Are you looking for a reliable private money lender near you? Before you settle with a lender that offers low-interest rates and loan terms that seem too good to be true, you must ask them a few questions.

You must prepare your meeting with the prospective lender beforehand and ask them a few tough questions to ensure that you’re partnering up with a credible money lending firm. Here’s what to ask a private money lender before you sign on the loan deal.

Are you a hard money lender or just a broker?

It’s essential to know the difference between the two!

A hard money broker will only request funds from other lending firms and charge you a hefty fee. On the other hand, a hard money lender will process your loan application, set the loan terms, and release your funds in just a few days.

How long have you been in the real estate industry?

The more experience the lender has, the better for you!

More experience in the real estate industry means that your lender will create more feasible loan terms to facilitate and finance the borrower. Moreover, experienced lenders are better at protecting the borrower’s interest and their assets.

What is your interest rate?

Most private money lenders will charge a high-interest rate to lower their high risks. However, specific experienced lenders such as Commercial Private Equity can bend the loan terms with lower interest rates.

Do you require a minimum credit score?

Often private money lenders don’t need to review a credit score or a credit report.

However, it’s better to inquire about the credit score requirements before applying for the loan. Not knowing the company requirements for credit score and having a low credit score can derail your chances of getting approved for the loan.

Will you schedule a property appraisal?

Private money lenders often schedule property appraisals to know the collateral’s value.

On the other hand, other private lending firms might believe your appraised value and avoid the need to get an appraiser on board. Asking this will ensure that you’re not fudging your numbers and are being honest in your application.

Are there any hidden costs to your lending services?

It’s better to learn all about the origination fee, upfront fee, processing, and closing fee before the loan application process. Most lenders will wait long before briefing the client on the hefty hidden costs and come up with nasty surprises for the borrower just when they’re about to sign up for the loan.

How long will it take to fund the loan?

Private money lenders are faster than banks. However, not all lending firms operate at the same pace!

If you need to close on a hot property within a week, try to search for a lender with a quick approval time and an even faster turnaround rate.

Consider Commercial Private Equity for your Next Real Estate Transaction

Our clients can get in touch with our representatives and schedule a one-on-one consultation session. From inquiring about our lending company’s policies to learning about our interest rates, our clients can get all the correct answers at Commercial Private Equity.

Get in touch with us to apply for our hard money loans, commercial bridge loans, and construction loans all across the United States.

When it comes to the age-old non-recourse vs. recourse loan debate, we recommend that you always go the non-recourse loans route!

Why’s that?

Well, let’s take a look at all the reasons why non-recourse loans make for a more flexible and safer financing option for borrowers.

Non-Recourse Vs. Recourse Loan – What’s the difference?

Before we jump to conclusions, we’ll explore the key difference between a non-recourse loan and a recourse loan.

If a borrower applies for a recourse loan but defaults on their payment, the lender has the right to seize the collateral and recover their investment. If the lenders can’t compensate the complete losses with the collateral’s value, they have a right to go after the borrower’s other assets.

On the other hand, by signing up for a non-recourse loan, borrowers can protect their assets and their credit reports in case of a default. Lenders cannot seize or sell off other assets, and they can’t do much about recovering their outstanding balance.

Non-Recourse Loans Protect the Borrowers

Non-recourse loans ensure that in case of default, borrowers and their assets are always protected. With this option, borrowers don’t need to worry that their personal property, vehicles, retirement accounts, or other valuable belongings would be seized and sold.

A Much Simpler Underwriting Process

Since non-recourse loans only need single, high-value collateral, the underwriting process is much simpler. Borrowers don’t need to provide details of other assets, such as their personal property or any other investment properties. These valuable assets, attributes, and appraised values are kept out of the underwriting process, making it short and quick.

Fewer Contingent Liabilities

Most lenders and banks consider recourse loans as ‘contingent liabilities.’ This means that the loan would be counted as a liability if the borrower defaults.

The next time you’re considering applying for a loan, the lenders would be less inclined to extend loans to borrowers with many ‘contingent liabilities‘ on their records.

With a non-recourse loan, borrowers aren’t exposed to any contingent liabilities and can get quick loan approvals in the future.

More Convenient for Borrowers

If something goes wrong, borrowers have a secret weapon to renegotiate the loan terms – their non-recourse loan!

How does that work?

Since non-recourse loans do not protect the lender, they might not be able to compensate for any outstanding debt. However, borrowers can leverage this situation to their advantage and work out new loan terms with the lenders. This makes non-recourse loans a more convenient option for borrowers and ensures that they work out the repayment strategy with the lender.

Choose Commercial Private Equity For Your Next Real Estate Transaction

At Commercial Private Equity, we offer non-recourse loans against a profitable, tangible asset. Our lending firm has been in the real estate business for the last 75 years and has learned how to optimize the loan application experience for our clients. As a result, with low-interest rates and low LTV ratios, we ensure that our clients get the best loan terms for their hard money loans, bridge loans, or construction loans.

Get in touch with us to learn more about our non-recourse loan options.

Are you considering  turning your raw land into a high-value residential property? If yes, then a construction loan can help finance your home-building project!

Construction loans are offered to real estate developers and homebuyers who want to develop land and turn it into a residential property. However, not knowing the construction loan terms and requirements can do more harm than good!

To navigate through the home-building process, we have come with this brief guide on home construction loans. We explore what home construction loans are, who can benefit from them, and how borrowers can close the loan at the end of the loan period.

What are Home Construction Loans?

A home construction loan is specifically designed to facilitate home buyers and real estate developers. Borrowers can take out the construction loan to build residential property from scratch or even remodel existing residential properties.

Since lenders are extending home construction loans on low-value collateral (which is the unbuilt property), the loan terms can come with high-interest rates and other stringent requirements.

Home Construction Loans: How do they work?

Consider this: You are a home buyer who wants to build their residential property from scratch.

You already have a parcel of land to your name but need to finance the construction or the home-building process. You can meet up with a contractor, build a home plan, and learn all about the costs involved in the project. Your estimates suggest that your home building project would cost you around $350,000.

With the construction plan, blueprints, and cost estimates in your hand, you seek out a $350,00 construction loan to finance the project. According to your drawdown schedule, your contractor requires $60,000 for the construction costs. The lender will forward this loan amount to the contractor, and you’ll be required to pay interest on this $60,000 amount only. As you progress through the construction period, you take out the loan amount according to your drawdown schedule and leave the rest with the lender.

At the end of the loan period, the lender will only require the borrower to pay interest on the loan amount they withdrew from the lender. Borrowers can take out an end loan with another lender or bank and refinance the construction loan into a long-term home mortgage.

Types of Construction Loans: What Are a Homebuyer’s Options?

With home construction loans, borrowers can apply for either a construction-only loan or get in touch with a lender for a construction-to-permanent loan.

Here’s how they differ.

• Construction-only Loans – With a construction-only loan, borrowers can expect funds that’ll finance the building project. From buying the land to financing labor and materials, a construction-only loan can provide disbursements based on the progress of the home building phases. However, at the end of the loan period, the borrower will need to repay the construction-only loan or refinance it into a long-term mortgage loan.
• Construction-to-permanent loans – On the other hand, a construction-to-permanent loan allows the buyers to draw payments according to the progress of the home-building process, skip past the closing costs, and is structured to convert into a traditional mortgage loanprogram on itself.

 How to Qualify For One?

Since the property hasn’t been built yet, extending a construction loan can mean a high-risk investment for lenders. To ensure that they’re extending loans to the right borrowers, lenders hire underwriters to analyze these construction loan applications.

Moreover, these home construction loans aren’t extended by most lenders and come with some strict requirements.

However, a carefully planned application and the right documents can help you come out of the underwriting analysis victorious! Here’s how you can qualify for a home construction loan and build your dream house.

Keeping Low LTV ratios

To tip the loan terms in your favor, we recommend that you put a sizeable down payment on your property. A 20% or higher down payment reduces risks for the lenders, lowers the Loan to Value Ratio, and sets you in a position to negotiate your loan terms.

Moreover, it can help borrowers work out lower interest rates on the loan amount!

Excellent Credit Scores

Most lenders wouldn’t consider loan applications unless the borrower has an excellent credit history.

A credit score of more than 730 determines the borrower’s creditworthiness and assures the lender that they won’t default on their payments. Moreover, credit histories, financial records, and a low Debt-to-income ratio can help improve a borrower’s prospects of landing a home construction loan.

An in-depth Property Appraisal

A lender might require you to appraise the property and get an estimate of the completed project’s value. This appraisal will consider the value of the land the property’s built on and the value of the home structure. A high anticipated sale value will act as collateral and lower risks for lenders. They can bank on the property if the borrower defaults.

Apart from the lender’s appraisal, we recommend that borrowers perform a personal appraisal to get an anticipated sale value for their property.

An Elaborate Construction Plan

Before you begin applying for home construction loans, take the time to work on your construction plan.

Meeting up with a builder or contractors, preparing the blueprints, setting images, illustrations, and other construction project specifications will let the lender know that you’re really interested in securing financing.

Moreover, the construction plan can help them in the appraisal process and estimate the property’s anticipated sale value.

Choose Commercial Private Equity For All Your Real Estate Financing Needs

If you’re looking to finance real estate transactions or make down payments to close a deal, Commercial Private Equity is the right choice for you!

We work with clients and corporations at our private money lending firm and help them take out hard money loans, bridge loans, and construction loans at the most feasible loan terms. From assisting real estate developers to facilitating new homeowners, our short-term construction loans are designed to cut down risks for our borrowers and help you build the house of your dreams!

Get in touch with our representatives to learn more about our construction loan programs and loan terms.

Do you have a real estate development idea that could tap a lifelong cash flow for you? Such a large-scale real estate development project requires a generous source of funding.

This is where an acquisition and development loan comes to your rescue!

Here’s everything you need to know about acquisition and development loans before applying for the loan program.

Acquisition and Development loan

An acquisition and development loan is ideal for real estate developers who work on expansive development projects. The loan is meant to cover all the bases of a real estate purchase and development project. From covering the cost of raw land to facilitating horizontal improvements, acquisition and development loans are designed to finance projects such as recreational parks, hotels, residential units, and commercial buildings. Here’s how it works.

Acquisition and development loan – How does it work?

These loan programs are always secured against real estate properties. The private money lender approves the application and releases funds within a short time.

As soon as a real estate developer has received the funds, they can use part of the proceeds to purchase raw land. The remaining funds are used to carry out horizontal improvements such as grading the land, zoning, and installing utilities such as water supply, electricity grids, and sewer systems to transform the land into a construction-ready building site.

As soon as the utilities have been installed, the real estate developer can sub-divide the land and work with other real estate developers to construct new properties.

Here’s How to Get Approved For an Acquisition and Development Loan

Since lenders are financing such an extensive real estate project without any existing property, these loans feature many stringent requirements for the borrowers.

• The location of the raw land and the economic and political situation surrounding the area. For instance, if the land is located in a warm climate area, lenders are more likely to invest as these areas have a high inflow of immigrants from the North.
• Moreover, the underwriting team will also consider the zones of the property and how the borrower’s project can attract more investment and customers.
• The borrower’s real estate history and their successful property development experiences in the past
• A larger down paymentof 25-30% in cash can help reduce risk, gauge the borrower’s commitment to the project, and lower the LTV ratio for the borrowing party.

These factors can help real estate developers secure an acquisition and development loan for their new projects. Borrowers must have the right location, a comprehensive construction plan, and a fool-proof exit strategy to repay the loan on time.

Choose A Leading Private Money Lending Firm For An Acquisition And Development Loan

A reputable private money lending firm such as Commercial Private Equity can help you secure an acquisition and development loan in time.

Since our private money lending firm has been in the real estate industry for the last 75 years, we excel at drafting flexible loan terms for real estate developers and investors. From offering low-interest rates to low LTV values, our loan terms are designed to facilitate and finance your large-scale real estate projects.

Get in touch with our representatives to discuss our company policies, hard money loans, commercial bridge loans, and acquisition and development loan requirements today!

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.

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.