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By Alexa Mizrahi
Loan Oak Fund LLC
Selecting the Right Private Lender
Knowing what to look for is the key to the best service and profit
As the commercial real estate market continues to improve, more and more private lend-
ers are surfacing. With many options,
it can be difficult to determine which
to choose to best meet your needs
and those of your borrowers. Com-
mercial real estate brokers need a go-
to lender that will perform. What is
the right lender to work with?
It pays to do your due diligence when
1. Type of lender
evaluating and selecting your lender —
ference. The following are eight areas to
consider when choosing a private lender.
You should distinguish whether the
CPA is a Registered Investment Adviser with the Securities and Exchange Commission
COLUMBIA PACIFIC ADVISORS
We are a fully capitalized private lender established to provide bridge financing on any type of cash flowing
commercial real estate including multifamily, office, warehouse/industrial, hospitality and senior housing anywhere
in the country. Our target loan amount ranges between $2 million – $20 million and typically close in 2-3 weeks.
For more information please contact:
– 2013 PRODUCTION –
REGION PRODUC T T YPE
•;First, Second and Mezzanine financing options available
•;1-3 year bridge loans
•;$2 million – $20 million bridge loans for various product types
•;Typical closing time 2-3 weeks
capital source is a direct portfolio
lender or a quasi lender. Direct lenders are preferable because they do not
rely on other lenders’ funds, allowing
them to set their own parameters and
maintain consistent terms. They have
the funds available to close quickly
and do not have to scramble to find
investors for each loan.
Many companies advertise themselves as direct lenders, but are actually quasi lenders because they broker
the loans to private lenders, which can
result in higher fees. Another disadvantage of this type of fractionalized
lending is that it’s not as efficient or
reliable as direct lending.
2. Size of lender
When analyzing and comparing lenders, you should identify their size and
funding volume. Larger is almost always better. A private lender with a
large fund is more likely to close your
loan than a lender with limited capital. An established fund with many
investors is generally more reliable
than a small fund. A strong track record of high lending volume indicates
that a lender is capable and willing to
fund more loans.
3. Broker protection
Another important determination when
selecting your lender is to find one that
will protect your interests. You should
seek out lenders that will honor broker
relationships and work to protect commissions. Your business is the lifeblood
of private lenders. Without continuous submissions from brokers, private
lenders have to work harder to source
deal flow. With that in mind, there is no
reason to settle for lenders that will not
protect you and your commissions. That
protection should be stated upfront and
throughout the process — broker compensation should be disclosed in the
initial commitment letter and in the loan
4. Clear lending parameters
To find lenders that will meet all your
needs and special requirements, identify what types of loans are made by
each lender you’re evaluating. Your
lender should have clearly defined
loan parameters and straightforward
answers to questions such as:
• Where do they lend?
• What types of properties can be
used as collateral?
• What are the minimum and maximum loan amounts?
• What is the maximum loan to
• Is there a prepayment penalty?
• Is a personal guaranty required?