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Industrial & Warehouse
Hard Money Loans


First Capital Trust Deeds (FCTD) has originated several short-term industrial and warehouse hard money loans for business owners and real estate investors across the U.S. These loans give investors the flexibility they need to fund difficult properties, finance on a tight timeline, or create liquidity when cash is needed. As a mortgage brokerage, FCTD works with a variety of hard money lenders to give our borrowers access to the fast capital that helps them move forward with their industrial investments, whether purchasing, developing or refinancing properties.

What is an Industrial Hard Money Loan?

An industrial hard money loan is a type of financing, specifically designed for industrial properties such as warehouses, factories and manufacturing facilities. It’s typically offered by private lenders who specialize in short-term loans.

Industrial hard money loans are considered bridge loans, with higher interest rates and shorter terms than bank and institutional mortgages. Owner-operators and real estate investors use hard money financing when they need quick funding or their circumstances prevent a long-term mortgage on their property.

Types of Industrial Buildings

Industrial buildings are broken down into the following asset classes:

Distribution Warehouses

Distribution warehouses apportion 5% to 10% of the overall square footage for office space, with the other 90% to 95% for warehouse space. These buildings are located near freeways, so trucks can easily access the building.

Cold Storage Buildings

If you’ve ever walked the High Line in New York City, from Hudson Yards to the Meatpacking District, you’ll see remnants of cold storage facilities flanking the former rail-line-turned-city-park/walking path. Today, cold storage facilities have moved to newer industrial districts near freeways and major boulevards.

Data Centers

Data centers are warehouses with a large electrical and telecommunications capacity along with backup power systems. In the Western United States, data centers are common due to inexpensive hydroelectric power provided from dams on major rivers.

Manufacturing Buildings

Manufacturing buildings can have a number of uses, including food, beverages, furniture, plastics, lumber…or even shower curtain rings.

Flex Buildings

Flex buildings have both an office and warehouse component. FCTD has most frequently originated this loan for cannabis cultivation and distribution purposes. Research and development companies also use flex warehouses.

Distribution Center Warehouse Hard Money Bridge Loans

Purpose of Industrial Hard Money Loans

Owner-operators and real estate investors use industrial hard money loans for a variety of purposes.

Purchase Vacant Building

Investors use 12-24 month hard money bridge loans to acquire vacant buildings. Banks and institutional lenders require properties be leased before approving a long-term mortgage on an industrial property. Hard money loans allow an investor to acquire the property, market to a new tenant or tenants, and then go to a bank for long-term debt.

Fast-Closing Purchase – Bank Financing Falls Through at the 11th Hour

I write about this all the time, but sometimes bank financing falls through at the last minute in a purchase transaction, and the buyer needs to close in less than a week. Hard money lenders can usually deliver. The nice thing about these situations is that the appraisal and environmental reports are already complete, so the lender can quickly review the information and draft loan docs to close on time.

Rate and Term Refinance

We had a situation a few years back where an owner of three industrial buildings received an acceleration notice from their Commercial Mortgage-Backed Securities (CMBS) lender. They had leased space to cannabis companies, which violated the terms of the loan agreement. A hard money loan was an ideal exit out of this problem.

Refinance (Cash-Out)

FCTD had a warehouse owner in San Diego with a 10-year fixed rate mortgage in first position with their credit union. The borrower wanted to pull out $1 million cash against the equity in the building, so FCTD secured a 24-month second trust deed for the owner.


We had an investor in Northern California acquire a warehouse along with seven additional acres of undeveloped land. They used a 24-month bridge loan to close on the property. Afterward, the investor split the lot into two parcels, and completed the engineering, plans and permits. They then refinanced the existing building into a long-term CMBS loan and obtained a construction loan to build the new warehouse facility.

What are the Terms, Pricing, Points, Fees, Closing Costs, and Interest Rates for Industrial Hard Money Loans?

I could say pricing generally falls between two points at 10.00%, and five points at 13.00%. However, pricing is case-by-case, based on factors including:

  • Loan-To-Value (LTV) – For first mortgages
  • Combined Loan-To-Value (CLTV) – For second, third, or cross-collateralized loans
  • Purpose of Loan – A purchase, refinance, renovation, construction, etc.
  • Condition of the Property – Turnkey or major renovation?
  • Scope of Work – Will the property be renovated? How long will it take?
  • Location – Urban, suburban or rural
  • Cash Flow – Fully leased or vacant?
  • Borrower Strength – State of their liquidity, credit, etc.

Beyond the terms of the loan, a borrower will need to pay for an environmental report – either a Phase 1, Phase 2, or both. These reports can cost between $2,000 to $8,000, depending on the scope of work.

An appraisal may also be ordered. A full commercial appraisal can cost between $2,500 to $3,500. However, some private lenders do a desktop review of the value and reach out to a commercial real estate broker in the area for their estimate. I worked on a $2.5 million bridge loan for a partially leased warehouse in Los Angeles’ Koreatown, where the lender internally valued the property with input from a top commercial broker they rely on for this asset class.

Most industrial hard money loans have a 12-24 month term, with the occasional loan extending to 36 months.

What Are Our Hard Money Industrial Loan Requirements?

Beyond the appraisal/valuation and environmental report, lenders will require some or all of the following items to underwrite the loan:

  • Application
  • Personal Credit Report
  • Background Check
  • Personal Financial Statement
  • Tax Returns – most recent year’s filings
  • Extensions – copy of the filed tax extension
  • Rent Roll – for leased buildings
  • Profit & Loss
  • Bank Statements – two months for the entity that owns the building
  • Entity Documents
  • Valuation
  • Environmental Report

How Long Does an Industrial Hard Money Loan Process Take?

The process from start to finish usually spans 7-15 days. It can be shorter, as in previously mentioned cases where bank financing fell through at the 11th hour. Other loans take longer, even out to two or three months, if an appraisal or environmental report is required. FCTD has closed loans in as little as 24 hours, but that’s the exception that happens only a few times each year, when we drop everything to get a loan closed for an emergency situation. We prefer normal transaction times!

Exit Strategy: Paying Off the Hard Money Loan

Going in, you need to know how you’ll get out of the bridge loan. FCTD won’t originate a hard money loan if the borrower doesn’t have a solid exit strategy.

Property Sale

Selling a property is a straightforward way to pay off the loan. During underwriting, FCTD will evaluate the expected sale price to make sure the bridge loan doesn’t over-encumber the property. We want borrowers to have cushion if a market dip causes them to lower their list price, so they can still have proceeds from the sale, and avoid closing with additional funds to pay off the loan.


FCTD wants to know what type of loan a borrower will use to pay off the hard money bridge loan.
We see the following loans paying off our bridge loans:

  • SBA 7(a)
  • SBA 504
  • USDA B&I
  • Bank Loans (community and regional banks where the borrowers have depository relationships)
  • CMBS
  • Construction Loan

An industrial hard money bridge loan is short-term financing for investors of properties such as warehouses, factories, and manufacturing plants who need quick access to capital. While industrial hard money loans have higher interest rates and shorter terms, their flexibility and speed is sometimes the best fit to finance property acquisitions, renovations, or other large-scale projects quickly and efficiently. FCTD has the wide-ranging expertise and lender portfolio to connect borrowers with the right financing solution when a hard money loan is the best option.


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