Bay Area Capital Commercial -
Transitional / Soft Money – better than hard money
This is not a bank product – this is a program from a private company. The loan is far less expensive than private or hard money, and it is perfect for investors who desire a more reasonable rate and cost structure during a purchase or refinance / period of transition. This is not a loan for construction, but it will allow some rehab expenses, it will consider an “after-completion” value, and it will work usually from properties that are vacant and non-income producing. This product is available in California. Eligible asset classes include multifamily and apartments, office, retail, hotel and hospitality, student housing, some industrial, possibly others.
This is a very powerful product for investors with property that does not meet the strict guidelines of the banks and Fannie Mae for issues that include:
- Property condition, including construction completion
- Inability to season income or demonstrate debt coverage
- Property in transition or Re-configuration (example old retail building now apartment)
Rates and cost can vary, depending upon class of property, strength of property performance, and strength of sponsor; however rates can be as low as 9.0% and generally are not higher than 10%. The fee structure is usually 3 points total (2 lender 1 broker), with a short three month prepayment penalty.
Note that this product requires tax filings, but tax filings are not used to debt service the loan. This is a critical distinction.
- Purchase or refinance (expedited purchase OK)
- 2-5 year term – interest only payments or flexible amortization term
- Up to 65% loan to future value and 60% loan to current value
- Property should demonstrate a good exit, but it does not need to be income producing right now.
- Three month prepayment penalty
- Can close as fast as 18 days
- $300,000 minimum loan size
- Appraisal to support future value, future income, future exit strategy
- Good sponsorship including strong resume and decent liquidity
- Full financials and documentation (not stated income)
- First liens only