Real Estate Financing
If you are on the market for high-end real estate but would rather not use a traditional credit-based lender, asset-based real estate financing could be the perfect option for you. Asset-based real estate financing is taking the real estate investment world by storm. Whether you are looking for a luxury home, private luxury retreat, or investment property, asset-based financing has created new opportunities for buyers to capitalize on the booming real estate market.
What Is Asset Based Real Estate Financing?
Traditional lenders, like banks, make the decision on whether or not to loan you money based on your credit history and the amount of debt you owe. Asset-based luxury real estate financing, on the other hand, allows you to acquire the funding necessary to purchase the desired property based on the value of your current assets. High net worth does not always mean a buyer has a good credit track record that appeals to traditional lenders.
This is where an asset-based real estate financing lender comes into play. They are not usually focused as much on credit history as they are on the value of the collateral. This allows individuals with a not-so-appealing credit history to still acquire the loan.
Types of Asset-Based Real Estate Collateral
The type of collateral a lender will accept can vary between lending firms, but some of the commonly accepted forms of collateral are:
- Luxury Vehicle
- Airplanes and jets
- Real estate
- Investments such as stocks, bonds, and cryptocurrency
- Valuable memorabilia or collectibles
- Precious metals
How to Finance a Commercial Property
A business owner can acquire an asset-based loan using the building or land’s net worth to secure financing that would otherwise not be available through a traditional lender.
To secure an asset-based loan, the company’s assets will be used as collateral. These assets can include real estate, equipment and machinery. A lien on the asset will be established after the lender provides funding to the company.
Traditional lenders rarely use personal real estate as collateral to secure funding, but with asset-based financing, almost any commercial property can be used to secure a loan.
High-End Asset-Based Real Estate Financing
With asset-based real estate financing, you are able to acquire funding for the purchase of high-end real estate based on the value of your current assets, not your creditworthiness.
Asset-based lenders do not usually require an in-depth application with pages and pages of information to fill out. You can, however, expect to provide thorough documentation of the property’s value. To establish the loan amount that will be offered and the interest rate, the lender will consider the investment objective, the as-is and after repair value of the property, the anticipated return on investment, and the investor’s exit strategy.