Lending

FAQ & Glossary

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Your Questions Answered

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Investment Solutions

Want to know if Broadmark is the right partner for your next project? Read below for insight into commonly asked questions.

What is Involved in Private Investing?

A private lender is a non-bank company or individual that loans money for the purpose of funding a real estate transaction. Broadmark is a private, non-traditional lender, meaning we lend clients our own money.

What is the difference between private lending and traditional lending?

Asset-based private lenders rely on collateral to determine whether or not to make a loan. Traditional lenders focus much more on your credit score. Broadmark is a private balance sheet lender. The benefits for you are numerous, including flexible lending requirements, in-house underwriting and servicing.

Do I need cash to close a purchase?

Yes, a primary requirement for attaining alternative capital or hard money loan are the funds you’re investing in the property and a cash reserve. The purpose of this is to cover certain contingencies. Typically, the amount of cash needed is determined by the debt service coverage ratio (DSCR) for your project. Connect with our Market Experts to learn more.

Do I need good credit to close on a private loan?

Private lending approval primarily comes from the value of your assets or collateral, and not your credit score. Accordingly, your credit score is not as important in private lending as it would be in traditional lending. We rely on your credit score to verify that refinancing your bridge loan with permanent financing is a viable exit strategy should the project fail. However, our Market Experts and loan teams help our clients make wise decisions to encourage high yield projects.

Types and Terms of Loans

Broadmark has a catalog of loan options designed to meet the needs of today’s complex credit environment.

What types of loans do you offer?

We specialize in short term loans with terms up to 36 months. Our loans support a variety of construction and real estate projects including Commercial, Multifamily, Land Development and Urban Infill. See our Products pages for details on each unique loan option.

What are some exit strategies?

Alternative capital loans are a short-term borrowing aid (typically up to 36 months). Upon meeting your term, you will then transition your loan to a long-term solution. There are many viable exit strategies, including selling or renting upon completion, or transferring your loan to a traditional lending institution. We can help support this transition.

What does a lender look for in a construction bridge loan borrower?

When applying for a construction bridge loan, private lenders will analyze the net worth of your project, the DSCR, your previous experience, cash reserves and documentation such as tax returns and resume. Your credit score will be reviewed, but does not determine your eligibility. Our Market Experts would be glad to connect with you to share more.

What qualities should I look for in a private lender?

Private lenders can offer many appealing features. In our experience, we recommend using a private lender that offers you flexibility and fast turnaround time from approval to cash draw. Fair interest rates and terms, excellent communication and robust market experience are also crucial. Broadmark is proud to meet these criteria.

What is the process for getting a Broadmark loan?

Our clients partner with a Broadmark Market Expert to walk through a 5 step loan process . The components include Discovery, Acceptance, Underwriting, Approval and Funding. Read our Products Pages for more comprehensive information about this streamlined process.

What size projects do you work with?

Broadmark is an inclusive lender that provides creative lending for a range of real estate investments. As a guidepost, our loans support projects in the $5M-$75M range. Our terms range up to 36 months. We offer senior, subordinate and participating debt capital with LTV up to 70% and LTC up to 85%.

What other specifics should I know about your loan options?

Our clients benefit from a low origination fee generally in the 1-4% range. Our competitive interest rates start at 8%. Non-recourse loans are subject to carve-outs.

What are some examples of past loan types you have financed?

Broadmark has supported loans for the construction of single-family residences, condos, and townhomes. We also have partnered with clients investing in land development for the construction of subdivisions or other residential buildings. Our loan portfolio also includes commercial development including everything from warehouses to medical buildings, hotels and retail spaces.

Where do you lend?

Broadmark is rapidly expanding to all 50 states. Consult with our Regional Market Experts, specializing in Western, Central and Eastern Markets to get more information about lending in your desired state.

Glossary

An overview of commonly used terms in real estate investing.

All | # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
There are currently 40 names in this directory
Acquisition
Any loan where the primary purpose is for the borrower to acquire the property where the intent is generally subsequent financing.
Asset Repositioning
Asset Repositioning is the process of implementing capital improvements into an already existing property in a way that often completely changes the building’s purpose and function. This can be done to bring the building more in-line with comparable buildings in the area, or to transform the building’s purpose to meet the needs of the builder. An example of Asset Repositioning is taking an existing hotel and rehabbing it into a multifamily investment property.
Balance Sheet Lending
A balance sheet lender is a private lender who is not affiliated with a bank. A balance sheet lender provides a monetary loan for a short-term duration. The lender maintains the full debt until the borrower completes their term and pays back the loan. Unlike traditional lenders, it is rare for a balance sheet lender to sell the debt to another lender. The benefit is a simplified process that includes in-house underwriting and servicing.
Bridge Loan
A bridge loan is where the primary purpose is to provide the borrower with sufficient time to lease and stabilize or restabilize an asset with sufficient cash flows to obtain permanent financing or sell the asset.
Build to Rent (BTR)
A loan for a developer to construct housing with the intention of renting it upon completion.
Commercial Finished Lots
A developed lot that typically has roads, curbs, gutters, and utilities complete entitled for commercial construction.
Commercial Paper Lots
A lot entitled for commercial construction, which would typically begin with horizontal improvements.
Condos
Single family units within a building structure that are each separately owned, surrounded by common areas that are jointly owned. Condo units typically do not have ownership of the land.
Construction Lending Glossary
With an industry brimming with real-estate jargon, even the most seasoned investor can have questions. Here are some common phrases in the industry.
Debt Service Coverage Ratio (DSCR)
DSCR is a measure of the cash flow available to pay current debt obligations. Lenders will analyze a borrower’s DSCR to determine whether or not they have enough liquid assets and income to pay off debts.
Duplex
A two unit attached residential building that is built with the intent to rent out upon completion.
Entitled Land
Land that has gone through the public hearing process or zoning, as well as obtained site permits or approval for a specific use.
Horizontal Development
Any loan where the primary purpose is to provide the borrower with funds to build or install horizontal improvements (e.g. utilities, roads, sewers etc.) on real property.
Hotel
A multi-unit residential building that is built with the intent to rent out on a short-term basis upon completion.
Industrial
A property in which the primary use is non-specific manufacturing and other light commercial uses.
Investment
Any loan where the primary purpose does not neatly fit into the other loan purpose categories (e.g., cash out refinance, partnership buyout etc.)
Land Entitlement
Any loan where the primary purpose is to entitle land, obtain specific zoning, permitting, or legal use to further develop or accept the property.
Loan to Cost (LTC)
Loan to Cost compares the financing amount of a commercial real estate loan to its cost. It is calculated by dividing the loan amount by the anticipated construction cost.
Loan to Value (LTV)
Loan to Value measures the amount of a real estate loan month’s mortgage, compared to the appraised value of the property. The higher your down payment, the lower your LTV ratio.
Market Expert
At Broadmark, our Market Experts are highly skilled loan originators. They specialize in the intricacies of real estate investment financing solutions to ensure each client has their needs met. They guide clients through our 5 step loan process to ensure successful project completion.
Medical
A property zoned and constructed to allow medical care tenants.
Office
A property zoned and constructed for corporate/business (banks, law firms, start-ups etc.) tenants.
Private Lender
A private real estate lender loans their money directly to a borrower. Private lenders and private lending companies are not affiliated with traditional bank lenders. Private lenders set their own terms, conditions, and interest rates.
Quadplex
A four unit attached residential building that is built with the intent to rent out upon completion.
Rehab
Any loan where the primary purpose is to provide the borrower with funds to renovate (including adaptive reuse projects) or improve the physical existence of real property.
Residential Finished Lots
A developed lot that typically has roads, curbs, gutters, and utilities complete and is entitled for residential construction.
Residential Multi-Family
A five+ unit residential building that is built with the intent to rent upon completion.
Residential Paper Lots
A lot that is entitled for residential construction, which would typically begin with horizontal improvements.
Retail
A property zoned and constructed for retail (restaurants, retailers etc.) tenants.
Self-storage
A property with storage units that are rented on a short-term basis.
Senior Housing
A five+ unit residential building that is built with the intent to use as an Assisted Living, Memory Care and/or Independent Living Facility. Typically these facilities require specific licenses to operate from the state and/or municipal authorities in order to operate.
SFR- For rent
A free-standing single family residential building that is built with the intent to rent out upon completion.
SFR- For sale
A free-standing single family residential building that is built with the intent to sell upon completion.
Student Housing
A five+ unit residential building that is built with the intent to rent to students upon completion.
Townhome
Single family terraced housing with a small footprint on multiple floors. Typically has ground floor ingress/egress to the unit.
Triplex
A three unit attached residential building that is built with the intent to rent out upon completion.
Unentitled Land
Land with zoning or permitted use is non-specific in nature.
Urban Infill
Urban Infill is when builders construct new residential units on underutilized or undeveloped land that is inside of already developed areas such as neighborhoods. The new construction is typically surrounded by already existing buildings and is therefore “filling in” the remaining gaps.
Vertical Construction
Any loan where the primary purpose is to provide the borrower with funds to build or install new vertical improvements on real property.
Warehouse
A property constructed for the storage and routing of goods. Ceiling heights, truck bay count and ingress/egress are meaningful factors in assessing building values.

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