Scotsman Guide - June 2011 Commercial Edition

By Brian Walker
President and CEO
Walker Commercial Funding

Play by Private Lending’s Rules ivate Lendi R l s
Learn how to handle the differences of financing with hard-money lenders

Few institutional banks have funded large commercial proj- ects in the past two years. Most banks have even stayed away from simple income-producing property loans. This leaves many investors looking to finance commercial deals with nowhere to turn but private lending. In this environment, it’s critical for commercial mortgage brokers to understand the differences between institutional and private-funding business models.

Without institutional funding available, brokers must introduce seasoned developers and commercial property owners to the private funding world. Fortunately, private lending is actually simpler and more efficient than traditional institutional banking. There are several key differences that anyone seeking private financing should know, however. Brokers should keep in mind the following when working with private-lending deals:

1. Private funders usually have their
own idiosyncrasies. For example,
a funder may only be interested in
hospitality projects in Costa Rica,
Mexico and Panama, because it
knows the area and is comfortable
lending there.

• Send in a file missing relevant information. It is impossible for any funder to render an intelligent decision without all the facts. Files submitted without full financials and an accurate and compelling business plan get turned down. That digital submission represents the project, property and developer as a whole. Don’t be sloppy.

• Dictate your compensation terms. Most private-money funders will let you make a reasonable amount for bringing the transaction for ward in a professional manner, but demanding an unreasonable amount likely could kill your transaction. •

Brian Walker is president and CEO of Walker Commercial Funding, an international financial intermediary for all types of commercial projects, properties and in-ground asset funding. Reach him at (281) 964-8037 or brian@ walkercf.com. For more information, visit the company’s website at www.walkercf.com.

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