Understanding Private Real Estate Financing
Private real estate financing can provide investors, property owners, builders, and developers with alternatives to conventional bank financing. These programs are often structured around the property, the proposed transaction, the borrower’s objectives, and the strength of the repayment or exit strategy.
Financing may be available for property acquisitions, refinancing, renovations, construction, lease-up, stabilization, foreclosure prevention, and other real estate transactions that require a practical source of capital.
Unlike traditional lending programs that may rely heavily on standardized qualification requirements, private real estate financing can allow a broader range of factors to be considered. These may include the property’s current value, projected value, rental income, occupancy, renovation plans, development budget, borrower experience, available equity, and expected repayment source.
Potential financing options may include
- DSCR rental loans
- Fix-and-flip financing
- Residential and commercial bridge loans
- Ground-up construction loans
- Multifamily financing
- Mixed-use property loans
- Hotel and motel financing
- RV park loans
- Mobile home park loans
- Rate-and-term refinancing
- Cash-out refinancing
- Foreclosure bailout loans
Important Program Considerations
Every transaction is different. Available terms, loan amounts, leverage, interest rates, documentation requirements, and closing timelines will depend on the property, requested financing, borrower qualifications, and overall risk profile.
Information to Prepare
To begin the review process, provide preliminary information about the property, requested loan amount, intended use of funds, estimated value, current debt, project timeline, and proposed exit strategy. Your scenario can then be evaluated to determine which financing programs may be appropriate.