One of the advantages of hard money loans is that the private money lenders who underwrite them are not bound by the same rigid federal restrictions that govern banks and other institutional lenders. This series of blogs will explore the types of out-of-the-box loans in which private money lenders specialize and highlight how hard money loans can be a crucial tool for the savvy commercial real estate investor. There are eight common types of loans that private capital lenders will underwrite which banks typically will not consider.  These will be explored in detail over eight blogs: Cash-Out Bridge Loans, Loans to Foreign Nationals, Marijuana-Tenanted Properties, Note-Purchase Loans, Non-Recourse Loans, Vacant Land Loans, Tight Timeframe Lending, and Beyond the Typical Requirements.

Why do Investors like Marijuana-Tenanted Properties?

Marijuana tenants are willing to pay significantly higher rents for well-located warehouse and dispensary properties. As more and more states legalize cannabis sales, the window for these higher rents is narrowing.

Why Use Hard Money to Purchase Marijuana-Tenanted Properties?

Because marijuana is only legal at the state level rather than the federal one, banks are unwilling to knowingly finance mortgages for properties that will be rented to marijuana tenants. Some landlords have had banks call their mortgages upon discovery of a marijuana tenant.,  In  the case of a retail complex with multiple tenants with only a single marijuana tenant may be sufficient for a bank to call their existing loan. The reluctance of banks to service the marijuana industry has created a gap in financing that hard money lenders have stepped in to fill. Private lenders can provide cash-out refinance loans to help landlords of current properties who need to pay back their bank loan quickly as well as acquisition loans to purchase new properties with rental potential.

Marijuana-tenanted property loans are just one example of the flexibility and willingness of private money lenders to work with their borrowers to find creative, outside-the-box lending solutions to  commercial real estate  financing needs when conventional lenders are not willing to fund these loans.. Check out the next blog in this series, Note-Purchase Loans, for another example of how hard money loans can work for you.

For more information about Montegra’s cannabis real estate lender program, contact us at 303-377-4181 or loans@montegra.com.