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Successful investing needs capital. For real estate investors, that often means mortgaging existing properties as a source of attaining capital. Traditional lending through banks and other financial institutions is often the method of acquiring hard-money loans. Sometimes though, the loan approval process may be too time-consuming or their lending practices may be too restrictive for investors.
Keyur Patel (top, left) and Naim Hamdar (top, right) of Synergistic Funding share three types of creative mortgages that are available to real estate investors as an alternative to traditional institutional lending.
- Commercial Mortgage-Backed Securities – CMBS Loans
- Currently strong alternative loan product
- Cyclical nature – this type of loan dissipates with market downturn
- Undisclosed, non-restrictive cash-out feature
- Assumable
- Non-recourse
- Quick execution – loan sold as packaged, traded security or bond
- Competitive Interest Rates compared w/ institutional lending (< 8%)
- Bridge Financing
- Often used as alternative loan for investors making balloon payments on existing mortgage and institution not offering re-financing options
- Up to 65% loan-to-value
- Typical terms – 1-3 yrs. w/ balloon
- Interest rates between 8-12%
- Quick-closing
- Non-Recourse
- Creative underwriting – “carve-outs” prevent loan being taken out with malicious intent
- No minimum for financing, but $100 million ceiling
- Line of Credit
- Designed for seasoned investors w/ multiple projects per year
- Private lines of credit offered to investors
- Available for entire term (1yr)
- No annual fees if not used
- Once used, 1% monthly fee applied + 9-month repayment term
- Quick-closing
- Relatively quick approval turnover (1-3 weeks)
- Investors must have at least 2 successful closings per year
- 1 yr. tax returns
- 3 months bank statements
For more questions on these types of creative mortgages for real estate investing or to find out about other services Keyur and Naim offer:
Call Synergistic Funding – 813-333-5128
or email them at info@synergisticfunding.com
