Bridge/Hard Money

Bridge Loan

Core Commercial Capital (“CORE”) offers bridge financing through its extensive lender relationships throughout the U.S. These loans are primarily used for interim financing for construction, rehab or for fast purchases where time is of the essence.

CORE is committed to helping borrowers throughout the U.S. and our mission is to provide the highest level of customer service throughout the entire loan process… and the name “Core Commercial Capital” is synonymous with that commitment.

Qualifications for these types of loans depend on the market, property type and strength of the sponsors. Rates and terms vary but usually terms are for 1-3 years interest only with rates starting in the 7’s.

Property Types Include:
  • Multi-Family
  • Retail
  • Office
  • Industrial
  • Hospitality
  • Mobile Home Parks
  • RV Parks
  • Other

Hard Money Loans

 Core Commercial Capital can provide hard money financing through its extensive relationships with private lenders throughout the U.S.
A hard money loan is a specific type of financing in which a borrower receives funds based on the value of a specific parcel of real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial property loans and are almost never issued by a commercial bank or other deposit institution.

Hard money is similar to a bridge loan which usually has similar criteria for lending as well as cost to the borrowers. The primary difference is that a bridge loan often refers to a commercial property or investment property that may be in transition and not yet qualifying for traditional financing. Whereas hard money often refers to not only an asset-based loan with a high interest rate, but can signify a distressed financial situation such as arrears on the existing mortgage or bankruptcy and foreclosure proceedings are occurring.
 

Loan Structure

A hard money loan is a species of real estate loan collateralized against the quick-sale value of the property for which the loan is made. Most lenders fund in the first lien position, meaning that in the event of a default, they are the first creditor to receive remuneration. Occasionally, a lender will subordinate to another first lien position loan; this loan is known as a mezzanine loan or second lien.
Hard money lenders structure loans based on a percentage of the quick-sale value of the subject property. This is called the loan-to-value or LTV ratio and typically hovers between 60-70% of the market value of the property. For determining an LTV, the word “value” is defined as “today’s purchase price.” This is the amount a lender could reasonably expect to realize from the sale of the property if the loan defaults and the property must be sold in a one- to four-month timeframe. This value differs from a market value appraisal, which assumes an arms-length transaction in which neither buyer nor seller is acting under duress.

Below is an example of how a commercial real estate purchase might be structured by a hard money lender:
  • 65% Hard money (Conforming loan)
  • 20% Borrower equity (cash or additional collateralized real estate)
  • 15% Seller carryback loan or other subordinated (mezzanine) loan

Property Types: Hard money loans can be used for almost any property types depending on the circumstances, strength of the sponsors and a viable exit plan (therefore, how will the hard money be taken out after the term of the loan).