Alternative Funding Group, Thomas Rothstein has recently released his top list of the best Hard Money lenders for real estate investments. In this article, we take a closer look at one such lender, Freedom Financial. If you have not heard of him, Freedom Financial is an investment property company that manages loans with mostly commercial properties. It is one of only a handful of hard money lenders that exclusively deal in distressed real estate loans. And they have some really great deals to offer: home equity conversion loans, REO conversions, commercial short sales, etc.
The company has recently made some bold choices in restructuring its loans and more specifically its commercial loan portfolio. At one time it had been lending money to businesses that were not in good standing. This was a huge mistake as many businesses soon went out of business and there was virtually no chance that these businesses would still be around in a few years. In retrospect, it was a mistake that cost Freedom Financial its capital as well as potentially many more clients Alternative Funding Group.
Now it is only lending to those businesses that are actually going to stay in business. It does not encompass any new small businesses. So, what does this mean for investors in other lenders? Well, most banks and credit unions have a “funds only” policy. The policy states that all lending activities must be done through the institution’s fund manager who is typically an investor in that bank or credit union. As you might expect, when this policy is put into effect, it causes many brokers to either choose to no longer provide any direct investment to commercial borrowers or to charge a higher commission on the funds they do sell to these companies.
Freedom Financial is a unique choice in that it has an independent fund manager who is also a member of the Alternative Funding Group. This independent fund manager has the ability to take a more aggressive approach to finding good commercial opportunities as opposed to relying on the recommendations of banks and other lenders. He is also able to take a broader view of funding sources and as such will be better able to identify companies with sound business plans that can fit within the guidelines of a profitable Alternative Funding Group. The Alternative Funding group itself is designed to help broker-dealers find and manage commercial loan opportunities.
Freedom Financial is a high risk type of lender. However, it is not necessarily considered to be a high risk investment by traditional investment guidelines. The truth of the matter is that the Alternative Funding group works to broker-dealers by finding the most profitable funding sources for these companies while concurrently reducing the overall risk that is inherent in the funding sources. If an investor was to look at the Alternative Funding listings, they would quickly see that most of these are for real estate related investments. While there is certainly the potential for diversification, it still remains largely dependent upon the level of risk inherent in the underlying commercial properties being sought out for investment.
As mentioned earlier, there are some very attractive Alternative Funding opportunities in Arizona real estate. These are generally small properties that have the potential to turn a profit when properly handled. In most cases, the Alternative Funding group will serve as the mediator in negotiating terms of repayment between the borrower and the lender. Once terms have been agreed upon, the Alternative Funding group may then purchase the property outright or provide the cash to the borrower in exchange for a note or a deed.
For investors interested in this method of investing, it is important to remember that it is very possible for them to find a variety of Alternative Funding opportunities. However, there are certain factors that must be considered before the Alternative Funding group is selected. First, the funding sources need to be solid and it is also essential that the investors involved are highly motivated. This is because the Alternative Funding group needs to be a highly motivated group if it is going to be successful in finding the most profitable commercial loan opportunities. This is why the selection of a reliable Alternative Funding broker is critical to the success of an investor as well.
If you are interested in making an investment in Arizona real estate, the Alternative Funding group can help you make an informed decision regarding your purchase of a piece of property. Although this financing option can be risky, it is definitely worth researching before making your final decision. Once you have taken all of the necessary steps to select the best Alternative Funding group, you can then turn your attention to signing the purchase contract on the property that you have secured with a qualified commercial loan.