%.

Not only borrowers with bad credit or tough deals are using these bridge loans which typically mature in under two years. Borrowers with good credit are using bridge loans to close deals much faster than commercial banks can fund.

I am also seeing more requests these days for commercial real estate bridge loans. Lately, I've seen requests for private money loans to fund the acquisition of gas stations, to refinance an automobile dealership, to refinance a single purpose property and to re-finance a construction loan for an office building.

As I have previously mentioned, I'm working with one private money, bridge lender whose rates currently range from 8.5% to 10.0% (before points) for bridge loans secured by commercial real estate in California of all property types. The lender is able to fund loans of up to $50 million and is willing to consider properties in other western states.

Need help finding the right lender or telling your story the right way? Read "Matchmaking for Business Loans" and give me a call!

Tags : commercial real estate , hard money loans , bridge loans , private money loans , hedge funds , California

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