Thanks in advance, any help would be appreciated.
I'm looking for typical terms(rates, points, fees, and down payment) on a typical Hard Money or Private Capital on a development. Don't necessarily need a site if you can share your experience of how a deal was structured. Looking for Multi-family, hotel, and strip centers.
I'm trying to run some back of the envelope numbers on a couple projects I am considering
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I own and manage a private lending company. Loan amounts range from $100,000 to $3 million. Interest rate range generally 10-12%, sometimes higher if I feel I (or the mortgage broker) can sell it. 2-5 points depending on loan size. We aim for 65% LTV or less, but often go higher if the borrower has experience or we're comfortable with the collateral. If it's a development project, we want our borrowers to have skin in the game so we'll cap the LTC around 80%. We're a family office fund so no strict underwriting guidelines. We just need quality collateral and a clear exit strategy.
Today if you're looking for a larger development loan ($3 million+), there's some national funds that can offer lower rates/points on CRE development projects.
So what's the advantage to using one of these funds as to a commercial bank. All these terms aren't that favorable. Is it the speed of the loan process or willing to lend to someone with less experience?
In this market, I can see mezzanine debt at the terms you mentioned, but to fund an entire project with the above terms seems like it's destined to fail or be really tight.
A lot of my loan requests are quick close transactions. For example, a mortgage broker called me yesterday about a deal. Out of state investor is purchasing a small multifamily portfolio in my city. There's a 1031 deadline of 11/3 and for whatever reason bank financing was never put in place. I'll be issuing a loan approval today for 50% of the purchase price at 11.5% and 3 points. Closing 11/2. Borrower is experienced with great credit and strong global cash flow and liquidity. I don't need to think much about it. Quick and easy $30k fee. Loan committee consisted of me and my brother pondering the transaction while playing Warzone this morning lol.
Worked for a commercial hard money lender for a couple of years and there is a lot of available capital out there right now. I would say you could get up to 70%-85% LTC at an 8.5%-11.0% I/O rate. Depending on the lender you could get above $10MM (a lot of smaller hard money lenders will syndicate out if they can't take on the size). Most likely looking at 1%-3% points in total.
A few lenders: Bay Mountain Capital, Silver Arch, Swiss Ave Funding, Broadmark Realty Captial, Kennedy Funding
These terms seem to be more in line with what I was expecting. Has the current market made terms far more favorable? Lower down payment is what appeals to me. I have capital but would like to sit on it as a contingency fund, as opposed to tying it up as a down payment/equity.
I know in the residential hard money, rates are almost 3-5% lower than pre-covid.
Broadmark is fantastic. Would recommend reaching out to Brett Kaye.
Send me a DM we can chat in more detail. I know some people that run a platform for this exact thing.
More generally the industry sort of looks like this at the moment.
Rates: 8 - 13 depending on location, price per door/sqft, etc.
Points: 2 - 5
Fees: Generally pass through only (legal, apprasial, etc.)
Leverage: upto 90/100 depending on the deal type. Commercial usually caps out at 80% of purchase 100% of rehab. Both sides LTV usually caps at 70% of after repair value can get upto 75% with extensive experience and large enough deals.
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