Recently I had a client that I worked with for several months on getting a hard money loan so they could do a refinance/ cash-out on their portfolio. Their portfolio was a difficult scenario that you couldn’t put into “standard criteria” for most lenders. This, coupled with numerous properties to “refi”, caused the process to take a little longer than a straight refi on a single property. The client felt it was taking too long to get to a term sheet, so they took matters into their own hands. They found a broker/lender, one that spit out a term sheet quickly, signed it then went to closing.
I spoke with the client letting them know of the pitfalls that could come working with a broker/lender that moves that quickly on a loan like theirs. I articulated to the client as to how that loan process would go for them, what would happen and the difficulties they could face over the term of that loan. Despite the fact they went with another broker/lender on their own, I let them know that I would be here if they needed help or to find another lender when the term was due.
Fast forward to the term of that loan ending. The client calls me and lets me know all that has happened to them with this broker/lender and their experience with them. Sadly, most of what was articulated to the client had come to pass. I was happy to work with them again and have an opportunity to get them out of this “bad loan”. This broker/lender went so far as to tack on an additional 10% of erroneous fees just before closing!
Fortunately, I was able to work with the client and the broker community to bring down some of these erroneous fees their previous broker/lender was trying to levy. Additionally, we were able to find a lender that had reasonable fees and a loan structure that wouldn’t gouge them when the term would come due.
This is one of many reasons it is advisable to use a commercial loan broker when it comes to financing commercial real estate projects. Not only do we know the right lenders for your particular project, we also know the bad ones to avoid. We also have a community of loan brokers that are in national associations where we come together, not only to network with other brokers and lenders but to keep lenders in check and to weed out the bad brokers and lenders. We build relationships with lenders that our clients wouldn’t otherwise have time to do up to the point they need a lender.
Often times a commercial loan broker can get a project financed or fix a troubling situation with a loan that the borrower otherwise couldn’t. In closing, with the same manner you need a commercial real estate broker for the selling and purchasing of property, it is wise to have a commercial loan broker for financing these properties as well.
If this relates to you and you currently don’t have a commercial loan broker that will fight for you, feel free to contact us. We would love to go to work for you!