As a result, there are times when its more important to get commercial property financing in place that can get the deal closed versus getting the best deal.
This is where private mortgage financing can play a significant role in the commercial mortgage financing process.
Here are a few examples to further support this contention.
Lets say that you want to acquire a building and renovate it into a long term investment with multiple tenants. You have a considerable amount of cash to put into the deal and a strong financial profile that would allow you to qualify for bank or institutional financing, but you also need to close the initial purchase and then complete the renovations in the next 4 months.
The probability of getting through a bank or institutional financing process in the time period outlined is low, or risky to say the least.
The longer term take out commercial mortgage can start to be arranged as the same time as the private mortgage so when all the work is completed and the property tenanted, the longer term mortgage can pay out the short term bridge loan as soon as possible, minimizing the time you’re incurring a higher cost of borrowing.
Another example would be where you are months into the process of setting up a development mortgage for a residential subdivision project, but are now running out of cash flow and require a private mortgage as a bridge to provide a capital infusion into the project to cover future costs until the longer term development financing is secured.
There are many other examples I could cite, but the common theme is a requirement for shorter term funding to bridge the project or transaction to a longer term bank or institutional commercial mortgage financing solution.
While private mortgage financing can be a great bridge financing solution, it can be hard to locate and secure in the time you have to work with if you aren’t looking in the right places.
Especially when a quick turnaround is required, there is only a small percentage of private lenders that can pull it off.
So the key to success is working with an experienced private mortgage broker with direct access and experience with private lenders that can provide different types of commercial property financing bridge loans.
If you have a short term commercial property requirement, I suggest that you give me a call so we can go through your situation together and discuss available private mortgage solutions.