What is a wrap loan in commercial real estate?

A wrap loan in commercial real estate is a loan structure where a single loan covers both the acquisition cost and the construction or improvement costs for a property. The loan, often referred to as an all-in-one loan or a blanket loan, is wrapped up into a single loan product and then secured by the same property being purchased, improved or constructed. In California, wrap loans are available from various lenders, including banks, mortgage companies, and other financiers. The loan amount is typically dependent on the borrower’s creditworthiness and the type of property being purchased. The loan application typically requires a detailed description of the property, financial statements, appraisal, and other related documents. Wrap loans can be beneficial to borrowers in California who need financing for commercial property purchases because they are easier to manage than two separate loans and often offer lower interest rates and more flexible repayment terms. However, wrap loans also come with more risk for the lender as they can be harder to foreclose on if the buyer defaults on the loan. It is important for borrowers to weigh the benefits of a wrap loan against any risks or disadvantages to ensure that it is the right financing option for their situation.

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What is a wrap loan in commercial real estate?

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