Private Investors Drive Booming Online Commercial Lending Market

With booming real estate markets and plenty of opportunities in emerging world countries, the current global commercial property boom is largely being driven by online private investors with hundreds of millions of dollars to lend.

Atlanta, GA (PRWEB) May 13, 2007 -- Rapidly growing commercial property markets and a wealth of opportunities in emerging world countries is driving a boom in private investor-fund-led online commercial property lending.

Comparing the commercial property development scramble to the online gold rush, Ms Helen Bassett of commercialfundstogo.com said it was "quite common" for agents to receive six applications a day for commercial real estate projects valued at anywhere from $50 million to $1 billion.

"The ease and speed with which deals are being done online is quite amazing," Ms Bassett said.

"Much of this can be attributed to private investors worldwide who take a different approach to the traditional bank or broker. Basically, if a deal makes sense, they will consider it and make a decision -- fast.

"Increasingly, these investors are prepared to underwrite commercial property ventures -- worth many hundreds of millions of dollars - with no credit checks, no complicated documentation, and no income verification."

Typically, these loans fall into two categories, with the first being a "conforming" loan, when full documentation with limited concern for credit is required, while the second is "non-conforming" where there is no documentation required, no credit checks, and no income verification.

Ms Bassett said lenders were prepared to lend up to 90% of the value of the project on non-conforming loans, depending on the project type, although deals such as non-conforming reacquisition transactions required a maximum of 50% LTV for consideration.

"Conforming transactions approvals rely heavily on what cash an applicant has vested in a submitted project. Substitutes for cash include either collateral or a winning pro forma, but not less, while equity in real estate is not generally considered a viable substitute," Ms Bassett said.

"Regardless of what an applicant might choose to substitute cash with, in order to justify an approval, no substitute can ever be effective without a project that makes sense.

"A winning pro forma, if truly winning, can easily substitute for cash and ultimately lead to 100% LTV funding, though not without sufficient cash for closing.

"Commercial transactions generally take 30-60 days to close, providing they are approved and accepted."

###