A Northern California real estate investor used a 24-month cash-out private money commercial loan to make improvements to the building prior to being placed on the market.
When seeking cash-out financing, sometimes the path of least resistance for a commercial real estate investor is to go the route of private money commercial loan. We frequently see this with investor clients who don’t have the time or patience to wait for a commercial bank to make an underwriting decision, which can often take 90-180 days.
Our clients value the speed of private money financing and realize that in their situation, funding speed outweighs the added costs of non-institutional financing. Obtaining a private money loan can take a week, whereas a bank loan can take 3-6 months. Investors realize they can obtain private money financing in one week, have the property sold in 3-6 months, and be moving on to their next real estate project or acquisition before a commercial bank ever approves or denies their loan application.
Here are the 24-month cash-out terms obtained for a Northern California industrial warehouse facility. The owner wanted to quickly pull cash out to make improvements for an incoming tenant and then subdivide the large parcel before placing the property on the market within the next 6-12 months.
Private Money Commercial LoanTerms:
- $1,500,000 Loan Amount (18% LTV)
- 10.50% Interest-Only
- $13,125/Month Payment
- 24-Month Term
- No Prepayment Penalty
- Trust Deed Investor Site Inspection Required
- Partial Lien Release Clause When Parcels are Sold