Alternative Funding:  Bridge, Mezzanine & Construction Loans;  Hard Money; Transactional Loans, Cash-Flow Buyouts & More

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In need of a temporary "bridge" loan, a "construction-to-perm" commercial mortgage or commercial construction loan?  Quest Funding Services can help you.  We also have construction loans for owner-builders, builders of "spec" homes or for entire residential projects, even land acquisition.  The variety of lenders and programs for these purposes varies too widely to make generalizations about them.  Provide us with details of your needs and we will work to obtain the financing that you have had trouble placing.

Why Hard Money? Watch this Video Clip
and Then YOU Decide if You Should Consider More Than Conventional Funding Options:

You need Quest Funding Services on your side for your funding search! 

Alternative & Hard Money Loans, In General:  

Quest Funding Services has alternative documentation and "hard money" commercial lenders that have funds available in amounts from less than $100,000 to over $25,000,000 for persons or companies that do not qualify for a normal commercial loan, either because they require Limited Documentation loans; or because their credit doesn't fit into normal guidelines. Interest rates and fees will be higher than for a conventional loan, but this may not matter when the term is reasonably short and the alternative loan is later swapped for conventional funding. However, do not be fooled those who say that they have lenders ready to "throw money at you." Be realistic: Read, and believe, our other comments, below, about alternative funding. Then, call us!

• BRIDGE LOANS are relatively short-term loans often used for the axquisition of real estate when another more favorable type of financing cannot be quickly obtained. Terms can range from a month or two up to a year or so. Sometimes, for ther relatively high loan cost &/or rate, a settlement can be accomplished as quickly as within 1-3 weeks of application. However, do realize that the approval conditions have tighened up in the present financial crisis.

HARD MONEY refers to loans for borrowers who cannot meet the requirements for more conventional funding. In today's tight credit markets, the best borrowers are having trouble qualifying for conventional funding. We prefer to call this "alternative funding", because they do not always involve significantly higher rates and fees than conventional loans. But, regardless, the lenders are not the same entities as those that fund conventional loans. The most important thing to keep in mind, when considering alternative funding, is that the loan size must be smaller, compared to the value of the collateral, than for conventional funding. That is especially true if the borrower has lower credit, smaller income, fewer assets, etc, than is the norm for a conventional loan. Do your homework and DON'T overpay for the investment. There is a lot more hard--money information below.

• Mezzanine Loans are often based on a company's total net assets more than on realty alone. The increased or perceived risk, by lenders, may result in higher than normal rates and fees, but can be a life-saver for those borrowers who need them These loans are structured more like bonds or securities and are available through Quest Funding Services on a varying basis. 

CONSTRUCTION LOANS come in a wide variety of configurations. They may involve purchases or refinances of realty; and may involve the development of completely vacant land or the refinancing of a partially finished project. The terms will vary depending upon the type of property/use and/or whether the property is commercial or residential; owner-occupied or for investment"; etc:

Learn More About Construction Loans

• Conventional, FHA'VA Construction Loans can fund the construction or rehad of 1-4 unit properties for owner-occupants or investors (conventional only). These are fully documented loans available at favorable rates, but the borrower must have permanent financing approval in place and a professional contractor must be utilized. As originators for Mega Financial Network of NJ, we offer these loans in NL & FL.
• Construction-to-Perm Loans save on closing costs as the permanent "take-out" loan is approved along with the construction loan. There is no second settlement required, when the construction is complete, at the time the construction loan is converted to longer, permanent financing. This can save thousands of dollare.
• Investment, Commercial or Speculative Construction Loans are available through Quest Funding Services at somewhat higher rates for investors, commercial or residential developers or speculators. These loans may involve purchases or refinances and can be used to purchase &/or develop raw land. Reduced documentation loans may be available as well, but this varies with market conditions.
• Owner-Builder Loans may be available for investors or owner-occupants but their availability varies with he market, location, borrower and property. As above, permanent financing approval may be required in advance.
• Rehab Purchases/Flips can be accomplished with some hard money loans (See Below). Please bear in mind, however, that these loans, in the present market, are harder to obtain. than previously, for borrowers with limited assets, investments or credit. Having an existing resale contract with a qualified buyer can facilitate approvals for these loans.

Foreign Loans are placed here on the Hard Money page simply because they involve properties outside of the United States, or its possessions, which puts them beyond the interest of most US, conventional lenders. However, under the right circumstances, these can be funded at reasonable rates/fees/terms. There are many factors...borrower, property and location in particular. we have access to funding for some caribbean and latin American regions. Call with your needs.

"Niche" Properties:  
A big factor in financing is the property's intended use:  Churches, private schools, adult clubs, mixed use properties, rural properties, farms and other properties often do not "fit into the mold" of most lenders.  Quest Funding Services has lenders for almost any type of property of all types for qualifying borrowers.  With a bit of luck, the rates and terms could be more favorable than you might, otherwise, have expected. If you have been having no luck finding the lender you need, contact us with the details of your money needs.

Transactional Loans provide extremely short-term funds when a transaction involves the purchase and almost immediate sale or "flip" to a subsequent buyer. This may be needed when, for example, a purchase is being made and a resale is already under contract, but the original seller will not permit an assignment of the first agreement. While great care will be exercised to ensure that the resale will occur simultaneously with, or quickly after, the first closing, no interest is charged on this funding. The short term and points charged (usually 2 or less) result in a high APR, but the cash out of the first buyer's pocket is reasonable and is often be chargable to the end buyer.

Cash-Flow & Private Note Buyouts:  
Are you holding a private note/mortgage or receiving some other cash flow that you would like to convert to a "lump-sum" payment?  Quest Funding Services has over a dozen buyers of discounted notes and other structured settlements/payouts that can put cash in your pocket now.  Partial buyouts are also possible.  As one of our competitors says..."It's your money". Get it now with a buyout arranged by Quest Funding Services.

Some Hard Money Myths Squashed 

Three common misconceptions about Hard Money Loans:

• They are available with no money out of pocket
• Hard Money loans are easy to find if there is enough property equity
• Hard Money is available for any kind of property

Few hard money loans are available with no borrower investment: Do not be deceived...Regardless of your credit score, or the amount of equity in the "deal",  unless you have a strong financial statement; you can apply using full documentation; and/or the property has good cash flow that will more than support the loan payments (DSCR greater than one); it is rare for hard money to be available for funding 100%. 

• 100% loans are possible. It will, depend on the property, the cash flow or exit strategy for the property, the loan size compared to value and the borrower's financial strength...but  true 100% loans, with nothing, and which roll in the closing costs, along with prepaid interest, are rare, especially when the borrower cannot document good income and other assets. Those online sources that say these loans are commonly available are often trying to sell you lists of lenders, or some such thing. After calling all of the lenders, you will usually find that the loan you want is not available, or it has lending guidelines that you cannot meet. 
• With 20-35% down, costs and interest might be rolled into the loan and the funding opportunities increase tremendously.  It is even possible to find funding opportunities that require as little as 10-15% down, plus costs. But, true equity lenders are rare. 
• Does this mean that no 100% loan funding is available? Not at all. For some properties, some locations, and some borrowers, we can fund your project with nothing out-of-pocket. We just want you to realize that this funding is nowhere near as common or available as you might think from the Internet. Contact us and we will see if you are in the niche of borrowers who do not need any cash to close on a loan. Just, please, don't be disappointed if you are not.

Very Few lenders "loan to own". Many potential hard money borrowers expect that there are many lenders who will be okay with lending money, regardless of who the borrower is, when there is a lot of equity. The theory, though not supported by reality, is that these lenders will lend even if it is likely that the loan will go bad and the lender will gladly take back the property and make a profit upon resale. This is the same misconception that is often associated with traditional, residential bank loans..."The bank would love to see me default so they can take back the property and sell it at a profit." But, most lenders do not want to "set you up to fail." Unfortunately, many lenders are now swamped with properties they took back and cannot sell. 

• The problem with this theory of bank REO's (properties taken back from mortgage defaults) is that, just as the defaulting borrower may be liable for a deficiency the bank experiences when takes back a property, the lender  could be obligated to pay any profit it makes, upon resale, back to the defaulted owner. The is no guarantee it can profit from a take-back. 
• Thus, in a large number of cases, REO's are more trouble than they are worth to the lender. They lose money, must manage and maintain the properties, etc. But banks are relatively poor property managers. In most cases,  both the lender and the former owner are in a losing situation. 

• There are predatory servicers of defaulted home loans that do know how to "milk" defaulted borrowers. But, it is normally more advantageous to all parties, to modify bad loans before a foreclosure...even if some lenders are too "pig-headed" to admit it. And, the end conclusion of most lenders is that they are ill-advised if the make loans to borrowers who cannot prove that they can handle the loans and are likely to default on them.

Hard money loans on 1-4 family residential properties, especially owner-occupied: Even though there are thousands, even millions, of these properties available at prices far below their sales prices of a few years ago, these are often the hardest to fund. Why? First, residential loans are usually covered by strict federal RESPA, state or other mortgage lending law. Second, many borrowers want to roll the costs into a loan and put nothing down...assuming that they can fix up the property and sell it at a profit. But, it is getting harder and harder to find lenders that lend based on the after-rehab value vs the present value or "as-is" sales price. This means that large down payments are often required. Alternatively, the loan may be available for a short term, but the lender may require that a long-term loan commitment be obtained, unless a very strong "exit strategy" is in place. Put yourself in the lender's position:  What makes you think you can sell the property for so much more that the bargain price that did not bring a buyer, possibly, for months?

Hard money for vacant land or non-income producing property:  One on the toughest things a borrower has to do is convince the lender that they can afford to pay for the loan. If they expect the lender to ignore the fact that the borrower may have low saving and little or no income, the borrower has to fall back on the net income from the property they want to finance. If it makes no money...is vacant or a single family home...this is very difficult. An exit strategy is important. That is, a plan to market the property.  If the property is to be retained, it must support itself. If it is to be resold, the borrower must prove that a resale is likely.  The best situation is to already have a buyer lined up.  If the property won't support itself, and the borrower can't prove that a sale is likely, or that they can afford to hold the property, don't expect a lender to take a risk.