Private Financing

ed berlinskiEd Berlinski, S.E.C., CCIM, is actively engaged in commercial and general real estate brokerage in his home community of Rochester, N.Y. He is also a private real estate financier who provides funds to assist in closing a transaction or solving a short-term need for cash.

Ed visited with the publisher of the S.E.C. Real Estate Observer recently for a conversation about the private real estate financing aspects of his real estate practice.

Observer: Ed, describe the kinds of financing opportunities you typically fund?

Berlinski: As a lender, I often make loans to real estate investors and partnerships with a need for funds to bridge the gap between closing and obtaining long-term financing. A typical loan is secured by the property, with a term of 18 months or less, and fully amortized over the term of the loan. The interest rate will be higher than bank rates, but will be competitive with others who make similar loans. In the past, many of my loans have been made to those who need an immediate, ready source of short-term cash to close a transaction.

Observer: What is your source of funds for your lending activities?

Berlinski: Typically, the source of funds is my own personal assets. As such, I can move very quickly and have committed to funding in as little as 3-4 business days from the first contact.

Observer: Tell us about the type of property and the collateral you require.

Berlinski: Geographically, I will lend on properties anywhere in the contiguous 48 states and will consider almost any type of real estate as security, including land. The size of the loans is most often in the $25,000 to $200,000 range. I will also consider an equity position in an investment that is short term in nature with a strong upside and excellent track records for both the property and the borrower.

Observer: What about your underwriting requirements for lending funds? Do you require borrower financial statements and personal guarantees, property appraisals, title reports and insurance and other typical loan underwriting criteria?

Berlinski: The degree of underwriting requirements depends on many factors, including geographical location of the property, type of property and my personal knowledge of the borrower requesting the loan. Usually most of the items mentioned above are required. In particular I gravitate toward self-liquidating transactions that will generate proceeds for repayment as part of the normal course of the project.

Observer: What, in your opinion, are the two most important factors that you look for when you lend your funds?

Berlinski: That’s easy… first, the character and experience of the borrower and second, the character and experience of the borrower!! In only one instance I can think of have I seriously misjudged this important factor and I’ve paid handsomely for this misjudgment.

Observer: Any final thoughts you’d like to leave with our readers, Ed?

Berlinski: Yes. The lending business appears much simpler than it really is. It takes many years to refine each lender’s proper methodology and settle on the appropriate risk/return structure that fits the mindset of each lender.

Observer: There is an old saying that goes “If you are going to lend money, think and act like a lender.” Any comments?

Berlinski: Absolutely! The other side of that coin is also the key to a successful lending transaction: “If you are going to be a borrower, think and act like a lender!!”

Observer: Thanks for your time and insights, Ed.

Ed Berlinski, S.E.C. is a Certified Commercial Investment Member (CCIM) and a member of the Society’s Board of Governors where he serves as Chairman of the Production Committee. He is an Associate Broker for RE/MAX 1st Commercial in Rochester, N.Y. active in real estate counseling, general brokerage, real estate finance, and investor representation. Ed has a strong financial background, having been a corporate financial officer for several major corporations. He has a BS in Economics from Villanova University and an MBA in Finance from the Wharton School of the University of Pennsylvania. Ed has also completed the Executive Management Program at Yale University.

Comments are closed.