Private Loans: Benefits For Commercial Real Estate Investors
Starting a career in commercial real estate can yield handsome returns for those who like improving homes and solving problems. However, what keeps most people from taking the plunge comes down to financing. Traditional loans typically take too long to process, causing opportunities to be missed, and the initial requirements are usually too high for independent commercial real estate investors to qualify in the first place. For these reasons, many commercial real estate investors are turning to private loans because of the benefits they offer.
Private Loans Offer More Financing
Banks have limits on the amount of funding they can offer for commercial real estate transactions. Banks approve loans based on the value of the cost of the property and its appraisal value. Private loans, by contrast, are not restricted by red tape and rigid calculations. Private loans are based on the needs of commercial real estate investors, the overall profitability of the property, and it’s potential.
Private Loans Are Faster And More Efficient
Banks follow a chain of command, which means traditional loans can take a long time to process. Loan applications get passed from department to department, and even between entire branches, before they are approved or denied. Even is they are approved, it still takes additional time for funds to disburse. Private loans do not have to go through any internal bureaucracy, offering closing times as fast as ten business days.
Commercial real estate investors, though they may not have traditional careers, have a right to privacy. This avoids unnecessary conflicts and competitors trying to jump on a property while a bank loan is still being processed. Private loans offer a level of anonymity that traditional bank transactions do not.
Traditional lending channels are not fond of commercial real estate investors who incorporate en exit strategy to sell properties quickly and pay off the balance as soon as possible. In short, banks prefer borrowers to see loans to term, so they can profit off of the interest. Private loans, on the other hand, frequently do not have prepayment penalties, and allow commercial real estate investors to perform additional transactions while the loan is still active.
Get Your CRE Transactions Handled Quickly
At BG Capital Funding Group, we offer a wide range of private loans to commercial real estate investors, for transactions of all sizes. Contact our offices today to get started.