Banks can offer lower interest rates than hard money lenders because banks can fund loans via retail deposits on which they pay minimal interest rates. Hard money lenders fund loans via private capital which has higher expectations.
Hard money lenders are typically regulated at the state level via the Department of Real Estate, as at least one person associated with hard money lending must have a valid Real Estate Broker License. Additional licensing requirements may be required on a state-by-state basis.
Hard money loans are typically funded by individuals or by funds that aggregate capital from multiple wealthy investors. Individuals who invest directly into a single loan are known as trust deed investors. Many trust deed investors are real estate investors/owners who invest in “bridge loans” to keep available capital working to generate a higher rate of return, rather than leaving the capital in banks earning minimal interest rates.
Priority Investor Loans can close your deal as soon as 2 weeks.
Priority Investor Loans does not have a pre-payment penalty for Fix and Flip Loans, Bridge Loans, or Mini-Perms Loans.
Property classes for multi-family real estate ranges from new builds (which are usually Class A) to class B and class C buildings (which are the mid-range, more common classes of multi-family real estate) to class D apartments.
A balloon payment is a large payment due at the end of a balloon loan, such as a commercial loan, or another type of amortized loan. It is considered similar to a bullet repayment.
Priority Investor Loans will order an apprasial and survey after your application has been accepted and a deposit has been made.
Borrowers can determine whether a lender is reputable by speaking with references, confirming that the lender has a valid license, research company reviews, checking with the Better Business Bureau, and finding out what industry events the lender attends or hosts.
Whether or not a non-refundable deposit is required varies depending on the loan product and the borrowers qualifications.
Hard money lenders differ from bank lenders in that they often fund more quickly, with fewer requirements. Hard money lenders are sometimes called “asset-based lenders” because they focus mostly on the collateral for the loan, whereas banks require both strong collateral and usually excellent credit and cash flow from the borrower.
Mini-perm is a type of short-term real estate financing used to pay off income-producing construction or commercial properties. This type of funding is usually payable in three to five years.
Typically, a borrower must provide Priority Investor Loans with a loan application, purchase contract and 3 months of bank statements and/or interest statements (non-retirement).
The borrower is responsible for paying a processing fee, an administration fee, and a wire/courier fee to Priority Investor Loans. The borrower may also be responsible for paying title, insurance, and legal fees.
Generally, properties with more than five units are considered multi-family commercial real estate (MFCR), while anything with less than five is classified as residential.
The amortization period is the total length of time it takes a company to pay off a loan—usually months or years. If a company chooses a short amortization period, it will pay less interest overall but must make higher payments on the principal (the original amount of the loan before interest).