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raw land development can be a rewarding experience for real estate developers

What to Know When You’re Developing Raw Land

June 26, 2021/in Blog /by Bruce Kent

Are you thinking of developing your raw land into a profitable property?

Whether you’re a home buyer or a novice real estate developer, raw land development can be a challenging but rewarding process.

Here are some things that you need to know before developing raw land into a profitable asset.

Have The Right Plan

Before you begin working on your development plan, know what you intend to do with the completed building structure.

Will you be selling this property to make a profit? Will you turn it into a rental for tenants, or will you use it for your own use?

Rentals, selling properties, and personal properties all come with different features. Custom features like a converted garage might work for you, but it might not appeal to a prospective homebuyer.

This is why it’s crucial to draw up a construction plan that aligns with your future goals and intentions.

Raw Land Development Takes Time

While buying raw land and developing it is definitely cheaper than a pre-made hot property, it also has a few downsides.

Raw land developers need to have a lot of patience to work through the property development and appreciation phase. Your contractor might cap the construction duration at 12 months, but inconsistencies such as bad weather, lack of funds and labor can stretch the process.

a construction loan can help expedite the construction process

You must take out a construction loan to expedite the construction process and tackle any financial obligations that come in your way.

Know Your Zones

Before you begin drafting a real estate development plan, ensure that you know your zones.

Zoning codes determine the types of properties that can be constructed within a zone. For instance, you cannot get approved to build a residential home within a commercial real estate zone!

Knowing your jurisdiction’s zoning and building codes will ensure that you cut down on any potential fines or don’t face any permit rejections from the government authorities. Moreover, it’ll ensure that your development process rolls out smoothly and without any hurdles!

Work With Credible Professionals

Whether it comes to working with contractors, builders, or a private money lending firm, know that you’re partnering with the right people.

Research your contractors, sub-contractors, or home-builders that you need to work with. Get reviews and referrals from your friends, colleagues, and family members to ensure you have the right team for the developing job!

Similarly, ensure that you’re taking out a construction loan from a reliable and credible lender. An experienced lender will create flexible loan terms for you and ensure that your raw land develops into the property of your dreams!

Partner with Commercial Private Equity to Develop your Raw Land

We know that the lack of funds can further stretch your property development process. But with Commercial Private Equity, our clients can rest assured that their raw land development will go according to their scheduled plans!

We extend hard money loans to finance raw land purchases and construction loans to facilitate the real estate development process.

Head to our website to get more details about our construction loan program in the United States.

https://commercialprivateequity.com/wp-content/uploads/raw-land-development-can-be-a-rewarding-experience-for-real-estate-developers.jpg 416 624 Bruce Kent https://commercialprivateequity.com/wp-content/uploads/Commercial-Private-Equity-Logo-2.png Bruce Kent2021-06-26 12:39:592021-07-07 10:34:00What to Know When You’re Developing Raw Land
non-recourse loans are high-risk investment for lenders

All You Need to Know About Non-Recourse Loans?

June 25, 2021/in Blog /by Bruce Kent

Should you opt for a recourse loan, or would a non-recourse loan be the best bet for your real estate investment?

Before you consult your lending firm representatives and sign up for either one of these loans, know the difference between a recourse loan and a non-recourse loan.

This blog breaks down non-recourse loans, how they work, and if they’re the right financing option for your commercial real estate venture. Take a look!

Non-Recourse Loan: What is it?

Just like a recourse loan or a hard money loan, non-recourse loans are also backed with assets or collateral. If the borrower fails to repay the loan amount on time, the lender or the lending firm has the right to seize the property and recoup their losses from the collateral’s resale.

non-recourse loans are ideal for commercial real estate ventures

However, it’s important to note that non-course loans permit the lender to seize just the collateral and not any other asset.

What does this mean?

If a borrower cannot close the loan or defaults, the lending firm will get the right to bank the collateral’s value and resell it. However, if there’s a market crash and the collateral sells for less than its anticipated value, the lender does not have the right to seize other assets to recover their losses.

Non-Recourse Loan: How does it work?

Consider you’re a homebuyer who has set their heart on a property valued at $400,000. After you’ve put a down payment of $50,000, you need a lender to lend you $350,000.

Unfortunately, you weren’t able to repay your loan on time and defaulted at $275,000. The lender will have to foreclose the collateral and put it up for sale to retrieve the outstanding debt amount.

However, the real estate market is witnessing a downward trend, and the collateral doesn’t bring in more than $250,000 in sale value. In a non-recourse loan, the lender or the bank will bear the costs of the outstanding debt of $25,000, and doesn’t have the right to foreclose the borrower’s other assets.

What Sets it Apart From a Recourse Loan?

If both recourse and non-recourse loans are backed by collateral, where does the difference lie?

With a recourse loan, the bank, credit union, or the private lender can all resort to the borrower’s other assets. This means that they can go after any other property, cars, or valuables that the borrowers might have on their name, seize them, and sell them to recover their losses.

Recourse loans are more preferred by private lending firms and banks as they protect the lenders. Moreover, recourse loans are designed to reduce risks for the lender, which is why they come with lower interest rates for the borrower.

On the other, non-recourse loans are designed to favor the borrower. This is why they come bearing high risks, and ultimately, high-interest rates. If a borrower can’t repay their loan amount and their interest, the lender has no other option but to make do with the collateral and pay for additional debts on their own.

Who Should Apply For a Non-Recourse Loan?

Since non-recourse loans come with favorable terms for the borrowers, they are often used in commercial real estate transactions. The land or the undeveloped property acts as collateral, and its anticipated resale value can get borrowers approved for the non-recourse loan.

non-recourse loans come with high interest rates

Moreover, commercial properties often come with high resale values. This can help reduce the risk for the investors and incline them to extend non-recourse loans to successful property flippers and real estate developers.

How To Qualify For a Non-Recourse Loan?

Since non-recourse loans put the lenders at high risk, they’re offered by just a handful of banks, credit unions, and private lenders. If you live in one of the 12 non-recourse states or have found a lender who’s willing to extend a non-recourse loan, here’s how you can get it approved.

lenders review the borrower's credit history and credit score for a non-recourse loan

Low Debt-To-Income Ratio

A high debt-to-income ratio might put off the underwriters from approving your non-recourse loan.

To ensure that you qualify for the non-recourse loan, try to maintain a low and steady DTI. This leads to a financial picture that you’re apt at managing and paying off your debts with your fixed income source.

To improve your chances of getting approved for a non-recourse loan, try to lower your DTI by paying off outstanding debts and increasing your sources of income.

Have a High-Value Collateral

Collaterals are presented to lower risk for the lender and improve loan terms for borrowers.

With high-value collateral, the lender might be more inclined to extend a non-recourse loan, lower interest rates for the borrowers, and give them more leeway for the loan amount.

Good Credit Score Counts

Your credit score depicts your creditworthiness; the higher it is, the better your loan landing prospects.

Lenders are always inclined to extend loans to borrowers that have high credit scores, unblemished financial histories, and credit reports. To get approved for a non-recourse loan, pay your debts on time, avoid maxing out on your credit limit, and dispute any errors on your credit report.

Pay High-Interest Rates

If you’re willing to pay high-interest rates for the entire loan duration, then lenders might just approve you for a non-recourse loan.

These high-interest rates help the lenders lower their risks. However, if you pair these already high interest rates with a low down payment, shorter loan duration, and a consistently poor credit score, expect to pay exorbitantly high-interest rates!

Work with a leading private money lending firm in the United States.

A private lending firm such as Commercial Private Equity can help you secure a hard money loan for your real estate transaction.

Our representatives will guide you through the loan application process, our company policies, and our requirements to get approval.

Moreover, our private lending firm offers low-interest rates and low LTV ratio loans, and customizable financing solutions for our clients.

Get in touch with us to learn more about our hard money loans, construction loans, and commercial bridge loan services all across the United States.

https://commercialprivateequity.com/wp-content/uploads/non-recourse-loans-are-high-risk-investment-for-lenders.jpg 416 624 Bruce Kent https://commercialprivateequity.com/wp-content/uploads/Commercial-Private-Equity-Logo-2.png Bruce Kent2021-06-25 13:38:492021-06-25 13:39:45All You Need to Know About Non-Recourse Loans?
man filling out a hard money loan application

Here’s How to Get Approved For a Hard Money Loan

June 23, 2021/in Blog /by Bruce Kent

Hard money loans can help you bridge the gap between an ongoing real estate transaction and a long-term financing solution.

While getting approved for a hard money loan is relatively easier than applying to a bank or a credit union, certain factors can derail your chances of securing a hard money loan.

We’ve come up with some practical ways that’ll help you secure a hard money loan for your next real estate transaction.

Showcase your Success

Since hard money loans and bridge loans are high-risk investments for private lenders, they’ll always prefer to lend to a successful house flipper or developer.

To stand out from the hard money applicants’ crowd, you must show your successful history of developing real estate property or flipping houses.

Let the underwriters know how long you have been in the business, how many real estate deals you’ve closed, and successfully negotiated a high resale value for the flipped property. A peek into your successful real estate career will assure the private investors of your ability to repay the loan.

Set a High-Value Collateral

If there’s one thing that could get you a stamp of approval from the underwriter, it’s high-value collateral.

In hard money loans, credit scores are replaced with high-value collateral. Since hard money loans come with high risks for the lenders, they want to know the value of your collateral against which you’re applying for a loan.

hard money loans are short-term, asset-backed loans

It acts as a form of protection for lenders. In case borrowers default on their loan repayments, the lenders can move ahead, seize the collateral, and sell it to recover their losses. Therefore, we recommend that you list the current value of your collateral property and its anticipated resale value (ARV). Collaterals with high ARVs make for a profitable deal for the lenders, and can get you instantly approved for the loan.

Make a Hefty Down Payment

Think the down payment doesn’t have much say in your loan approval process? Think again!

A large down payment, more than 20%, assures the property seller that you’re seriously interested in the property; it conveys a similar message to your lenders.

A hefty down payment means that you’re paying a larger percentage of the home’s value, thereby making it low-risk for the investor.

Moreover, it assures the lender that they’ll need to finance the remaining 80% or less of the property’s value. Setting a large down payment would ensure that you get a low LTV ratio, smaller loan amount, fewer monthly payments, and reduced risks for both the investor and yourself; a complete win-win situation for everyone!

Your Repayment Strategy is Just as Important

A carefully crafted repayment strategy might just win you the seal of approval!

While most borrowers are focused on getting the approval process right, they tend to forget the most crucial part of the loan process; the repayment strategy.

Hard money loans are suitable for real estate developers and investors

Before you apply for that hard money loan:

  • Consider crunching your numbers.
  • Review your income, current liabilities, the loan amount you need, and the interest rates you’ll need to pay.
  • Devise a straightforward plan on repaying your loans on time.

Moreover, your exit strategy is the one thing that can make you fit for a hard money loan. Tell the lenders how do you plan to repay the loan at the end of the loan period.

Will you be selling the high-value flipped property? Or will you sign up for another long-term refinancing plan?

These details will convey the right message to the lender, and they might just approve your loan application!

Seek Referrals

If you need to find the best private money lenders for your hard money needs, try to build connections with real estate industry professionals. Professionals like real estate agents, investors, property developers, and construction companies can help you connect with some of the leading private lending firms.

Real estate networking events can help borrowers get hard money lender referrals

Moreover, their referrals will help you navigate through the different private lenders, their firms’ policies, and details about their turnaround rates.

You could always seek help from outside the real estate industry. Friends, family members, acquaintances, and colleagues can refer you to reliable private money lenders that offer low-interest rates and have feasible loan terms. These referrals and suggestions will ensure that you opt for a credible and reliable hard money lender and have access to funds within just a few days.

Get in touch with Credible Private Money Lenders.

Before you settle on that one private money lender, it’s crucial that you meet up with various private lenders out there.

Get to learn more about their hard money application process, how long they have been in the industry, and how they can help reduce risks for your hard money loan.

Moreover, you can inquire about the company’s policies, the loan terms that they offer, and if they’re willing to create customizable financing solutions. Weighing in these factors can help you decide on a private money lender and help you ensure that you’re placing your trust in the right firm.

Remember, each of these private money lenders will come with different turnaround rates, approval rates, loan terms, and credibility.

Evaluating the time frame of your hard money loan, the loan terms, and the private lender’s reputation will help you choose the right lender for your hard money loan.

Consider Commercial Private Equity for a Hard Money Loan

If you need to make a down payment or close a real estate deal real quick, we can help you out.

At Commercial Private Equity, we have over 75 years of experience and have rescued thousands of real estate investors. Our clients don’t have to go through the hassle of improving credit histories and credit reports. With our asset back hard money loan policy, we offer low interest rates and low LTV ratios to help reduce the risk for our clients and our private lending firm.

Call us at 404-301-8633 or head to our website to get more details about our hard money loans, commercial bridge loans, and construction loans all across the United States.

https://commercialprivateequity.com/wp-content/uploads/man-filling-out-a-hard-money-loan-application.jpg 417 624 Bruce Kent https://commercialprivateequity.com/wp-content/uploads/Commercial-Private-Equity-Logo-2.png Bruce Kent2021-06-23 08:06:082021-06-21 08:16:22Here’s How to Get Approved For a Hard Money Loan
construction loans can cover the costs of house building and finishing

‘5’ Considerations When Building Your Dream House

June 22, 2021/in Blog /by Bruce Kent

You’re now a proud landowner and on your way to fulfilling your American dream; your own house!

But before you break the ground and start pouring the foundation, you need to take a few considerations into account!

We list some things that can help you build the house of your dreams, make it a rewarding experience for you, and cut down on any future regrets!

Location Considerations

Before you even buy the land, consider the location that it boasts of. Is the land located in a populated area? Or is it located on a not-so-popular site?

Does the land have access to all the basic amenities and facilities? Not having access to basic facilities such as the sewage system, gas, and electricity grids can delay your plans of building a home.

If your land has access to all the required amenities and is surrounded by a developed infrastructure, we suggest you meet up with your builder right away!

Research Contractors

Your contractor will be tasked with the responsibility of supervising sub-contractors. Make sure that you opt for a reliable and competent contractor who can get the job done.

Ask around for referrals and read contractor reviews online. Once you find the perfect contractor, avoid paying a hefty advance even before the construction phase has begun. This simple consideration can protect you from scammers and ensure that your house plan is in the right hands!

Don’t Forget the Zoning Codes!

When it comes to designing your house plan, don’t forget to consider the government regulations!

Draw up a construction plan that’s in line with your jurisdiction’s zoning and building codes. While zoning codes dictate the property development standards in a zone, the building codes are meant to deal with the safety and technical aspects of the building structure itself.

To avoid derailing your project or getting hefty fines, ensure that you work out a house plan that considers your jurisdiction’s zoning and building codes.

Work out a budget

Now that your construction plan has been approved and a contractor has been secured, it’s time to work on the budget. Make a checklist of all the materials and items that will be required to build your home. From labor expenses to material costs, list each and everything in your budget.

Apart from the building budget, you’ll need to work out a furnishing and a finishing budget to turn your dream house into a reality. The average house can cost anywhere between $155-$200 per square foot or even more if you’re opting for a more luxurious home design.

construction loans can help develop raw land into high value property

Consider applying for a construction loan with a reliable private lending firm such as Commercial Private Equity. Make sure you list the required budget, attach your construction plan, and get an appraisal to improve your prospects of securing a loan.

Think Ahead

You never know what the future holds! It’s safe to design a space that’s ready to accommodate your expanding family or tenants for a rental or makes for the most eligible house for sale on the block. To design such a home, you’ll need to get in touch with a real estate agent and discuss your plan of selling or renting out your space.

A real estate agent can help you plan your construction so that it’s more appealing to potential homebuyers. Functional kitchen and bathroom spaces, more storage areas, and spacious floor plans are some things that you can consider before laying the foundations of your house.

Commercial Private Equity can help build the house of your dreams!

At our private lending firm, we facilitate our clients by extending our hard money and construction loans. Whether you’re purchasing raw land, seeking permits, or have started to work on your house’s foundation, our loan programs can help you design and build your own home from scratch.

Head to our website to learn all about our short-term commercial and construction loans and ensure that your dream house becomes a reality!

https://commercialprivateequity.com/wp-content/uploads/construction-loans-can-cover-the-costs-of-house-building-and-finishing.jpg 482 321 Bruce Kent https://commercialprivateequity.com/wp-content/uploads/Commercial-Private-Equity-Logo-2.png Bruce Kent2021-06-22 08:01:562021-06-21 08:05:29‘5’ Considerations When Building Your Dream House
raw land can be developed to earn massive profits

Why You Should Consider Buying and Developing Raw Land

June 21, 2021/in Blog /by Bruce Kent

While you may not think much of raw land investment, it can open new income streams and become a lucrative investment for investors and home buyers alike.

Most investors are wary of investing in raw land because;

  1. a) it takes time for developing a property from scratch
  2. b) raw land might not seem that profitable

However, we delve deep into the benefits of purchasing raw land, developing or holding it, and making hundreds of thousands of dollars worth of profit with just a piece of land!

A highly affordable real estate investment

If you’re a new real estate investor or a first-time home buyer, the overly crowded real estate market and costly properties can overwhelm you. This is when you need to consider buying and developing raw land.

A developed property sitting on a piece of land would obviously cost you more. On the other hand, a similar parcel of land with similar dimensions can be bought for much less. If you have the finances to develop a property, you could always purchase raw land and seek a construction loan to build your own property.

Appreciates over time

The RLI-NAR survey reported over a 2% increase in residential, commercial, and recreational land sales during the Pandemic alone. This strong growth in land sales depicts investors’ interest in vacant pieces of land.

raw land value appreciates over time

But why?

Because just as developed property appreciates over time, so does raw land!

Even if landowners buy and hold a piece of land without developing it, they’ll always walk out of a transaction with more profit in their pockets!

Factors such as infrastructure development, economic changes, developing amenities, and local development make land more habitable. As the area’s popularity begins to rise, so does the land’s value!

Low holding costs

Not only is raw land less costly than developed properties, but it also features low holding costs!

If you plan to let the land sit and appreciate over time, you’ll only be required to pay an annual tax, some maintenance, or holding costs. If you don’t wish to develop the property just yet or intend to sell it in the future, you can let the land sit and increase in value without doing any hard work!

Carve your own path

A raw parcel of land acts just like a blank canvas. You can develop your property with your own construction plan while remaining within the zoning and building codes. You could always have a larger front yard, more space in the backyard, and choose finishing materials of your choice!

With a commercial piece of land, you can always partner up with a builder and build a commercial property that reflects your or is specifically made for a particular business.

Raw land lets landowners build their dream properties at their own pace!

Consider Commercial Private Equity for Raw Land Financing Solutions

While most traditional banks find a raw land investment riskier, Commercial Private Equity thinks otherwise!

At Commercial Private Equity, we ensure that our clients get to build commercial or residential property on the land of their choice. We extend hard money loans to finance the purchase of raw land, and our construction loans can help you build the property of your dreams on your own land.

Give us a call at 404-301-8633 to learn more about our customizable loan terms to finance raw land transactions all across the United States.

https://commercialprivateequity.com/wp-content/uploads/raw-land-can-be-developed-to-earn-massive-profits.jpg 468 624 Bruce Kent https://commercialprivateequity.com/wp-content/uploads/Commercial-Private-Equity-Logo-2.png Bruce Kent2021-06-21 07:51:552021-06-21 07:51:55Why You Should Consider Buying and Developing Raw Land
underwriters review hard money loan applications

What is Underwriting in Loans?

June 20, 2021/in Blog /by Bruce Kent

Whether you’re applying for a hard money loan, a home loan, or an auto loan, your application will be required to go through an underwriting process.

Not knowing what goes on in an underwriting process can actually ruin your chances of landing a hard money loan and throw your application in the rejected pile.

Here’s all that you need to know about the underwriting process, how it works, and how borrowers and applicants can swerve through the process effortlessly!

What is Underwriting?

Extending hard money loans can be a high-risk process for both borrowers and private money lenders. To ensure that the borrower won’t default on their payment and be able to pay high-interest rates throughout the repayment period, private money lenders hire underwriters to gauge the borrower’s creditworthiness.

Underwriters can either work manually or use an automated system to help them skim through the hundreds of loan applications and ensure that they’re approving the right applications.

With a streamlined underwriting process, private money lenders or banks know that they’re lowering their risks and working with borrowers who have a decent loan repayment history.

Underwriting: How does it work?

As you might have guessed from the looks of it, underwriting can be a tedious process. The underwriters need to evaluate each aspect of the applicant’s personal and financial information.

a female underwriter evaluating hard money loan applications

Underwriters might need to review financial statements, transactions, credit histories, credit scores, and even repayment histories. This ensures that the applicant is worthy of receiving the hard money loan and will carry out periodic repayments according to the loan terms.

Moreover, underwriters are required to go through an applicant’s income, assets, and financial liabilities to make the final decision.

Here’s all that underwriters need to evaluate before giving a nod of approval to the applicant.

Credit Scores Are Crucial

A good credit score can get you a stamp of approval within just a few hours!

When it comes to reviewing loan applications, underwriters take great care in evaluating credit scores. A poor score indicates that borrowers have been reckless in amassing loans and not repaying them on time.

private money lenders hire underwriters to review loan applications

On the other hand, a good credit score, preferably 730 or higher, assures the underwriter that your credits and loans are well managed and you’ve got a good relationship with lenders and credit unions.

Moreover, underwriters might also review the applicant’s credit reports. This is to ensure that there are no foreclosures or bankruptcies to the applicant’s name. These negative remarks indicate the borrower’s failure to repay the loan amount on time, which might get the applicant rejected.

Repayment History Matters

As you can tell, most underwriters are interested in a borrower’s previous financial history.

From their credit reports to their repayment history, underwriters are tasked to dig deep and find any inaccuracies in the borrower’s application. These underwriters take a keen interest in inquiring about the applicant’s debts and liabilities.

Their primary concern is to ensure that the applicants don’t have any outstanding debts or any other liabilities. This helps them evaluate the applicant’s current financial standing and if their finances and liabilities align with the lender’s policies.

The Source of Income

When it comes to approving an application, the underwriter ensures that the applicant has a steady source of income.

underwriters review the hard money loan applicant's income and their liabilities

Since most lenders have a specified salary limit for borrowers, underwriters need to ensure that the applicants fall within this limit to get approval. Similar to credit scores and repayment histories, this ensures that the borrower uses their income to make periodic repayments.

Evaluating Collaterals

Since most hard money loans and bridge loans are asset-backed, they require valuable collateral to be approved.

The underwriter will review the collateral, its value, and its anticipated value at the end of the loan period. It’s important to note that the collateral should have a higher value than the loan amount. This ensures that the collateral would be enough to recover the loan amount if a borrower defaults on the loan payment.

Underwriting: How long does it take?

Borrower applications are forwarded to underwriters within just a few hours. While these applications can take anywhere between a few hours or days to be reviewed, a complicated and flawed application might take a month to be evaluated and then approved.

How to Navigate Through the Underwriting Process?

An underwriter can reject a loan application. To avoid landing up in the rejected lot, here’s how borrowers can prepare for the underwriting process.

Address the Concerns

If you think that a loan or repayment might stop you from securing a new loan, address it.

Resolving loan repayments, improving credit scores, or paying a large down payment can actually brighten your chances of landing a hard money loan.

Take your Time to Fill out the Documents

We have said this before, and we’ll say it again: underwriting is a tedious process.

To make matters quick and easy for yourself and the underwriter, ensure that you’re filling out each document and adding all the required details. Moreover, ensure that you’re attaching financial statements and credit reports that the underwriter needs to review.

Avoid Fudging the Numbers

You might think that faking your financial records will help you sail through the underwriting process. Think again!

This manipulation can get your application rejected. Moreover, it can actually land you in legal trouble. Borrowers must always be transparent during the loan application process to avoid legal complications or denial from the underwriter’s end.

Find Hard Money Loans Underwritten 100% by Private Funds

At Commercial Private Equity, our application process is 100% underwritten by private funds. This helps expedite the loan approval process and ensures that our clients can access their loan funds within the given time frame.

Having been in the real estate industry for the last 75 years, Commercial Private Equity has mastered the art of underwriting hard money loans, commercial bridge loans, and construction loans. Our low-interest rates and our low LTV rations make us a client favorite and help lower the risks for both the customer and our firm.

Give us a call at 404-301-8633 to learn more about our hard money loans and commercial bridge loans.

https://commercialprivateequity.com/wp-content/uploads/underwriters-review-hard-money-loan-applications.jpg 416 624 Bruce Kent https://commercialprivateequity.com/wp-content/uploads/Commercial-Private-Equity-Logo-2.png Bruce Kent2021-06-20 13:38:282021-06-18 13:42:49What is Underwriting in Loans?
private money lenders offer short term loans to borrowers

Why Private Lenders Are a Better Option Than Most Banks

June 19, 2021/in Blog /by Bruce Kent

Do you have any other alternative to conventional bank loans?

Absolutely!

Private money lenders are just as effective at extending loans for real estate transactions and other financial obligations.

These lenders are easy to work with and offer tons of benefits to borrowers. We look at why private money lending firms are a better option than banks and how borrowers can benefit from their quick services.

What Are Private Money Lenders?

As shady as private money lenders might sound, these organizations are perfectly legal and preferred by millions of borrowers across the nation.

A private money lending firm is an organization or a group of investors that extend short-term loans to borrowers. Most of these loans are asset-backed and are extended for just a year or sometimes more than a year.

With a private money lender, borrowers can fill out loan applications and seek out high-value loans without any strict restrictions.

Private Money Lenders Vs. Banks—Which Is Better?

Even though private organizations or investors offer private money loans, they’re less strictly regulated than banks or traditional lending institutions.

private money loans are calculated according to the borrowers needs and collateral value

Private lending firms have to conform to usury laws and ensure they don’t charge high-interest rates from borrowers. These slight regulations place a check on private lending firms and ensure that borrowers are protected at all times.

Moreover, since private investors back these private money lending firms, borrowers don’t need to fit the requirements or guidelines as laid out by federally insured banks.

These private lending firm makes for a more convenient and accommodating financing option for most real estate agents and homebuyers. Here’s why.

Private Money Lenders Redefine Flexibility

Private money lenders can be more flexible than you might think!

These private lenders aren’t strictly regulated; they are insured by private investors and don’t require borrowers to comply with unbending guidelines. This gives them the leeway to create more flexible, more convenient loan terms for their clients.

Moreover, private money lenders aren’t federally insured, which is why they don’t set strict restrictions for their borrowers. Borrowers get a lot of elbow room to use these funds in whatever way they wish to and can’t be dictated by the lenders on spending these funds.

Credit Score Doesn’t Matter

Think you’ll need a sky-high credit score to get approved for a hard money loan? Absolutely not!

private money lenders don't require good credit scores or repayment records

When it comes to working with private money lenders, borrowers gain the advantage of skipping past the horrors of their financial history and seeking out a loan with a clean slate. Since private money lenders are almost always focused on the details of the collateral being offered against the loan application, these firms overlook any foreclosures, bankruptcies, and blemished repayment records.

Application Approval Process Made Uncomplicated 

You know it all too well; previous financial history and bankruptcies can step in the way of loan approvals and prevent you from gaining funds quickly.

But with a private money lending firm, borrowers can rest assured that the investors will not go digging their past financial records and their repayment histories.

All that a private money lending firm is interested in is the collateral value and down payments. With a high-value collateral asset and a hefty down payment, private money lenders can quickly process loan applications and approve the release of funds within just a few days!

This makes it an ideal financing option for seasoned real estate investors or homebuyers who can’t lose out on real estate deals and need to make that property down payment quickly.

Customizable Financing Options

While banks might not be able to offer custom loans to every borrower, private lending firms indeed can!

Since all banks are federally insured, they need to comply with federal rules and regulations. This is why most borrowers need to undergo tedious paperwork and background inspection to get approved for a bank loan.

private lending representatives can help create custom loan terms for clients

On the other hand, private money lenders skip past these technicalities and review loan applications within just a few days. Moreover, these private lending firms can work around the applicants’ requirements, evaluate collateral assets, and draw up loan terms that are feasible to the borrower and the lending firm.

Such custom financing solutions can help borrowers invest in real estate property, buy raw land, develop it, renovate properties, and even put down a downpayment for houses.

A Quicker Funds Approval Process

Since private money lenders aren’t trying to pry out a borrower’s previous financial history, their funds’ approval time is significantly reduced.

The lending firms can quickly review these loan applications, have a look at the borrowers’ needs and their financial obligations, and meet with them to create feasible loan terms that are convenient to both borrowers and lenders.

The Bottom Line

Hard money loans extended by private money lenders can come with high risks and interest rates. However, these private money lenders offer quick, easy, and short-term financing options to real estate investors and homebuyers. On the other hand, banks and credit unions need to review the borrower’s credit history and scrutinize their repayment history with a magnifying glass.

Such thorough financial inspection can cause clients to lose out on lucrative real estate deals. However, a private lending firm can step in, rescue borrowers, and ensure that they make that downpayment in due time.

Whether you’re a real estate investor or an interested home buyer, you can work with a private money lending firm to get the property of your dreams.

At Commercial Private Equity, clients can fill out our application forms, get in touch with our representatives and work out financing terms that align with their needs and conditions.

As a reliable private money lending firm in Atlanta, GA, Commercial Private Equity has made a name in the real estate industry. From offering commercial hard money loans to accommodating clients with our bridge loans, we’re a leading and trusted private money lender on the market!

Get in touch with us to learn more about our commercial hard money loans, bridge loans, and construction transactions.

https://commercialprivateequity.com/wp-content/uploads/private-money-lenders-offer-short-term-loans-to-borrowers.jpg 379 253 Bruce Kent https://commercialprivateequity.com/wp-content/uploads/Commercial-Private-Equity-Logo-2.png Bruce Kent2021-06-19 13:34:002021-06-18 13:37:58Why Private Lenders Are a Better Option Than Most Banks
hard money lenders can provide short term loans for borrowers

How To Choose the Right Commercial Hard Money Lender

June 18, 2021/in Blog /by Bruce Kent

While hard money loans can greatly simplify your life and save you from the hassle of maintaining a good credit score, the wrong hard money lender can land you in legal complications.

However, this shouldn’t put you off from securing a hard money loan for your financial obligations. Our blog lists some handy tips to help borrowers navigate through the hard money industry smoothly and choose the right lender for all their hard money needs.

Take a look.

Look For Hard Money Specialists

Since these hard money loans are short-term and require minimal documentation, they might seem simple to the borrower. However, an inexperienced or novice lender can mess up the whole process for you.

It’s crucial that you get in touch with hard money specialists that know the ins and outs of the hard money loan process. From working on origination and servicing to structuring the loan, hard money specialists can simplify the process and ensure that your funds are released within a few days.

How Quickly Do You Want To Get Approved?

Sure, hard money lenders are faster than traditional banks and credit unions, but you must consider this question before setting out on a hunt for hard money specialists.

Do you need to close a real estate transaction in two weeks? Or do you need the money to flip properties?

hard money loans can be borrowed

Each hard money lender has a different time frame for processing and approving applications. While some might approve your application and release funds within a week, others might take a few days to approve your loan application.

Borrowers must opt for a hard money provider that suits their hard money needs and help them close real estate deals within the set time frame.

Know Your Hard Money Needs

Some hard money specialists are all about investing in real estate transactions and facilitating borrowers; however, others might be open to a whole lot of investment opportunities. Before you meet up with a hard money lender, consider why you’re applying for the loan.

Do you need money to finance your next real estate project? Or are you a house flipper who wants to renovate a property?

hard money loans can be borrowed by real estate investors

These questions can help borrowers choose the right hard money lender that fits their criteria and meets their hard money needs.

Transparency Comes First

If you’re working with a hard money lender that isn’t open to communication or just seems a little off, you can always back out of the deal.

Some hard money lenders lie on the scamming spectrum and are after your personal details. We recommend that you don’t disclose any personal details or fill out any application forms until you’re assured of the lender’s credibility. These firms can use this information to commit identity theft and fraud in the borrower’s name and expose them to legal complications.

ensure that you read all documents before signing up for a hard money loan

It’s better to investigate the lending firm’s transparency and have a background check before signing on the dotted line.

Watch Out for Scammers

Certain hard money lenders might sound like a good deal. However, once you’ve established trust, they might expose you to nasty, hidden surprises!

Often, scamming hard money lenders change loan terms right at the last minute and make them unfavorable for the borrower.

We suggest that you always read through application forms, policies, and other loan term documents before signing them or agreeing to them. Moreover, borrowers should try to seek out referrals from other real estate professionals to find the right hard money lender.

Know Your Hard Money Questions

Even before you schedule a visit to the lending firm, you need to be armed with all the right hard money questions!

  • What are the interest rates that the firm offers?
  • Are these interest rates fixed or variable?
  • How long have the lenders been in the hard money industry?
  • Are there any satisfied clients that can vouch for the lender’s services?
  • Does the lender have any loan qualifications for borrowers?
  • What are the fees and other costs involved in a hard money process?

Such questions can help you make an informed decision and get your hard money application approved in less than a week.

Don’t Underestimate The Red Flags

Whether they’re in a personal relationship or a lender-borrower relationship, red flags can help you get out of a shady situation!

To avoid getting caught in a hard money scam, we recommend that you look out for any tricky signs and red flags early on.

Not asking for any collateral, having a sky-rocketing upfront fee for clients, or having interest rates lower than 5% just seem fishy and should be avoided at all costs.

Instead, borrowers can opt for legitimate hard money lenders by keeping an eye out for such red flags, trusting word-of-mouth advertisement, and researching the company through their social media handles.

Choose A Direct Lender And Not A Broker

While a broker can help connect you to reputable hard money lenders in the region, they can cost more.

These brokers work with both borrowers and lending firms and forward the buyer’s application to the firms. This can cost you more time and more money in the long run. A broker will probably lead to a delay in the application approval and fund release process.

Borrowers must choose a direct lender, submit their applications, and expect to get approval within 7-10 working days.

Find credible hard money lenders near you

At Commercial Private Equity, we are a credible private money lending firm based in Atlanta, GA. Our expertise and our knowledge in the private lending market and the real estate industry have made us a client favorite all across the United States. At Commercial Private Equity, our representatives are apt at evaluating loan applications and working with our clients to develop feasible loan terms.

Give us a call at 404-301-8633 or head to our website to learn more about our specialized loans, hard money loans, and commercial bridge loans.

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hard money loans can help real estate developers close deals

4 Ways to Develop A Property for Profit

June 17, 2021/in Blog /by Bruce Kent

If you want to earn massive profits in the shortest time possible, property development is one of the highly lucrative businesses in the world.

Whether you’re working as a property developer in the United States or performing raw land development in the Middle East, property development can help developers make an impressive amount of profit.

If you’re looking to venture into this lucrative business, we have got some solid advice for you.

This blog uncovers the concept behind property development, what it is, how to do it right, and turn raw land into a profit-making machine!

What Is Property Development?

Simply put, property development is the art of taking raw land or buildings, developing them, and turning them into a high-value property.

Developers are tasked with the responsibility of adding value to a piece of land. Here’s how they do it.

Property developers invest in a piece of land or a building, either refurbish or develop it to make it more lucrative or withhold it to appreciate its value over the coming years.

Property Profit—How To Develop Properties For Profit?

Before they jump into the development business, property developers need money to make more money.

hard money loans can be used to renovate dwellings

These developers need to put down down payments for raw lands or buildings, increase their value through subdivisions and renovations, and then introduce completed projects to interested buyers. Even though property developers make an increased return of investments by withholding property or raw land by letting it appreciate over time. However, there are several ways to improve a property’s value and return on its investment.

Subdivisions Of Raw Land

Raw land might not seem like a profitable investment; however, it’s the first step to a successful property development career.

Real estate investors can invest in a piece of land and create subdivided blocks out of it.

How does a simple process of sub-division make hundreds of thousands of dollars worth of profit? Well, here’s how.

For instance, a real estate investor invests in a large block of land that measures 1000 square meters for $400,000. Since most buyers aren’t interested in purchasing 1000 sq. m of land, the developer can subdivide the land into five, 200 sq. meters of land. They can then proceed to evaluate this land at $200,000 for each 200 sq. meters block.

With sub-division, all that a property developer needs to do is subdivide the land into smaller blocks of land and sell them off to buyers at a much higher value. This way, the property developer withheld the parcel of land, subdivided it, and sold it off for $600,000!

Renovating And Flipping Real Estate Properties

Renovation or refurbishment is another value-adding strategy that never backfires!

Even if you aren’t a renowned property developer, you can always get into this bankable business by renovating your own property!

hard money loans can be used to renovate properties for profit

Property developers can purchase unfurnished dwellings or buildings, equip them with the latest amenities, furnishings, and feature contemporary interiors to make the residence look more up to date and valuable.

Updating kitchens, bathrooms, installing new cabinets, adding further details, and marketing these buildings to the interested buyers will ensure that property developers receive a sizeable profit.

These property developers or real estate flippers can set a high selling price on these buildings and include the cost of the building, furnishings, and their own profit.

Real estate developers can partner up with investors or opt for hard money loans from credible private lenders to initiate renovation projects. These hard money loans do come with high interest rates; however, they can be repaid within a short time frame and make a perfect financing option for real estate investors.

Constructing Residential And Commercial Properties

This value-adding strategy takes property development to the next level!

Developers can begin by buying a piece of land, partnering up with investors, offering them equity in the finished real estate project, and hiring a builder to oversee the construction phase. This strategy entails that developers design and develop residential or commercial buildings atop a development site.

hard money loans can be used to flip houses and turn them into rentals

Real estate developers can construct apartments and dwellings according to the local zoning codes, market demands, planning regulations for the area, and the developer’s budget.

Developers can take out bridge loans to secure the real estate deal, take out hard money loans to complete the development project, and sell it off to earn massive profits and repay their short-term loans.

These hard money loans are ideal for real estate investors and property developers who need immediate cash flow to guarantee that their property development process doesn’t come to a complete stop!

Commercial And Residential Rentals

Another way property developers can create a lasting income stream is through developing property for rentals.

Once they have utilized their value-adding strategies, real estate developers can choose to keep the property and not sell it. This way, they can subdivide their renovated or newly constructed property into various dwellings, rent them out to tenants and enjoy a steady source of monthly income without any expense! They can also make these dwelling into vacation rentals, residential rentals, or even commercial offices. These tenants will pay a fixed amount of rent every month, which ultimately goes up with the rising inflation and continues to benefit the real estate investors!

Moreover, they can quickly liquidate their property and sell it off to interested buyers if they need a significant return on their investment.

Are you on the lookout for a commercial hard money lender in Atlanta, GA? Commercial Private Equity has all the right real estate financing solutions for you!

From offering commercial hard money loans to lending bridge loans to homeowners, real estate investors, and even large corporations, Commercial Private Equity has been serving the real estate industry for the last 75 years. Our company works with borrowers on drawing up suitable terms for their hard money and bridge loans. Moreover, we offer a no-cost application process to our clients and have one of the lowest interest rates in the country.

You can get in touch with our team to learn more about our commercial hard money loans and secure one at the earliest.

https://commercialprivateequity.com/wp-content/uploads/hard-money-loans-can-help-real-estate-developers-close-deals.jpg 351 624 Bruce Kent https://commercialprivateequity.com/wp-content/uploads/Commercial-Private-Equity-Logo-2.png Bruce Kent2021-06-17 09:45:122021-06-14 09:50:124 Ways to Develop A Property for Profit
construction loans are short-term loans that are offered for at least one year

Construction Instruction: A Complete Guide to Construction Loans

June 16, 2021/in Uncategorized /by Bruce Kent

Should you apply for an owner-builder loan or a construction-to-permanent loan?

Whether you’re a homeowner looking to construct a home from scratch or a new builder who’s looking to secure the right construction financing from private money lenders, this blog is the ultimate guide for you.

Before we uncover the different types of construction loans, we’ll delve deep into what construction loans are, who should apply for them, and how builders can qualify for these short-term loans.

Construction Loans: How do they work?

Construction loans are extended to borrowers who want to complete the construction of  offices, homes, and other properties on a parcel of land. These short-term loans are extended to borrowers as a line of credit loan that’s released in sync with the construction progress and milestones. Since construction loans are short-term and scheduled to last up to a year or sometimes more, the borrower can obtain long-term funding later.

construction loan lenders need to evaluate a complete construction plan

Moreover, a borrower can refinance the construction loan into a permanent mortgage or take out a new loan to pay off the construction loan.

3 Types of construction loans

Construction loans aren’t a one size fits all!

We explain the different types of construction loans used by either builders, buyers, and developers to execute their construction projects successfully.

Construction-to-permanent loans

Don’t want to go through the hassle of finding a mortgage after you’re done constructing your home? A Construction-to-permanent loan might just be the right solution for you!

This specific construction loan allows developers and builders to finance the property’s construction until its completion. Once the building has been completed, the borrowers can convert this loan into a fixed-rate mortgage and save the closing costs on their construction project.

Construction-only loans

This short-term loan is ideal for borrowers that are confident about the high-value sale of the completed project but only need immediate cash flow to initiate the construction.

Once the construction has been completed, the borrower will need to repay the entire loan by the end of the loan term or refinance it into a mortgage.

Usually, borrowers who apply for a construction-only loan need to submit two applications and require two closings. The first process is to secure the construction-only loan before the completion of the house. The second application and closing process are required to refinance the building project and secure a mortgage for it.

Renovation construction loans

Maybe you just bought a complete house but feel that it needs some renovation and fixing to do. Homeowners and house flippers can take up a renovation construction loan from their lender. This type of loan is extended to developers, house buyers, and house flippers who want to carry out extensive renovation projects. The borrowers can use the funds from renovation construction loans to finance the purchase of a new home and cover the costs of renovations the new property needs.

a renovation construction loan can be used to rehabilitate a property

Lenders specify the loan amount based on the expected value of the house after the renovations have been completed.

Do you qualify for construction loans?

Before you embark on a search for a construction loan lender, know if you qualify for one or not.

Most lending firms will require builders or developers to present approvals and piles of paperwork to approve the construction loan.

Credit History

Since construction loans are high-risk financing solutions, the lender might need to review your credit score. While a 680 credit score is considered decent, a credit score higher than 720 will instantly get you approved for the construction loan. Moreover, the lender will need to look at the borrower’s history and ideally have a low debt-to-income ratio to qualify for the construction loan.

Down Payment

If you need to get that construction loan as quickly as possible, you’ll need to make a hefty down payment!

A down payment higher than 20% will assure the lender of your genuine interest and reduce the risk for their investment.

A comprehensive construction plan

A carefully crafted construction plan can help borrowers secure a construction loan quickly.

Before you head out to apply for a construction loan, ensure that you have a comprehensive plan and specifications of the building.

lenders need to review a construction plan to approve a construction loan

Compile the blueprints, illustrated images, budget, resources, and computer-aided designs that show the complete requirements for a construction project.

A land appraisal

A lender might want to get an appraisal performed to evaluate the land.

They’ll need to perform their own appraisal of the land you have, the building that’s being constructed, and the anticipated value of the completed property. This appraisal might determine the value of the construction loan being extended to the borrower.

How to find the right construction loan lender?

While construction loans can come with high-interest rates and larger down payments, this shouldn’t prevent you from taking out a loan and building the property of your dreams. Here’s how borrowers can choose the right construction loan lender and take out a short-term loan for their obligations.

Borrowers should get in touch with a lending consultant and pose a few questions like;

  • the type of construction loans that they offer
  • their interest rates, whether they’re fixed or variable
  • if they charge any closing costs such as appraisal fees, attorney’s fees, or inspection fees
  • How does the lending firm extend construction draws? Do they carry out construction draws after reaching every construction milestone or as a percentage of the completion?
  • How can the consultants help with the construction budget projections?

Popping these few questions will let you know if you should opt for the first lender or further scan the markets to find the right one.

A private money lender can help you secure a short-term construction loan in no time! At Commercial Private Equity, clients can get in touch with our consultants and seek out construction loans according to their financial obligations.

Our senior partners at Commercial Private Equity offer low-interest rates and low loan to value construction loans that lower risks for our clients and our firm!

Looking to secure a construction loan for your house building project? Give us a call at 404-301-8633 to learn more about our hard money loans, bridge loans, and construction loan policies.

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