Stated Income Commercial Loans a Great Alternative to Hard Money
Arcstone private money announced it is now offering “stated income” loans for commercial properties and for 1-4 unit non-owner occupied investment properties. Since the melt down of the mortgage market back in 2007, financing has been in short supply to real estate investors who purchase either commercial or 1-4 unit investment properties. Even less financing options are available to investors whose credit is impaired or their ability to pay back the loan is in question. Therefore, most real estate investors turn to hard money or bridge loan financing which relies solely on the asset’s value in order to qualify for financing.
Today, commercial real estate investors have more choices and better loan programs to choose from as “stated income” commercial loan programs are starting to make a comeback!
Michael Kronsburg, director of finance for Arcstone explains,
“We have had a proliferation in the number of commercial investors who are seeking out our stated income loan program as an alternative to hard money financing because of the lower costs and lower rates associated with our loan programs.”
Hard money lenders typically charge anywhere from four to six loan origination points depending on the transaction and the loan term is usually for a one year period, thus leaving most investors vulnerable and scrambling to finding new financing within the year. Interest rates on hard money loans typically hover around 10% or more. Kronsburg mentioned his stated income loans are priced well below hard money loans and loan terms are fixed for 5 or 7 years, thus giving the commercial real estate investor time to breathe and potentially reposition the asset before new financing is needed.
Not everyone is going to qualify for these “stated income” commercial loans because there are still FICO qualifications and down payment qualifications for purchase transactions. Nonetheless, these “stated income” commercial loan programs have opened up the market for real estate investors seeking alternative financing to hard money loans with the loan fees and loan terms more palatable and a lot easier to swallow.