Financing in Chicago>Question Details

ericdechant,  in Chicago, IL

Chicago Hard Money Loans?

Asked by ericdechant, Chicago, IL Mon Oct 29, 2012

Hello - I'm a General Contractor in Chicago. My father has an apartment building worth $2 million (5 - 3 bed, 2ba apts w/laundry, also a 3 bed, 2 ba house next door) that has little/no loans against it. We'd like to expand our real estate holdings by buying another apartment building and renovating it and keeping it if possible. Most of the rental property income is tied up with supporting my folks (semi-retired). As the post title says, we have a decent amount of equity but little provable income to cover a new loan. Also, the property is owned by an "S" Corporation that is wholly owned/controlled by my father. Most banks don't seem to want to deal with real estate owned by corporations. This would be a "Hard Money" loan? Any thoughts? Thanks, Eric

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0 votes Thank Flag Link Mon Oct 29, 2012
What you're seeking is a commercial loan and for the right property and sufficient credit/cash flow you shoul be able to get a loan, especially if you're willing to cross collateralize your existing property. I don't do commercial loans anymore but I'm certain you can get one. With the right down payment or collateral you could also get a hat money loan. Best of luck to you!
0 votes Thank Flag Link Mon Oct 29, 2012
good idea.. the loan would require a low LTV and would be commercial - maybe call Mike @ wells fargo 312-475-4193
0 votes Thank Flag Link Mon Oct 29, 2012
What I see there is a commercial loan and not a hard money loan. Hard money has super high rates.
Call me for more reasonable rates on commercial loans.
0 votes Thank Flag Link Mon Oct 29, 2012
There are lenders / banks out there for this, but you are going to need to make some concessions.

The #1 question will be how do you service debt out of revenues when it is going to support your folks?

You are going to have to personally guarantee any loan, and perhaps transfer the ownership out of the S corp. There are other ways to take advantage of the tax treatments via the corporation.

Other questions will center around the building, how you have computed its value, what other collateral can be tied to the loan you are looking for , and why don't you show income.

A hard money lender will want assurances just like a bank, and while they may be an option, understand there is little forbearance by this type of investor and they will act very quickly to re-coup their money if there are any problems later.

If the game plan is all about expanding your holdings, you should at least consider cashing out of the $2 mil building and leveraging the sale proceeds, it will be easier to get loans, and will allow for more net capital to invest.

If you would like to talk to more, give me a call. (773) 732-9123
0 votes Thank Flag Link Mon Oct 29, 2012
Hard money loans are tough to come by. I would speak to a lender and see what your options are
0 votes Thank Flag Link Mon Oct 29, 2012
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