Finally, hard money interest rates on commercial bridge loans are starting to soften. Until recently, hard money loans in Utah have been some of the most expensive private loans in the nation. Many private lenders have started to soften their hard money interest rates, as a flood of new capital has recently entered the private lending arena. In order to compete for the best loans, private lenders are finally lowering their interest rates. Although 9.99% is still a bitter pill for some borrowers to swallow, it turns out to be cheaper than a loan from a family member or business partner.

Patrick Lofts - Salt Lake City, Utah

With such a large number of borrowers whose credit scores are the tank, these lower interest rates bring them a sigh of relief. At least until their credit scores are brought back to life, a private bridge loan is their only hope.

Although banks are still not loosing their purse strings, the private lending environment is booming, and private money interest rates are trending downward.

Posted by Corey Curwick, Private Money Consultant, on January 25, 2011

When our clients come to us looking for a hard money loan, or private loan in Utah, each of them has a different goal in the mind. There are times when a private loan may NOT be the right thing for them.

Clients also come to me  in distress and in desperate need of a loan. They are looking for their own “bail out” loan, but don’t want to risk getting into another bad financial predicament. This is where we can help.

Most hard money lenders in Utah won’t take the time to see what’s right for the client. Their only objective is to make a loan, a return on their investment. The lender looks only at the property’s merits as suitable collateral, and is not concerned about the client’s goals. This is where we come in.

We help our clients find the best loan scenario for their specific need. Even if that means they don’t need a loan at all. With so many bogus hard money financing groups out there, we direct our clients to the right lender for them. This is what Commercial Private Money Utah does.

Some Good News in Utah Private Lending

Our clients have been begging us for lower interest rates on private loans. Particularly real estate investors with excellent credit and substantial assets. Unfortunately we don’t have control over the interest rates our lenders charge.

There is a new hard money loan program in Utah that has been a welcome answer to our clients request for lower interest rates. This private loan program is for Utah only and has the following requirements:

• Residential (No Owner Occupied)
• Commercial (Multi-Family, Office, Industrial)
• 9.99% APR
• Up to 2 year loan terms available
• Interest Only

This is the best rate for hard money loans in Utah that we’ve seen in a long time. Have questions? Leave them in the comment section below or contact us via the contact page. We hope local Utah real estate investors will take advantage of this low interest rate, hard money loan program, while it lasts!

Other than local banks and credit unions, many banks just aren’t making commercial loans. It seems like every day we talk to a qualified borrower with a great commercial property who can’t obtain financing.  Some of these borrowers have had a good relationship with their banker for many years, have an excellent payment history, yet are still being turned away?

But what about the T.A.R.P money from the government that is supposed to keep banks lending? Why then aren’t banks making commercial loans?

Many of the banks that are still in business, desperately need to raise capital via stock issue.  And investors won’t look at a bank’s stock right now unless no more than 20% of its portfolio is secured by commercial real estate.  This means that banks must get this ratio down to attract investors to purchase their stock.  This is one of the many reasons why so many banks just are not issuing new commercial loans.

For real estate investors looking to scoop up commercial properties sold for pennies on the dollar, they are quickly finding out that cash is certainly king in the current market.  Most banks are requiring a 30% down payment, based on the purchase price, plus an additional cash deposit of 20% of the loan amount.

Just to illustrate this point, let’s say you found a 5 unit multi family property being sold for $500,000 when the FMV is more like $850K to $1 MM. You go to your friendly banker to obtain a loan. The banker asks for 30% of the $500K purchase price as a down payment. The banker then wants an additional 20% of the loan amount as a cash deposit at the institution. So now let’s do the math:

70% of $500K = $350K (This is what your bank will lend you on a property that is probably really worth $850-$1MM).

20% of $350K = $70K (This is what the bank will ask for as a cash deposit in order to make you the loan of $350K)

Total = $220K cash out of pocket to get the loan for $350K.

Does this make any sense? But this is the reality of conventional lending.

This is why so many commercial borrowers are using non-bank sources of financing such as hard money and private money loans. Investors prefer to pay the higher interest rates over the short term rather than parting with so much of their precious cash.

Any comments on this? Please leave them below.

Posted by Corey Curwick on August 18, 2010