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Welcome to the hard money
loan/commercial
real estate finance and joint ventures information center supported by the
Rainmaker Group of Companies. Rainmaker provides consulting for commercial
real estate finance and development joint-ventures. In some cases, these
higher-yielding programs make excellent sense for a developer who has everything
in hand but the bank. The most common use for these "hard money"
programs is the replacement of a construction lender on a last-minute
basis. The products available
for commercial real estate development finance include:
The most interesting of these approaches has to be the
sale of fractionalized real estate interests via the syndication
route to providing capital funding.
The strength of the transaction, the project team, the
market economics and the exit strategy all play a key role in the design of the
ultimate capital funding plan structure and you may rely upon Rainmaker
Marketing Corporation to help you structure a transaction that will meet the
test of the market. Each project is analyzed in terms of its peer group
and in terms of its unique attributes and development challenges. This
program can be utilized for a wide range of commercial real estate transactions
and raw land deals. Collateralization requirements are no longer set in
stone and are negotiable based upon the current capital market competitive
basket. Front-end fees have come down and investors (in some cases) are
amenable to having the front-end fees escrowed instead of paid and earned.
Recently, problems in the direct investment industry have
come to the attention of regulators and they are responding to the needs of both
investor and applicant, alike. As a whole, the industry is working a lot
harder to improve its image now that more aggressive investors (mainly hedge
funds) are entering the arena, driven by the potential earnings curve.
These investors are not going to make a mistake, so it would help to understand
the key issues, land mines and nature of the opportunity for the parties.
Direct investment (hard money) is driven by the following
key issues:
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Investment Horizon: Near-Term/30 Months or Less
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Front-End: Points (Typically 4) & Equity Interest
(Up To 30% - Deal by Deal)
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Back-End: Points & Buy-Back of Equity Interest
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Yield Target: IRR of Not Less Than 20%/Cash-On-Cash of
Not Less Than 30%
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Interest Constant: NYSE Prime + Spread (Deal by Deal
Assume No Less than 375 bps.)
This is one area of capital financing that
requires extreme due diligence on the part of the borrower
as there are a multitude of companies running the "commitment fee
scam" of having you pay a commitment fee or underwriting fee for
them to do nothing. Caveat Emptor.
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