What Can You Finance with a Private Money Loan?

To be successful with real estate investing or development, you need the capital to get started. Many investors turn to hard money loans to get the financing they need in order to get their projects off the ground.

A private money loan, also known as a hard money loan, is a loan typically issued by an investor or investment group rather than a financial institution such as a bank. Unlike traditional loans—which use an applicant’s credit score and financial history to determine risk—hard money loans use the property being purchased as collateral. Although hard money loans generally have higher interest rates, they allow borrowers to secure funds faster, even if the borrower doesn’t have a perfect credit score.

Since hard money loans rely on collateral, they are typically reserved for real estate transactions. If you’re looking for some capital to get your commercial real estate project off the ground, here are the types of real estate projects you can finance with a hard money loan.

Purchasing Commercial Property

Hard money loans aren’t limited to just flipping property. Many commercial real estate investors use hard money loans to purchase properties they intend to hold over the long term.

Since hard money loans rely on collateral – the value of the property itself – they’re ideal for investors who are financially extended on other projects, or even for those who don’t have the best credit.

Land Development

Do you see the potential in vacant pieces of land? A hard money loan can get you the funding necessary to turn an empty lot into a piece of land suitable for a commercial building. You can use it to pay for:

• Soft costs
• Entitlements
• Hiring architects, engineers, consultants, etc.
• And more

Many lenders will even base the loan on the future completed value of the property, giving you even more funding to turn your commercial real estate aspirations into reality and giving you a higher loan-to-value ratio compared to other forms of lending.

Commercial Real Estate Projects

Commercial real estate properties come in all shapes and sizes, many of which might not qualify for traditional mortgages. This is where a hard money loan comes in handy.

Developers can use a hard money loan to get financing to cover any kind of property and fund the various phases of a project as they build it from the ground up. There are different types of hard money loans to support each step of the development process:

• Construction loans
• Bridge financing loans
• Rehab or redevelopment loans
• Acquisition and development loans

No matter where you are in your development project, there’s a hard money loan designed to keep you going.

Get the Funding You Need for Your Commercial Real Estate Project

Hard money loans are much quicker and more flexible than traditional mortgages, making them ideal for any type of commercial real estate investment. If you’re looking for some support in your commercial real estate endeavors, perhaps a hard money loan is right for you.

At Broadmark Realty Capital, we know a thing or two about hard money loans. In our decade-plus of experience, we’ve funded over $2.8 billion to commercial real estate investors all over the United States. Contact us to talk about the financing you need to take your project to the next step.