Real estate is the largest asset for most people. The problem with this asset is that it is largely illiquid. For some consumers, obtaining a heloc, or home equity line of credit, is one option to access this equity. For many self employed individuals, real estate investors and business owners, however, this is not always an option. For situations that are out of the box, it is still possible to access equity with a non traditional private HELOC, second or third loan.
I specialize in helping people who cannot obtain financing through more conventional means. The trade off for this flexibility, however, is cost. Interest rates on non traiditional, private money options are going to be higher than bank financing. There are a number of scenarios, however, where this trade off makes sense. Business purpose loans are one of those categories. Many business owners or professional real estate investors need short term financing to grow their business or take advantage of an opportunity that has presented itself. By leveraging private investor funds, this money is often times availalbe within 10 business days.
In addition to the flexibily and speed, the ability to be subordinate to an existing bank loan - or even two or three existing bank loans - is anventagous. Existing low rate money does not need to be replaced, and the higher cost, short term funding of a private second or third can be repaid, typically without any prepayment penalties, while maintaining the advantage of an existing long term loan with attracive rates.
When the use of funds is for business purpose, the main concern for loan qualification becomes loan to value. The equity in the property is what allows the access to required funds. The loan to value ratio on these types of loans can range depending on a number of factors, but usually falls out between 65% and 75% of the total value of a property. Most property types can be used for these short term private money seconds and thirds. Rental properties, single family residences, apartment buildings, commercial buidings, mixed use, even industrial and unique property types. One exception is raw land.
We specialize in California private money loans, and can help with California private money seconds - and even thirds! You can visit our home page at ACALending.com to learn more, or you can contact us to discuss any questions you may have about these non conventional funding options and how they may assist your business.
