This is a summary of our criteria for commercial hard money loans. These are general guidelines. This is not an offer to lend nor an offer to approve a loan request. We underwrite loan requests that we receive from our network of commercial loan brokers for funding from our private financiers, or we can broker commercial loans to direct lenders.

For loan products that are outside of our scope of direct lending, we can broker commercial loan requests to direct lenders. We offer preliminary underwriting of the project and loan submission with no upfront fee. Commercial borrowers must agree with our fee arrangement before we will prepare and submit a loan a request. The fee is due and payable at the time that the borrower signs a terms sheet from a commercial lender. The lender will collect a good faith deposit to cover our fee, their underwriting costs, and for 3rd party reports.

We do NOT receive a “yield spread premium” from the lender by selling a more expensive loan to you, unless you specifically request that we are compensated in that arrangement (usually to reduce the amount cash that you must bring to closing). When we broker a commercial loan on your behalf as the borrower, you will pay a deposit to the lender for our commercial loan broker fee, 3rd party report fees, and underwriting costs, at the time that you accept the loan terms. We can defer payment of our fee until closing the loan or within a specified time frame, whichever occurs first.

When we broker commercial borrowers to other direct lenders, the borrower must agree to our fee arrangement. We will obtain some basic information from the borrower, draft a loan inquiry package with preliminary underwriting data, and then send it to direct lenders that may have an interest in the project. If a lender is interested, then the lender will request more documentation. If a letter of interest (also called a terms sheet) is delivered by the lender and the borrower signs it, then our fee is due and payable, along with any other 3rd party fees required by the direct lender (e.g., appraisal, environmental site assessment, survey, etc.). Upon successful completion of the lender’s due diligence on the property, a loan commitment is issued. Funds will be wired to the escrow agent according to the direct lender’s instructions.

We also buy promissory notes that are secured by 1st position liens on commercial real estate. We can purchase both performing and non-performing notes. The underlying collateral must fit our requirements for collateral below in the event that we must foreclose on the collateral. If you are a borrower with difficulty servicing a note (in 1st lien position), then we may be able to arrange buying that distressed note from the holder and provide additional funding to renovate and reposition the property for refinance or sell to redeem our investment.

Even when you believe that you meet these guidelines, we may decline your commercial loan request for any reason or no reason whatsoever. Our liquidity for funding loans is limited, and we must be very selective on how we lend to reduce the probability of loss and to maximize the probability of success. It never hurts to ask, but don’t take “no” personally. It’s probably just not the right project for us at that time.

Note: If we are referring your loan request to 3rd party direct lenders, then the loan request will be sent to those lenders that fit the parameters of the request, rather than the parameters described below that are only for loans that we directly originate.

Property Types

Our current preference for property types is:

  • Class “C” or class “B” multifamily (apartment) properties for working class tenants. (No luxury, time-share, resort, or hotel/motel properties.)
  • Busted condominium projects where the entire completed project is offered, and the property can be reversed into an apartment building or complex.
  • We will also look at mobile home communities, but so far we haven’t found anything that works for financing or location, with a good exit strategy for redeeming our investment. Maybe you’ll find the right property for us to finance?

We specifically exclude properties:

  • Serious flood zones.
  • Serious weather zones (tornado alley, hurricane alley, asteroid alley, etc.).
  • Serious earthquake or seismic activity zones. (No volcanoes, please!)
  • Expansive or contaminated soil.
  • Blighted or war zone areas.
  • Well or river water, or septic tank. (Must have city water and sewer.)
  • Way way way out in the boondocks, rural or mountains. (A little bit outside a medium or big city is alright, but you know what we’re talking about.)
  • Anything else that is very weird or very outside the norm. (Just a little weird that can be repositioned to not-so-weird may be alright.)
  • Residential parcels with less than 5 dwelling units.
  • Projects outside of the continental United States.

Commercial borrowers (this is not all-inclusive):

  • Must have combined net worth of at least 1.5 times the loan amount, not including the subject property for an acquisition loan. We can be lenient on this for an awesome project, provided that your power team qualifies.
  • Must have at least two years of management experience or retain a professional management company with at least five years experience.
  • For renovation projects, the general contractor (GC) must be vetted for proper licensing, insurance and bonding, and experience. We must approve the “scope of work” with cost estimates and the draw schedule. All construction, renovation, and repairs funds are escrowed and disbursed on a draw schedule.
  • We will work with a commercial loan broker to peek at your credit, to be sure that you are not a deadbeat that never pays bills. However, the subject property, your power team, and the business plan for that property is the primary qualifier.

Loan Parameters

We understand that every hard money deal is “hairy”. That’s why banks won’t touch it. Our typical loan parameters:

  • Borrowers must pay the costs for 3rd party due diligence reports, such as Environmental Site Assessment (ESA) level 1 and level 2 (if needed), appraisal, loan broker fees, survey, title examination, etc. Paying for these costs after you accept our non-binding terms sheet is required. Our final loan commitment is subject to our satisfactory review and approval of these reports. Be sure to include sufficient margin in your loan request to recoup these costs at closing. These costs are not refundable in the event that we decide not to issue a final loan commitment.
  • Points between 4% to 10% (sometimes higher) rolled into the loan amount.
  • Annualized interest-only rate of 15% or higher charged on the total loan amount.
  • We will consider deficit interest loan structure, allowing the unpaid interest to accrue and compound.
  • For non-cash flowing properties, we can escrow interest reserves.
  • If you lack sufficient equity to qualify for debt financing, then we can also provide preferred equity financing to close the gap between your debt and your available equity investment. Click here for details.

As a commercial hard money lender, we are comfortable with physically or managerially distressed properties, when the exit strategy is reasonable to redeem our investment in a reasonable time frame. We can’t change the neighborhood or the weather, etc., so don’t ask us to try that “just this one time.” The exit strategy for sale or refinance must be reasonable and feasible. If you already have a refinance letter of interest that is conditioned upon project completion, then that will greatly improve your chances of getting loan approval from us. We must know that our investment will be redeemed as contemplated.

Please provide details for your project in the form below. If we are interested in learning more about it, then we’ll have one of our commercial brokers contact you.

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