Real estate buyers find quick money – but at a hefty rate

06/23/2011

The advantage of debt funds over traditional lenders is the speed in which they can make a loan because funds don’t have the same layers of underwriting. But higher interest rates typically boost the cost of borrowing, Miami mortgage broker Adam Greenberg said.

“[Debt] funds don’t give you the best interest rate,” said Greenberg, managing director of BayBridge Capital Advisors, which provides bridge loans. “They compete on other facets of a transaction like timing, leverage, flexibility — that sort of stuff.”

Greenberg said he recently helped a client secure a bridge loan for under $10 million to acquire a retail center in North Miami Beach.

The property, which had been repossessed by a bank, was more than 30 percent vacant and needed to be re-tenanted and remodeled, he said. Still, a debt fund financed 80 percent of the purchase price, Greenberg said, declining to name the lender, which charged the borrower 2 points and 12 percent interest on the two-year loan.

“The lender was very comfortable in owning the asset if things went bad,” he said.

For the FULL article from the Daily Business Review by Paola Iuspa-Abbott, please click HERE.

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