As the name suggests, a commercial hard money loan is finance used for short-term solutions, including property flipping. Those searching for a commercial hard money loan will use the property as leverage on the loan, although there can be instances when other assets are considered. Unlike other types of finance, commercial hard money loans are issued quickly, especially compared to conventional financing from banks.
Factors to Consider When Applying for Hard Money Loans in Massachusetts
When searching online for a commercial hard money loans Massachusetts, it’s not unusual to find hundreds of options. Although a commercial hard money loan can be a viable form of financing, some factors need to be considered before making an application.
Properties Cannot Be Lived in By Owners or Family Members
Although those already involved in property investment will know the rules regarding commercial hard money loans in MA, those refurbishing a commercial property for the first time may be looking for some form of guidance regarding occupancy.
Because of the nature of the loan, it is classed as non-owner occupied. This means a commercial hard money loan can only be used for buildings that will be rented or resold commercially.
Interest Rates Can Be Excessive with Some Providers
Interest rates can be higher when using a hard money loan, but this doesn’t mean those searching for a short-term solution should pay more interest than they need to. Carrying out some research regarding the options available can make a lot of difference when making a return on a refurbished property, especially if investors are receiving advice as well as capital.
Missing or Late Payments Could Become Expensive or Lead to Default
The reason commercial hard money loans are popular among those in the real estate sector is that they offer fast access to finance to carry out repairs and renovations on a property. However, it is important to note the short-term nature of the loan.
Despite the higher interest rate, commercial hard money loans still offer great value for money, but it is important to ensure that repayments can be made at the right time. Late payments could mean the loan becomes more expensive, especially if the underwriting is incorrect.
Fortunately, using the right lender will ensure that advice is given as part of the service. Although some businesses offer financing with little understanding of the industry, others will offer solutions designed with property flipping in mind.
Not Every Lender Provides the Same Service
Understandably, those applying for a hard money loan in MA may assume all lenders operate in the same, but this is not the case. There can be instances when limits are put in place regarding the Loan to Value (LVR) ratio and After Repair Value (ARV). Some lenders may only offer a loan based on the current value of the property, while others will offer finance based on the value of the property after refurbishment. Of course, there is an element of risk associated with any investment, but dealing with a professional lender ensures those renovating a property are primed for success.
The Benefits of Commercial Hard Money Loans
Despite the many financing options available, not every type of capital is accessible. As with any type of finance, a commercial hard money load must be used in the right way. However, those keen on a fast and flexible form of finance can expect the following benefits when using the right lender.
Flexible Terms and Rates
Although some finance options may not be a good fit for a business, the choice available means there are plenty of opportunities to access fantastic rates and terms that align with the goal of the investor.
History Need Not Be a Hindrance
In life, there are times when things don’t go according to plan. Those who operate in the real estate sector can testify to this. Fortunately, just because things didn’t go as planned in the past doesn’t mean your future house flipping potential has to be hindered. Of course, there will be some companies that are unwilling to accept those who have credit problems or are self-employed. However, there are just as many lenders that understand that things can go wrong and work with clients to help them achieve their goals. Applying for loans when self-employed or bankrupt can be time-consuming and disheartening, but the unique approach taken by lenders offering commercial hard money loans ensures a solution is available regarding finance for repairs.
Fast Funding Means Closing is Quick
Banks can take up to 30 days to process a loan, so it’s understandable why some loans don’t align with the requirements of real estate investors. Finding the perfect property is the goal of many house flippers, but using conventional lending methods can make purchasing a property difficult. Those who apply for a commercial hard money loan can expect funds to clear within 10 days or less, making them perfect for real estate investments that involve refurbishments.
Find Commercial Properties Without Delay
As well as aiding the completion of projects, fast access to capital can also mean that finding properties to renovate can also be carried out quickly. When investing in real estate, there is nothing more frustrating than finding the perfect property, only to find it’s no longer available. The fast processing of commercial hard money loans in Massachusetts ensures a successful return-on-investment, especially when purchasing desirable properties quickly.
Choosing the Best Lender for Commercial Hard Money Loan in Massachusetts
Given the factors that need to be considered when searching for a hard money loan, it is understandable that those wanting to invest in real estate will need a lender that can meet the requirements and help them achieve a healthy return-on-investment and secure properties quickly. BridgeWell Capital is one of the most trusted lenders in America, and with some of the lowest rates in the industry, it isn’t difficult to understand why. Besides fast hard money financing, those who use BridgeWell Capital can also benefit from a professional investment coach to ensure that investments are successful.