How to Close Commercial Real Estate Deals When You Don’t Have Earnest Money

The commercial real estate market in the United States continues to grow as the number and value of deals increases. With this growth, real estate investors are in a position to close more deals, expand their portfolio, and grow their wealth.

But this expectation has not been in sync with reality.

Sellers in the real estate market demand that buyers make a soft deposit ( also known as a good faith deposit or earnest money) as a show of commitment and interest in purchasing the property later on. This soft deposit gives buyers a purchase option a right but not an obligation to purchase the property at a particular price within a given period.

Typically, buyers demand a soft deposit of between 5% and 15% of the property’s price.

As a result, this amount of money has been a source of difficulty for illiquid real estate investors, often forcing many to pass on good deals that would have made them money.

Does it mean that real estate investors have to keep passing on deals and foregoing the opportunity to profit from the booming commercial real estate market?

Not necessarily!

In this article, we will consider three ways investors can raise money for soft deposits so they can evaluate and close more deals and build a profitable commercial real estate portfolio.

Traditional bank loans

A bank loan is an option that real estate investors can consider.

However, getting a bank loan can be difficult as they will require a credit report, which must show that you have a good credit score. Depending on the size of the loan and your credit report, they may also request for a collateral.

Even if you apply for the loan as a small business (if your real estate business is registered), they will still demand for a credit report and collateral. In fact, the loan rejection rate for SMEs is very high.

Moreover, banks take a long time to conduct due diligence on potential borrowers. Within this period, other buyers may have already secured the property that you have in view.

Online lenders

Unlike banks, online lenders are more generous with their requirements. Many of them are willing to consider lower credit scores and reduce the time spent conducting due diligence.

However, they will often charge a higher interest rate (compared to banks) and some of them may impose arduous repayment terms and use various unconventional means to recover debt.

This is because many of them are unregulated, thereby providing less security and confidence when compared with a traditional commercial bank.

Soft deposit financing

Soft deposit financing is a specific service offered by Duckfund and created specifically to help commercial real estate investors.

With this service, Duckfund will provide the soft deposit you need to get a purchase option on your favourite commercial properties. This soft deposit financing is accessible (it requires no credit report) and quick, since the application can be completed in 2 minutes, review takes just 24 hours, and funds are made available after another 24 hours.

It is also cost effective. Duckfund charges just 2% monthly commission on all its soft deposit loans, which is one of the lowest commission rates around.

Moreover, Duckfund can provide soft deposit financing for a number of properties at the same time so that you can work on closing multiple deals and continue building your commercial real estate portfolio even when you are illiquid.

If you are a commercial real estate investor that is short on cash to make soft deposits, consider using Duckfund’s soft deposit financing to raise the funds you need so that you can position yourself to benefit from today’s thriving commercial real estate market.

Press Release Distributed by The Express Wire

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