Buying Commercial Property on your Own

Today everyone is looking for the easiest way to learn for how to buy commercial properties. Most people keep asking as what they should do, so that they can buy their commercial property. Well the answer to all such questions could be that: you should be aware of all the rules and regulations of the game. By becoming a commercial mortgage broker, you can solve a lot of your problem while buying a commercial property for yourself.

Now the question may arises that what will I gain if I become a commercial mortgage broker?

Unless you have a lot of money, you will need to borrow money in order to buy commercial properties. Well if you are a commercial mortgage broker then you will certainly have good working relationship with a lender. This will help you in having a better chance for you loan approval. And also you are not breaking any rule for this special treatment. It is only because you have worked with the lender. You will be aware of what are the property types they lend loan on and what are the applicable conditions. You will also be aware of what are the criteria you need to satisfy. Remember the clients may have different needs from yours you are required to know different programs for the same. Your knowledge about the different programs should be up to date as the programs differ with different needs. Also if you are working with a borrower, you will know what are the properties you should own and which type of properties can benefit you.

Now that you are a commercial mortgage broker you will be able to have contacts in the commercial appraisal industry, also with commercial realtors and with commercial property managers too. This can help tremendously. It helps you in judging the properties as which one are good and which one is bad. And these contacts are not only restricted to your place you can develop a network across the country. So you can increase the number of options for yourself.

Obviously if you are working as a commercial mortgage broker and you are providing a good service to clients by getting the best financing for their projects then you are paid handsomely for it. Commercial mortgage broker's fee generally depends on the complexity of the loan and the level of the services you are providing. He/ She can earn anywhere from 0.5 to 3 points.

There are different points that can help you buy a commercial property if you are a commercial broker yourself as you will be able to know all the facts and the ground reality for the property you are looking for. It would be easier for you to manage the loan, as you will be having different contacts. And as you are working in the same field and earning handsomely funds are no problem. So if you are looking for a commercial property be in the same field to be aware of all the facts.

Purchasing Small Commercial Properties

Purchasing small commercial property is not as difficult as many people might think. If you wish to invest in a small commercial property, chances are that the bank will not need income verification and flawless credit record on your part to lend you the money. The commonly accepted definition of small commercial property is any property worth $2 million or less.

Purchasing Small Commercial Property: What You Need To Know

Getting a loan;
The property you want to buy decides the loan amount. If you already possess any small commercial property, then you can get the money for cash back.

Small commercial property includes shopping area, offices, bed and breakfast, warehouses, mixed use area, restaurant, bar and mobile home parks. Therefore, you need not stick to office space or shopping plazas.

Small commercial property loans are larger compared to residential property. Since there are fewer investors dabbling in small commercial property, you can have more investment opportunities and lesser competition.

Look under loan lists to find properties you can invest in. You can talk to your previous clients about their property, and make a reasonable offer to them. If any establishment rents their property, you can approach them to see if they would be interested in selling.

To find buyers for your small commercial property, approach businesses that lease office or retail space. They may be interested in buying your property.

Small commercial property transactions need extensive paperwork and documentation. Before extending the loan, the bank or financial institution will see if the property will generate a good cash flow. This is the reason that your credit record is not very important when it comes to loans for small commercial property.

You need to give detailed information to the lender for getting a loan. You have to tell the lender about rents, operating plans and leases before the lender can consider extending a loan to you.

The lenders for the property need not be only banks. You can approach investment banks, residential lenders and credit companies to get loan for purchasing small commercial property.

Most credit lending institutes will do an appraisal of the small commercial property you wish to purchase before extending a loan for it. They will either use a full narrative report that considers the income, cost and profitability, or a 71B. Many financial establishments also use in-house evaluation.

If you wish to invest in small commercial property, there is no time like the present. Low interest rates on loans, more relaxed credit criteria, and the demand for small commercial property is being driven by entrepreneurs, and startups has made purchasing small commercial property as a viable investment option. In addition, the interest rates are less than what you might have to pay for investing in residential properties. All these factors make small commercial property investment attractive to real estate investors as well as small businesses.

How Do I Sell My Commercial Real Estate Note At A High Price?

If you're looking for a quick source of cash, you might be saying to yourself: I want to sell my commercial real estate note. Well, that's not a bad idea, given the fact that you can receive a lump sum of money without the headache of a loan. Nowadays, note sales can be executed very quickly, and you have more options today than ever before.

Regardless of whether you are looking to sell commercial real estate note, residential or any other type of cash flow paper, you need to find a reputable, experienced note buyer to ensure that a) you will get top dollar for your note and b) you are aware of all of your options. Although most sellers choose to sell the entire note, which yields the highest amount of money up front, it's important to know that you can also sell just a portion of the note. This is known as a partial, and it allows you to get a sum of cash for "x" amount of payments. You then start receiving the monthly payments again afterwards.

So if you're thinking: I want to sell my commercial real estate note, know that there are several ways you can go about it, and figure out which way works best for your particular situation. Whichever option you do choose, it always works out in your favor because money today is always worth more than money tomorrow. You might have heard this phrase before, but what does it mean for you when you sell commercial real estate note?

First of all, it means that the value of money decreases over time. For example, $50,000 today will buy you a very nice sports car. In 10 years, that same $50,000 will probably buy you a small entry-level coupe. So you can see that getting a lump sum of money is much more favorable than receiving small monthly payments for years and years, especially for those who need cash right now.

Another good reason to sell your commercial real estate note is it eliminates the uncertainty that comes with receiving monthly payments. Sure, the payments are coming in now, but what's going to happen in 6 months, or a year, or 5 years? You just never know. Something could happen to the buyer that hampers his or her ability to make the payments. You might find yourself in a situation down the road where monthly payments are no longer a good option for you.

You might be asking yourself, I definitely want to sell my commercial real estate note, but how much can I get for it? That's a good question of course, but there is no set answer. The amount you can expect to receive will depend on a number of criteria, including but not limited to: the balance remaining on the note, the time left, the property value, timeliness of payments received to date, financial stability of the payor, overall risk and other factors.

Keep in mind that the commercial real estate note buyer is assuming all of the risk that comes with purchasing your note, so it has to make sense for them financially. But even though you might sell commercial real estate note at a discount, the money that you receive in exchange is guaranteed, and you can't put a price on that!

We hope that we've helped you answer the question: Should I sell my commercial real estate note? Feel free to visit our site for more information.

Commercial Real Estate Trends In Miami-Dade County

The South Florida region knows too well that the real estate slump has truly hit the housing industry real hard, with vacancies rising and leasing rates falling down.

While the residential markets are bearing the brunt, surprisingly, commercial properties here continue to fetch record prices and have remained buoyant because of much lower vacancy rates.

A Quick Overview Of Commercial Property Markets In South Florida

A closer view of the areas markets reveals just how poorly commercial real estate is faring, at least in terms of occupancy. In Miami, for example, residential units in the central business district increased 55% since 2000, while the office increase was 9.5%, according to local real estate industry observers. And even if developers contemplated a new office building, the construction companies were likely tied up with residential jobs until recently, notes some analysts. Overall, South Florida's economy has been steadily improving, and those forces have combined to boost the office market there.

Why The Commercial Market Wasn't Hit As Hard As The Residential Sectors

According to housing market analysts, unlike the residential market, where investors are most often private individuals, commercial real estate investors are more diverse and not nearly as tied to mortgage rates. Commercial property market also investors include institutional buyers such as pension funds that pay cash instead of borrowing money. Many analysts have noted that there's still strong demand for commercial real estate, particularly among foreign investors, and many don't see any slowing of investor interest, particularly in retail and hotels.

As home-ownership trends are tied directly to income and interest rates, observers have noted that home buying was made unusually affordable in the past few years because of low interest rates and the popularity of mortgage-financing options such as interest-only loans. This trend has led to high demand, a lot of speculation and lots of new building.

However, when interest rates began to soar, it became much harder for individuals to afford or even to qualify for housing loans. This end result has produced a glut of homes and condos in many areas. While interest rates also affect commercial mortgages as well, cheap debt has been one major factor why there has been so many bidders on the commercial buildings sold over the past few years, which have pushed prices to record levels and yields to record lows as well.

The Office Markets May Be Slow, But The Retail Sector Is Booming

Some commercial market analysts note that they are seeing some softness in the office sales market, particularly in Broward County, where they aren't well tenanted, but are seeing high demand in the retail sector, where grocery store-anchored centers are selling quickly as soon as developers finish them. Rental rates in the west Miami-Dade industrial markets] are down currently, however, the value of commercial properties has gone up, even in weak markets like today, as more investors prefer real estate more than equity markets, and have paid premium prices to be in this real estate market.

The Florida commercial real estate market continues to remain a cyclical industry notes industry analysts, and it is early in the office sector's recovery. Those investors who paid really high prices for commercial buildings, especially those who funded these using floating-rate debt or interest-only loans in the early years, are hopeful on their optimistic growth projections to deliver.

To be exact, the office recovery is uneven in most markets, as longtime struggling office markets like the one in Dallas, Texas are improving despite high vacancy rates from previous overbuilding. Other areas like Cleveland and Detroit are also slightly improving, despite limited job growth.

What is an Appraisal?

Buying real estate properties is a major investment. This is why you need to do your research before you fork over thousands of dollars and agree to a long-term mortgage or home loan. One of the best ways to ensure you are investing in a valuable commercial property is to have it appraised. The following are some of the benefits of getting a good appraisal before you buy a commercial property.

You need to know how much a space is worth before you invest in it. Investing in a good appraisal means that you can be sure of a property's worth to ensure the asking price is reasonable. An appraisal means that you will never spend more money than necessary on a property.

If an appraisal shows that a space is over-priced, you then have leverage to renegotiate the price. Additionally, if the findings discover the commercial space is under-priced, you can score yourself an incredibly great deal on such real estate. Appraisals are important because they protect your investment.

A commercial property may look large, spacious, and fully functioning, but you may miss things when you walk through such spaces. Appraisers know to look into everything from the building's foundation and wiring to the neighborhood and the plumbing. This means that every rock will be unturned so that you can be sure that this commercial property is worth your time.

When you invest in real estate, you want the property to earn you money at the end of the day, especially if this is a commercial space. Use an appraiser to ensure you are putting your money into a worthwhile endeavor. This will no doubt protect you so that you do not waste your money on a building that has mold or is about to collapse.

Stated Income Commercial Loan For Your Commercial Property

A sicl is a commercial loan that does not require the full documentation that is required of a full document commercial loan. This type of commercial loan does not require the borrower to be able to prove that they can afford to make the loan payments from their own personal income but instead relies on the rents of the commercial property or the possible rents for the property.

Financial Benefits of a stated income commercial Loan include:

* Less Documentation The stated income commercial loan requires less documentation than a tradional commercial loan. In many cases since the loan is only underwritten to the properties cash flow or potential cash flow it is not necessary to provide as much documention.

* Easier approval process This commercial loan has an easier approval process because it does not have to be underwritten to both the property cash flow and a secondary repayment source such as the borrowers personal income.

secondary repayment source such as the borrowers personal income. Lower credit score requirements Some of these commercial loan programs also have reduced credit requirements.

Examples of a typical stated income commercial loan borrower include:

* A self employed small business owner that does not report all of their income on their tax returns who is looking to purchase a commercial property using a commercial loan.

* A real estate investor that does not show the amount of income necessary to qualify for a traditional commercial bank loan but the property has rental income that will support the debt payments.

Purpose

A stated income commercial loan is designed to help a borrower purchase real estate that they would otherwise be unable to purchase without a significant down payment. The commercial property does not have to be held in the name of the borrower or the operating company but can be held in the name of a holding company.

There are certain criteria for eligibility of this type of commercial loan.

The business that is occupying the property must be in business at least 2 years.

The guarantors credit score must be 600 or above.

The guarantor and operating company can not have a bankruptcy that is more recent than 3 years.

Structure

This commercial loan is only done on a first trust basis although it is possible to have a second trust provided by someone else. There are instances where combined total financing can be close to 100%. This depends on the type of commercial property, credit of the guarantor and other underwriting factors. Closing costs can be financed into the loan under most circumstances.

Easier than you think!

The stated income commercial loan is really meant to help people qualify for a loan without the hassle of providing the full documentation needed on a traditional bank loan.

Rates are slightly higher.

The interest rates are slightly higher for this type of commercial loan but the loans can be amortized up to 30 years.

The stated income commercial loan closes quickly in most cases.

It usually takes about 30 to 45 days from start to finish to close this commercial loan.

Borrowers do not have to use their house as collateral.

It is very rare that a stated income loan will need to use the borrowers home as collateral.

Borrowers with less than perfect credit can qualify.

Borrowers with credit scores as low as 600 can qualify for these programs. If your credit is within 40 points of this number it is possible that you may have some mistakes on your credit that we can help you fix while closing your loan. So even if your credit does not meet the 600 number today, it may when we are done with your loan.

Land Purchase Loan - Three Questions To Ask Your Lender

A land purchase loan is different in many ways from other types of secured loan, such as mortgages or commercial property loans. A land purchase loan can often require a great deal more information from the would-be borrower.

When there is a down-turn in the economy, or a credit crunch, there are likely to be fewer people looking for a land purchase loan. So there is no need to be put off by the current conditions as it means there will be more lenders looking for your business. This means you can shop around and find the lender who will give you the best deal.

So when you are comparing lenders, what should you be looking for? Here are some of the questions you should be asking.

Do you offer a long-term fixed rate? Land values are fluctuating at the moment. Interest rates are falling but they could start rising at any time. Having a variable interest rate would make it extremely difficult to budget your repayments. On the other hand, having a short-term fixed rate can lead to an unpleasant shock at the end of the deal. For stability, find a lender who offers a long-term fixed rate.

What fees do you charge? Many lenders charge quite unnecessary fees - often known as pink fees. Examples are underwriting fees and document preparation fees. These give the impression of being legitimate but they are actually part of the normal process by the lender of getting your application approved. Alternatively the lender might inflate legitimate fees - for instance they might double the charge for the credit report or the appraisal fee. Obtain a run-down of the fees and costs before applying for your land purchase loan and avoid a lender where the fees are excessive.

What is the time frame? Provided you have all your financial information to hand when you apply, it should not take more than 48 hours, or 72 at the most, to approve your application. Following approval, the appraisal process should take 1-3 weeks at the most and title 1-2 weeks. A good lender should be able to close your loan within three weeks of application. (Of course, if there are problems at any stage, it will take longer.) Many lenders pride themselves on a speedy turn-round so get this information in advance.

Obtaining a land purchase loan can be a good or bad experience depending on the lender. How good an experience it is often depends on whether the lender specializes in land loans or not. Just remember that YOU are in the driving seat. Make sure you get the land purchase loan YOU want, not the one the lender tries to push at you.

Commercial Mortgage - Its Purpose and Criteria

Commercial mortgages are basically used for business purpose, unlike housing or personal loans. Here the collateral is not your house instead it's the office, real estate or buildings that are used as collateral. This is again used for consolidating your business debts, for expanding your old set up or to carry out simple or major renovation work.

Your loan procedure would proceed with the careful examination of your credit standing in order to determine your repayment capabilities. For those who have stained financial credits, there is a suggestion for you. You must consider non status lending so that the banker or broker will not consider your credit scores while approving your loans. This means that ccj, bankruptcy or arrears does not affect the banker in any way.

You are approved for the loan amount based on the collateral value. Also, consider the Loan to Value known as LTV, this is a percentage calculated on the loan amount which is further divided by its purchase price. In this case, it is your property, building, office or factory that is your collateral.

Request for a payment holiday if you think you can't repay. You can inform the bank that you will be unable to pay for few months and they may make some arrangements so that you pay only the interest rate for some time and so that your equated monthly installment will come down.

The other option is to resort to 'unenforceable agreement'. When you have some pending debts and you are unable to pay back, find out if there are any loop holes in the loan agreement that you have signed. If there is not enough proper documentation then you can make use of this. A lender will not be in a position to claim the loan amount from you if the agreement has some facts missing and it becomes invalid.

Commercial Law - Unfair Contract Terms - Commercial Property - Loan Agreement

The case of Evans v Cherrytree Finance Ltd [2008] concerned unfair contract terms in relation to a loan agreement. The defendant company in this case ran a business which involved lending money to non-status, high risk borrowers on commercial premises.

The claimant and his wife owned a property. The property was used for their antiques business in which they were partners. In 1993, part of the property was converted into residential accommodation. From that point on the claimant and his family lived in the residential part of the property ("the Residential Accommodation").

The Residential Accommodation and the business premises had separate addresses. Unfortunately, in 1999, the claimant's wife initiated divorce proceedings and the partnership was dissolved. During the course of the divorce, the claimant's wife secured an order for the property to be sold.

Understandably, the claimant was anxious to prevent the sale. The claimant was granted four weeks in order to raise £150,000, which would facilitate the transfer of his wife's interest in the property to the claimant.

In order to pay the settlement, the claimant made an application to the defendant for a loan of £105,000. The application form for the loan was headed with the words "Commercial Loan". The claimant gave his address as the Residential Accommodation and gave the address of the business premises as the property against which the loan would be secured. The claimant also stated on the application form that the purpose of the loan was to:

- Repay an existing mortgage; and

- To pay his ex-wife the balance due under his divorce settlement.

The claimant soon defaulted on the loan repayments. Accordingly, in due course the property was sold by the defendant. The defendant realised the amount due under the loan, which also included a penalty fee.

The claimant subsequently brought proceedings against the defendant. He claimed that he was in effect not bound by the terms imposing the penalty because they were unfair. The issue that arose to be determined by the court was whether the claimant was a 'consumer' for the purposes of Unfair Terms in Consumer Contracts Regulations 1999 ("the Regulations").

The claimant was deemed a 'consumer' for the purposes of the Regulations with regards to the loan made to him by the defendant. The judge was of the opinion that the claimant had not been borrowing for the purposes of his business, but for a purpose existing outside of his trade, business or profession. That purpose being to buy out his wife in divorce proceedings.

Furthermore, it was held that the loan was essentially for personal purposes to enable him to have a place to live as well as work. Accordingly, the judge found that the Regulations did apply to the contract. This meant that the condition which imposed the penalty on the claimant was unfair.

The defendant appealed against the decision.

The claimant argued that the main reasons he took out the loan had not been related to his business, but that it was needed in order for him to establish himself. The defendant submitted that the claimant's purpose had never been revealed to the defendant. The defendant argued that it had not been told that the claimant and his wife had lived at the property or that the loan was needed to provide the claimant with a place to live.

The appeal was dismissed.

It was held that in the circumstances of the case, the judge had been perfectly entitled to conclude that the loan was for a purpose outside the claimant's business or trade.

When considered objectively, it was decided that although the loan enabled the claimant to continue his livelihood, it was not the sole purpose of the loan. The court was unaware of the matters that had been taken into account when reaching the divorce settlement.

It was decided that the statement on the application that the other purpose of the loan was to pay off a mortgage was equivocal. Furthermore, the court was of the opinion that the defendant could have deduced from the information it had been provided by the claimant that the claimant had been living as well as working in the property.

14 Steps to Successfully Listing a Commercial Property

Forget about the competition and focus on creating a successful game plan for landing that perfect listing. Here's how:

1. Determine what type and location

a. Retail, industrial, office
b. Size: big, small
c. Urban, suburban
d. Areas you'd like it to be located in

2. List all possibilities in this category

a. For example, if you pick smaller suburban retails properties to lease; list all of these properties within your area.
b. You can't prospect that which you have no awareness of - do a thorough job on this step.

3. Gather contact information

a. Collect the contact information on each property you've identified including name, address, phone, fax, and email.
b. You want all of this information so that you can contact these property owners using a variety of mediums.

4. Identify the common problems these owners have and suggest a solution.

a. List all of the problems your prospects may be experiencing as a property owner.
b. Pick the top three and focus on a solution.
c. Let the prospect know you can solve their problems! *

*THIS ONE IS BIG!!!!! PEOPLE BUY SOLUTIONS!!!!!

5. Come up with a game plan for contacting each owner

a. Write a letter introducing yourself and let them know you can solve their biggest problem (see #4 above).
b. Call next, your name hopefully will be familiar to them as a result of the letter.
c. Email after you call. Either thank them for their time or write how you've "missed" talking.
d. Fax a letter.
e. And so on.
f. The point here - have a game plan.

6. Set up an appointment to meet the prospect and "snag" the business.

7. Show up prepared.

a. Have nearby comps
b. Know who's in the marketplace already (don't forget these businesses still can be candidates to lease if you are seeking a leasing assignment).
c. Provide a sampling of who could be viable buyers or lessee's (don't be afraid you're giving away a few of the goodies).

8. Bring pages and pages of testimonials (written statements from those who have been happy with your service).

a. This is "social proof" that you are what you are portraying.

9. Provide an outline of your marketing program. Bring some samples.

a. Sign
b. Invitation to all brokers to bring a buyer/lessee
c. Direct Mail
d. Emails
e. Fax Blasts
f. Advertising
g. Online venues - Loopnet, CoStar, and others
h. Etc

10. Provide a prepared written document with all the frequently asked questions your prospect may come up with.

a. Even call them - FAQ's.

11. Find out what methods of communication the prospect prefers

a. Written or verbal
b. BE SURE TO PROMISE COMMUNICATION WEEKLY - then do it. This could be the single most important thing you do once you get an assignment

i. Communicate the good news, bad news, or no news. Don't be afraid of no news or bad news - communicate all news.

12. Provide a success story or two. It makes the story telling easier.

a. Use the PAR formula, state the:

i. P = PROBLEM
ii. A = ACTION TAKEN
iii. R = RESULTS

13. Let the prospect know what they can expect from you.

14. Lastly, ask for the business!

a. If you don't let the owner you'd really like, appreciate and value their business, there's a good chance you won't get it.
b. Too many say, "They know I want the business why should I ask?" Don't get trapped into this way of thinking.
c. Ask, Ask, Ask.

If the above feels like too much work - choose another career. It is a lot of work to continually land successful listings. That's why it's called 'WORK". Go get 'em and good luck!

How to Buy Commercial Properties and Invest in Apartment Buildings With Owner Financing

You will be surprised how many people own their properties free and clear, and are willing to finance the entire amount or a good part of the mortgage to make the deal happen. Usually, though, you will be getting secondary financing from the owner. That means you get the majority of the money (the first mortgage) from another source, like a bank, and the seller will give you the rest in the form of a second mortgage.

There are four types of owner financing to that you could ask for:

Type 1: Ask for the principal to be paid at certain later time. If you notice, I didn't mention monthly payments for interest; only principal be paid at a later date. Why pay monthly payments or interest if you don't have to?

Who would go for this? Most sellers won't... but some will. You only need one to get yourself a great deal, so ask for this each time. If they do insist on interest or payments, go to the next offer.

Type 2: Principal divided into monthly payments. Again no interest; you're paying off 100 % principal.

That's a great deal for you!

Example: A seller agrees to finance $100,000 over 20 years. 20 years a time 12 months per year is 240 months payments. $100,000 divided by 240 equals' payments of $417 per month.

Type 3: Ask interest-only payments, with the principal to be paid with a "balloon" (also called "bullet") mortgage in 5 years.

Example: You can offer 8% interest on $100,000 of owner financing. Multiply $100,000 by .08 and get $8,000 by 12 and get a monthly payment of $667 per month. You then must pay off the entire principal balance at the end of the fifth year. You would typically do this by either do this by either selling the property or refinancing it.

Type 4: If the owner insists on getting principal and interest, then you would structure the deal accordingly. Owner financing $100,000, 8% interest, amortized over twenty years with a five-year balloon.

Your principal and interest payment is amortized over a long period-twenty five years because the longer you make the amortization period, the lower the monthly principal and interest will be.

Owner financing is a great strategy to purchase real estate, whether it's commercial, multi-family apartment properties or single homes. Ask and negotiate with the seller and you would be surprised how easy it may be to start your property portfolio today.

Business Loans Without Banks - 14 Reasons Not to Go to a Bank for a Commercial Mortgage

Traditional banks serve a very important role in the U.S. economy. Nevertheless, when it comes to a business loan, there are over a dozen reasons to consider a source other than a traditional bank for a business loan. For most small business owners, five or more of these reasons are likely to be applicable. With many business loan borrowers, banks have already declined their loan application. That particular compelling reason to use a source other than a traditional bank (being declined by a traditional bank) is not included in the list below.

Here are 14 reasons a business owner might not go to a traditional bank for a commercial real estate loan.

Reason # 1: Minimum commercial real estate loan for many banks is $250,000 or more. With non-bank business lenders, the typical minimum commercial loan amount is $100,000.

Reason # 2: Most banks charge an up-front commitment fee. Most non-bank business lenders do not charge an up-front commitment fee for a commercial mortgage.

Reason # 3: Most banks will severely limit the amount of cash a business borrower can get when refinancing a commercial mortgage. When a borrower is refinancing their business property with non-bank business lenders, they can typically get up to $1,000,000 in cash.

Reason # 4: Most banks are reducing their commercial real estate loan interest in properties such as bars/restaurants, auto service businesses and funeral homes. Non-bank business lenders are very interested in these business categories (and many other special purpose properties) for a commercial mortgage.

Reason # 5: Most banks will require business plans for a commercial mortgage. The cost to provide this is usually several thousand dollars. Non-bank business lenders typically do not require business plans as part of their underwriting process for a commercial real estate loan.

Reason # 6: Most banks will require tax returns for a commercial mortgage. Non-bank business lenders do not require tax returns or any income verification for a Stated Income commercial real estate loan. Many banks not requesting tax returns will ask borrowers to sign IRS Form 4506 (which authorizes the lender to obtain tax returns directly from the IRS). Non-bank business lenders typically do not request borrowers to sign this form.

Reason # 7: Most banks will require cross collateralization of personal property for a commercial real estate loan. Most non-bank business lenders do not require cross collateralization of personal property for a commercial mortgage.

Reason # 8: Most banks will require balloon payments or the loan will be subject to recall after periods as short as 3-5 years for a commercial mortgage. With a commercial real estate loan via typical non-bank business lenders, all properties are eligible for 25-year loans and some up to 40 years.

Reason # 9: Most banks will not permit seller seconds or secondary financing for a commercial real estate loan. With many non-bank business lenders, if the business borrower uses a seller second or other secondary financing for a commercial mortgage, the business borrower can obtain a loan with a CLTV up to 95% of the property value.

Reason # 10: Most banks require income verification or audits even after the commercial real estate loan closes. Non-bank business lenders do not verify income either before or after a commercial loan closes with a Stated Income Business Loan Program.

Reason # 11: Most banks have strict guidelines for "sourcing" or "seasoning" of assets or ownership to qualify for a commercial mortgage. Most non-bank business lenders do not have any requirements or limitations involving sourcing/seasoning of funds or seasoning of ownership.

Reason # 12: Very few banks offer an assumable commercial real estate loan. Typical non-bank business lenders have an Assumable Commercial Loan Program which includes loan amounts up to $1 million.

Reason # 13: With most banks, a typical commercial real estate loan will require 3 to 9 months to close. At typical non-bank business lenders, most commercial mortgage loans close in 45 to 55 days.

Reason # 14: Very few banks use Stated Income (no tax returns, no income verification) for a commercial real estate loan. Non-bank business lenders use the Stated Income Approach for commercial mortgage loans in their Stated Income Business Loan Programs (most commercial mortgages up to $2-3 million qualify for these programs). This especially benefits self-employed business borrowers who frequently have income that is erratic and difficult to document properly.

Copyright 2005-2006 AEX Commercial Financing Group, LLC. All Rights Reserved.

Secured Business Loans: Commercial Mortgages!

Commercial mortgages can provide all the funds your business needs with very reasonable loan conditions.
Secured business loans are becoming more and more common among businessmen as small companies begin to own their own commercial offices and headquarters instead of renting. Thus, they can take advantage of real estate by obtaining finance through secured loans. But, they can also use as security their future sells, thus obtaining finance with alternative forms of collateral.

Real Estate Based Business Loans And Lines of Credit

There are business loans that are secured with real estate properties just like regular mortgage loans and home equity loans. The sole difference is that these properties belong to a company instead of a particular person.

Nevertheless the concept is just the same: the property's value guarantees repayment of the money to the lender and thus reduces the risk of the transaction letting the lender offer lower interest rates and more advantageous loan terms.

There are commercial mortgages (the equivalent to home mortgages), commercial second mortgages (the equivalent to home equity loans) and commercial lines of credit based on equity which are just like home equity lines of credit. Equity is the difference between the value of the property and the amount of money borrowed that the property is already guaranteeing.

However, commerce and companies have other property's that can be used as collateral for loans. Intellectual property, trade marks, etc. can also be used to guarantee a loan as they are usually of great value. A company has many possessions that can be used to guarantee a line of credit or a loan. You'll just need to consult with credit experts at an agency or financial institution since detailed information on this matter exceeds the purpose of this article.

Loans And Lines Of Credit Based On Future Sells

Finally there are also loans and lines of credit that are based on the future sells of the company. These financial products work as follows: The financial institution processes credit card payments for the company that wants to borrow money and thus, knows exactly the average income of the company in terms of credit card payments. Thus, the financial institution will be able to lend money in the form of a loan or line of credit and agree loan installments or minimum payments that will be withdrawn directly from the amount of money the financial institution gathers from the credit card sells.

Thus, the borrower has a cheap source of funds and the lender obtains guaranteed repayment of the money lent. Moreover, the company doesn't have to worry about repayment as it is automatically deducted from the sells each month. This financial tool is becoming more and more popular as it provides inexpensive financing, higher loan amounts, fast approval and a very easy and hassle free repayment program.

Refurbishment Loan Vs Property Development Finance

The first thing to consider when dealing with development finance UK is the type of funding you need. There is a difference between refurbishment loans and property development finance. Basically residential development finance and commercial development finance is used to build residential and commercial property respectively, or to carry out large scale renovations to existing property. It would be used for a fairly serious property development or some major additions or building works to an existing property. Development finance entails large amounts which are benchmarked at about 150,000 pounds and up. On the other hand, refurbishment loans would be taken out if a property looks worn out and you would need some basic internal works. Renovating property tends to be small scale in nature so the refurbishment loans can suffice.

Refurbishment loans can be obtained with some Buy to Let mortgages and cover basic property renovations. Some lenders for commercial mortgages will allow you to borrow based on the enhanced property value after the end of the renovations, and not on the property price in its current condition. This way, it enables you to borrow further. In essence, you receive two loans: the loan on the current property value and the loan from the completed value. You will need to provide the valuer with a detail of the works you are carrying out. Then they will assess these once they are carried out to confirm the new property value. The Buy to Let mortgage route only applies if you plan to keep the property as a rented investment after works are completed.

A developer can get 100% development finance both for large scale property development and renovations. For 100% development finance in large scale projects, lenders tend to have strict requirement or high interest rates. For 100% development finance through refurbishment loans, which by nature is small scale, an additional security is usually required.

Commercial Financing for Special Purpose Business Properties

Funeral homes, assisted living facilities, campgrounds and other special purpose properties represent one of the most difficult commercial loan situations which will be confronted by a business owner. Unique properties are not easily understood by traditional lenders, so the most common solution involves finding a non-traditional lender for funeral home financing as well as commercial financing for other special purpose properties. Such non-traditional lenders will be appropriate for purchase situations as well as refinancing and new construction.

KEY REASONS FOR DIFFICULTY IN ARRANGING COMMERCIAL FINANCING FOR SPECIAL PURPOSE PROPERTIES

(1) By definition special purpose properties are not similar to other commercial properties. This makes many lenders uncomfortable due to the likely difficulty of finding another owner for a unique commercial property should it be necessary due to a loan default.

(2) For funeral homes and many other special purpose commercial properties, most of the business value is represented by non-real estate assets. With traditional commercial lenders that focus on commercial real estate loans, it is almost impossible to get a loan based on the real estate value and the business value. For example, it is not uncommon to have a situation in which the real estate for a funeral home is valued at less than one million dollars while the overall business value is in excess of three million dollars.

(3) Because commercial financing is so difficult to arrange for special purpose properties such as funeral homes, assisted living facilities and campgrounds, sellers of such properties are generally willing to provide substantial seller financing to assist the buyer in acquiring the business. However, many traditional lenders do not recognize or accept seller financing as a means of reducing down payment requirements for special purpose properties.

(4) Many lenders simply do not understand the business complexities associated with a special purpose property. As a result, it is not uncommon for these lenders to attach onerous and expensive requirements such as business plans and environmental reviews. In most cases such lenders do not even want to make the business loan but will use undesirable loan requirements as a means of appearing to approve a loan when in fact they have disapproved the loan by adding commercial loan terms that they do not expect a commercial borrower to accept.

COMMERCIAL LOAN SOLUTIONS FOR SPECIAL PURPOSE PROPERTIES

For a business borrower facing the situation described above, the highest priority should be to locate a non-traditional commercial lender that engages in the following commercial loan practices:

(1) Openly welcomes special purpose properties and routinely finances such properties.

(2) Provides commercial financing for both the business and real estate.

(3) Accepts substantial seller financing.

(4) Does not add special requirements to the business loan for special purpose commercial properties.

(5) Has a history of making loans for the specific type of property under consideration.

(6) Can accommodate both small and large commercial loans for special purpose commercial properties (for example, loans as small as $100,000 and loans as large as $5 million or higher).

Copyright 2005-2006 AEX Commercial Financing Group, LLC. All Rights Reserved.

Why Invest In Commercial Properties Instead Of Residential?

When investors were leaving the stock market in droves, they turned to investing in real estate.
And real estate is an excellent choice compared to stocks. The tax deductions and potential for price appreciation
are enough reasons for burned out stock market investors to make the switch.

But real estate is a wide open field, where should you focus your time and money?

Many people might believe that residential property investing is the best way to go. Just look at all the television
programs that are now on the air, such as "Flip This House" on A&E and "Property Ladder" on TLC. They focus on buying
residential properties as investments. But I think the better solution is investing in commercial properties. Here are 3
reasons to leave residential investing and start investing in commercial properties.

#1 No More Qualifying For Loans

With commercial properties, the properties qualify the loan...not the borrower. Commercial lenders concentrate primarily on the income produced by the property to determine the financing risks. So with a few financial calculations, you can determine if the property will qualify the loan amount requested.

#2 No More Personally Guaranteeing Loans

There is a term that is never heard of in residential financing...non-recourse. Non-recourse financing is a type
of debt in which the borrower is not personally liable. If you default on a non-recourse loan, the lender must recover the amount you owe by foreclosing on the property by which the loan is secured. This won't affect your personal credit score.

#3 Deal With Professional Tenants

Investing in residential property, you will eventually find yourself in the world of tenant hell. Where excuses and non-payment go hand in hand. And government entitlement programs, such as Section 8 can cause you to lose your mind with bureacracy.

But with commercial property tenants, you will find them to be more professional. They are in a business and treat their leases as such. With commercial leases, they can be long term (5, 10, 15 years) and the they can be written so that
the tenant pays for maintenance, taxes and insurance.

Most investors want to invest in commercial properties but let fear of the unknown stop them. But with proper training
and education, buying commercial properties is not that difficult.

Private Commercial Mortgage Lenders - Filling The Funding Gap - Investors Turn To Hard Money Lenders

Getting a Commercial Mortgage is Tougher Today

We are, indeed, in the midst of a significant and severe credit crunch. Conventional lenders, such as banks, Wall Street investment houses and insurance companies have greatly curtailed their lending activity. Even the very best investors and developers are finding it hard to get projects funded.

The collateralized debt market has dried up. Few bond buyers are interested in mortgaged backed paper today. Big institutional lenders are finding it impossible to turn the mortgages they originate into cash. Put in simple terms; no mortgage buyers, no mortgage loans.

Property owners, investors and developers are left frustrated and without financing.

Good Deals on the Sidelines

The dollar volume of pent-up commercial mortgage loan demand now measures in the hundreds of billions of dollars. Deals that, just a year ago, would have enjoyed quick funding are being rejected by banks out-of-hand. Not because they don't have merit, but because the banks and their counterparts are caught up in the liquidity crises.

With millions in profit potential at stake, commercial property investors are seeking out non-traditional sources of mortgage funds.

Private Commercial Mortgage Loans; Funding Deals When Banks Won't

Privately funded commercial mortgage loans are becoming increasingly popular during this mortgage meltdown. Private lenders, many funded by wealthy individuals, hedge funds or other large pools of capital, often lend their own money for their own portfolios. These unique lenders have not been crippled by the breakdown of the collateralized mortgage bond market. They can still originate loans at will without worrying about who may or may-not want to buy them.

Further, private loans (sometimes called "hard money" loans) can close in just days, as-opposed to conventional loans which, if you get one at all, can take 3 months or more to fund.
There are generally no loan committees, stacks of paperwork or complicated ratios to deal with. If they like your deal and you demonstrate that you can pay them back, they can and will close your loan no-matter-what Wall Street is doing.

What Private Commercial Mortgage Lenders Look for

Private lenders are equity based lenders; loan decisions are not driven by the credit of the borrower. It is essential that the collateral property have substantial equity in it. Most hard money commercial lenders won't lend more than 70% of the purchase price or, in the case of a refinance, the value of the commercial property. So be prepared for large down-payment requests or a good sized 2nd mortgage. Also, borrowers will need to have some cash, typically 10% or more, in any given deal. There is no-such-thing-as 100% financing today. Documentation requirements will be much less than conventional lenders would require but be prepared to back up any claims you make with some proof.
Income producing buildings are favored by hard money lenders but most are willing to consider all property types.

Hard Money Commercial Loans Have Become Indispensable

With the large conventional lending institutions frozen like a deer in the headlights, private, hard money commercial lenders have become indispensable to the commercial sector. They stand ready and willing to lend against quality buildings or well thought-out development projects. Investors should not give up on finding financing for their best deals until they have looked into a privately funded mortgage.

Colorado Commercial Mortgage Brokers

Commercial mortgages are loans taken for the purchase of property that is, only intended for business or commercial use. Properties like shopping centers, industrial centers, offices, golf courses, resorts, hotels, parking garages, and car washes are termed as commercial properties. In Colorado, the best way to apply for a mortgage for a commercial property is to contact a commercial mortgage broker.

Colorado commercial mortgage brokers are usually a part of the Colorado Association of Mortgage Brokers (CAMB). It is a non-profit organization, aimed at providing assistance to professionals specializing in real estate. Commercial mortgage brokers are provided with training programs to keep them up-to-date with the latest trends and practices through this organization. The Colorado Association of Mortgage Brokers is also a part of the National Association of Mortgage Brokers.

It is necessary to get commercial property financed, at a competitive rate as it directly affects the finances of the organization. Commercial brokers come into the picture once a company decides on the location and price of a property. Usually, organizations opt for a 'commercial interest only' loan, as it provides them with an option of paying, only the interest for the first few years of the loan. A commercial loan can be for period of anywhere between five to thirty years. The rate for these loans can be either fixed or adjustable.

To become a commercial mortgage broker it is necessary to get a license. The appropriate regulatory bodies that are set in place regulate all the brokers. A regulator body will ensure that the broker complies with the laws. However, to know how a broker treats the customers and if the services provided by the broker are satisfactory, it is advisable to get an opinion from other similar business companies.

Commercial mortgage brokers advice the companies in deciding the best loan option. They help their clients understand the whole method of writing a proper loan application, processing the loan file and closing the loan. This helps the companies save a considerable amount of time and money.

The Basics of Bridge Finance

The old saying goes, "I have a bridge I'd like to sell you..." Well, references to bridge financing have nothing to do with bridges, but the expense associated with them can be pretty brutal if you aren't careful. Let's cover the basics of bridge loans.

What price would you pay for more time? This is the essential question that is asked with bridge financing. The financing is designed to give you anywhere from a couple months to a year of time, but you are going to pay a real premium for that time.

In a vast majority of cases, bridge loans are used in real estate transactions. The bridge loan typically becomes a need to "bridge" the sale of a previous property from which the proceeds will be used to fund a new property purchase. Let's look at a classic example.

My business owns an office building. We have been growing like gangbusters and need a new office. We look around and find the perfect building. We need to sell our old office building to pay a chunk of money down on the new one. Since commercial real state takes time to sell, we need temporary financing. The answer is to use a bridge loan to buy our company 6 months or so by using the money to buy the new office building and wait for the old one to sell.

Qualifying for a bridge loan is a bit different than what one experiences with a normal loan. The loan is based almost only on the collateral offered. Since the loan is fairly short term, income projections and such don't really figure into it. The issue is basically do you have collateral and can you afford the loan costs.

Loan costs. They are very high with a bridge loan. Since the loan is short term, you can expect the lender to crank up the cost because they need to make a profit. Does this mean the interest rate goes up? Yes, but only one percent or so. Where you really end up paying is in the points. A bridge loan may carry 5 to 10 to 15 points. Remember, a point represents one percent of the loan.

You can see why lenders would like these loans. They can make large profits on lending money for a very short term. If you need a bridge loan, prepare yourself for sticker shock and be ready to make a clear decision as to whether the cost makes sense.

Loans Against Property - A Lucrative Prospect

What is a loan taken against property? Simply it is the money borrowed from the bank while giving it some kind of assurance which is in this case any tangible item like a land, or a commercial property, or a built up property or even a residential object like a house. Even people who live in flats in cooperative societies can take advantage of the useful features of this loan. The only thing that they require to do is to submit a NOC( No Objection Certificate) from the co operative society in which they are living in.

When the user applies for this kind of a loan, the first thing that the bank does is figure out the net market worth of the property which the user is deeming as an assurance for the bank. Then the bank also check the credit history of the applicant. This is natural as the loan is a venture for the bank and it has to make sure that this venture leads to profit and not loss. Hence persons who have a bad credit history with multiple cases of defaulting are not suitable for giving a loan to. The total amount that the user takes as the loan normally falls in the price band of 75 percent of the total market worth of the product. This amount is required to be paid in monthly instalments until the total amount of the loan has been recovered.

The prospect of taking a loan against any type of property is a fantastic one. Anybody who is in need of money for various purposes can avail of this opportunity. Hence a person can take these types of loans against home when they want to improve and increase their individual businesses. They can also take this loan when they want to send their children aboard for higher studies for a better future and also when they want their children to have a family of their own by forming the immortal bond of marriage.

The process and the formalities for taking a loan against property is extremely hassle free and simple. For people who are engaged in jobs all the documents that they have to give are a set containing a residence proof, an identity proof, a from 16 for the previous years and also a passbook which shows his earnings as being credited for the last six months. For human beings who are into business they need a residence proof, an identity proof, a passbook and also a financial statement which is certified and has the tenure of the last 2 years.

Hence the bank lends a helping hand to people who need money and also give that help as a true friend. There are also many interesting features about loans against property. India is now a growing economy and hence has its population on an higher spending track which is balanced by a higher level of income. However when people require that extra amount of money, they can always go for loans against home as compared to other loans these have a much lower rate of interest. These loans also have a much larger time period for paying off the loan. Then there are also various kinds of plans from which the customer can choose from.

The Indian market for these loans is a big one and has many major players offering loans against property. India has banks like SBI of the State bank of India, ICICI, Kotak Mahindra and HDFC offering various types of loans against home. Hence these loans are very useful and are given by many banks in useful formats. Therefore a loan taken against property in India is quite useful and should be taken whenever the customer needs money. The bank is always there to lend a helping hand.

Commercial Loan For Your Hotel Property

Getting a commercial mortgage for a hotel property is very similar to getting a commercial mortgage for an owner occupied commercial property with a few subtle differences. The driving force for the majority of most hotel income is the RevPar or revenue per available room. RevPar is most commonly calculated by multiplying a hotels average daily room rate (ADR) by it occupancy rate and is a key indicator of performance. Rising RevPar is an indication that either occupancy is improving; the ADR is increasing, or a combination of the two.

Although RevPar only evaluates the strength of room revenue, it is typically the most relevant indicator of performance. While many full service hotels generate revenue through other means such as restaurants, casinos, conferences, spas, or other amenities the majority of hotel properties are either limited service flagged properties or limited service unflagged properties. A limited service hotel is simply a hotel with out a restaurant. Because the operating costs of the restaurant component generally run higher than that of the hotel operations, it is common for the net operating income (NOI) as a percentage of total sales to be lower for a full service than a limited service hotel. For this reason the majority of commercial lenders prefer to finance limited service hotels.

Flagged vs. Unflagged Properties:

A flagged hotel property is simply a hotel that belongs to a national franchise. An example of a flagged property would be a Holiday Inn or a Best Western. For the guest, a flagged property provides the benefits of a uniform standard that is upheld by the franchisor. A guest could stay in a flagged property on the east coast and could expect the same flag on the west coast to have the same standard of cleanliness and amenities. The owner of the property gets the benefit of a nationwide reservation system and marketing. For this benefit the operator is expected to pay a franchise fee which can typically range anywhere from 5% to 10% of room revenue. Because of the advantages that a flagged property has, most commercial lenders prefer to finance them over an unflagged property. Sometimes it can be extremely difficult to get a commercial loan for an unflagged property, especially if the property isn't in what is considered a destination resort area. A destination resort area would be an area like Miami, Myrtle Beach, or Orlando FL. An unflagged property in a destination resort is easier to obtain a commercial loan on than an unflagged property in other areas of the country.

Exterior Corridor vs. Interior Corridor:

An exterior corridor property is a hotel property where you can actually see the door to the rooms from the exterior of the property. These are sometimes referred to as a motel instead of a hotel. The term motel is actually derived from the term motor hotel where most travelers would park their vehicle directly in front of their room. While there are disagreements between what defines a motel and what defines a hotel, there is typically very little difference between the two outside of a lenders perception.

Most exterior corridor properties are older and subsequently will not have the quality of furnishings and will have more deferred maintenance than an interior corridor property. An interior corridor property is going to be more energy efficient and would have a lower utility expense as a percentage of gross revenue.

Financing Your Hotel Property:

When trying to get a commercial loan for your hotel property there are a few distinct differences you can expect as opposed to financing other commercial properties. A hotel property is considered special purpose in nature which simply means that it is generally cost prohibitive to convert it to alternate use. An office building or retail space can accommodate numerous types of businesses whereas a hotel property can only accommodate a hotel. Because of this a commercial mortgage for a hotel is going to be considered riskier to the lender than a commercial mortgage for other general purpose property types. A lender will mediate this risk by taking a more conservative approach to underwriting a hotel property.

The loan to value (LTV) for a hotel property will be lower than other general purpose property types. For a limited service, flagged property 65% LTV is typical and that number can go down depending upon the age of the property and whether its interior or exterior corridor. The LTV is simply a ratio calculated by dividing the loan amount by the value of the property. The debt service coverage ratio (DSCR) for a hotel will also need to be higher than that of a general purpose property type. The DSCR is a ratio that determines the strength of the property or business income in relation to the proposed mortgage payment. A typical required DSCR for a hotel property by a commercial lender is 1.30 which simply means that for every $1.00 in proposed mortgage expense there should be $1.30 available to pay it. For other general purpose property types the DSCR is lower. A DSCR of 1.20 is common for general purpose property types and can go oven lower for a less risky property such as an apartment building.

Because the acquisition of a hotel property under a conventional program requires a large capital injection, many borrowers prefer to purchase a hotel property by utilizing the SBA 504 program. This program enables the borrower to put in as little as 15% and still obtain a better interest rate than a traditional commercial mortgage for a hotel.

Commercial Real Estate to Lease Vs Own

In my daily dealings with small business owners I see entrepreneurs struggle with the question of whether to lease or own consistently. The idea of owning can be very appealing, especially now as interest rates are still low (historically), new loan programs are popping up like 90% non SBA financing and 30 year fixed programs. And, building bargains seem abundant.

This question is certainly not new. Businesses have struggled with this for years - in good times and bad. The decision can become complicated quickly as objective (financial, space needs, etc.) and subjective factors (business image, growth plans, pride of ownership, etc.) combine. Forces outside of the business owner's control, such as the general economy, interest rates, future real estate values, further obscure the issue.

The most thought of advantage of ownership is the potential appreciation. However as we are seeing now, appreciation is not always guaranteed.

Historically, financial experts have broken down the question by quantifying the factors such as the difference between the down payment/monthly mortgage vs. lease payments (among many others factors such as tax rate, tax benefits, interest rate, inflation, depreciation, expected holding period, expenses, etc). The point is to come up with an estimate of the buyers Internal Rate of Return on the down payment injected into the purchase.

Internal Rate of Return is commonly discussed, analyzed and dissected. Many factors can be manipulated, such as the anticipated appreciation rate inflation rate etc, to come up with different projections. Some of the major pros and cons of ownership include:

Pros

o The creation of equity
o Monthly mortgage payment is usually lower than comparable lease payment
o Potential future rental income
o Assisting owners with wealth/retirement
o Building an asset that will assist in securing business lines of credit and other forms of loans
o Pride of ownership
o Stability
o Control
o Business image
o Not being exposed to increases in rental market
o Not being exposed to whims of landlords
o Dramatic tax benefits

Cons

o Property management responsibilities
o Interest rate exposure on adjustable mortgages and/or if mortgage balloons
o Opportunity costs of down payment not being in a more liquid asset, or being used for business operations
o Decrease in functionality of building
o Building value subject to market conditions
o Length of time in selling building
o Decrease in space flexibility

These types of analysis can be very useful and give a clear perspective on a complicated issue. But, for most small business owners in general and in our Michigan economy, the question really boils down to money, and long term plans.

First of all, can the business really afford to inject 10% or 20% into a facility? Equity is hard to "tap" in commercial real estate. Many businesses need that capital for daily operations. Secondly, what is the difference in the potential mortgage payment vs. lease payments? Is owning going to increase cash-flow for the business (as it commonly does)?

Long term plans. Owning can be the wrong strategy for companies with strong growth potential/ expansion plans as selling on the short term can be expensive and difficult. Also, companies seeking venture capital may want to shy away due to how real estate ownership affects their books.

So, without overly simplifying the issue, the economy seems to be making purchasers think more of "now", how holding real estate affects their business immediately vs. traditional long term hold IRR type mentality. Many buyers are discovering that despite concerns over the market, ownership still makes a lot of sense for their business and personal wealth.

Tips For Investing in Commercial Property

Whether you own a commercial property, or are looking to invest in one, now is a great time to shop. The economy may be down, but exciting new prospects are one way that it is going to recover, and with commercial property costs at an all-time low, there has never been a better opportunity to invest.

Buying a Commercial Property

The idea of buying a commercial property is to turn a profit from it. Therefore, you want to invest, not collect. Don't buy something that you don't have a plan for, as it will just sit around unused, costing you money.

However, if you see a good deal on a commercial property and think you can make something of it, now is a great time to purchase that building. Some things to keep in mind if you have a plan for a business is to scope out the area for how similar business are faring, set aside money for any problems that might arise, and have a back-up plan for the future. Decide what you will do if, in a year, the investment is just not making any profitable returns.

Shop online. There are literally hundreds of websites available at your disposal. Compile all of the listings that interest you, and being researching them. Try to find as much information as you can about the buildings, including what they were used for and what the area is like. Then, you can contact their listing agents for a showing.

Selling Commercial Property

While it is true that lots of commercial properties and buildings are sitting empty and unused all across the United States, that does not mean that your listing has no chance of selling. In fact, there are lots of things you can do to boost interest in your commercial property and not feel like a dead duck.

The first thing to do is to gather up all of the available information about your property. Know all there is to know about the building including its age, whether repairs or updates have been made, and any problems with it. Include any relevant information that you think will help sell the property.

Get a good agent to help you sell your commercial property. You don't have to settle on the first one you find. Read online reviews and choose the agent who has the best track record of selling properties that are similar to yours.

Be willing to market your property. A good agent will give you a leg up in this game, but things such as word of mouth and utilizing online listings can help you spread word that your building is for sale. The more people hear about it, the more interest you will generate.

Prepare the building for showings. Clean up anything in the parking lot, sweep and mop floors, and give it a fresh coat of paint. Make the building presentable to potential buyers so that they can focus on the property itself and not all of the little repairs that they will need to do themselves.

How to Find Strong and Accurate Comps for Commercial Real Estate

When you are trying to get comps for commercial real estate it is imperative that the comps you get are up to date, since you need to know what the property you are looking at is currently worth. This will help you get an accurate idea of what the market value of the property is. When you go with comps that are too old, it will not give you an accurate idea of the value in today's market. Usually you'll want to go with commercial real estate comps that are less than six months old. The comps you get also need to be "like" comps as well, since you'll want the comps to depict the accurate value of the property you are interested in. Basically you don't want to compare an industrial property with an office building, since this won't enable you to come up with the accurate value. Be sure that the comparables you get are similar to the size and type of the property you are looking into.

Considerations When Researching Comps

When you are researching your comps in order to acquire accurate data on the commercial real estate you are considering, there are several factors you'll need to keep in mind. The following are a few things to consider in order to get the best possible comparables.

Consideration #1 - Similar Properties - The comps that you choose need to be similar properties, in both type and size, to the commercial real estate you are planning on purchasing.

Consideration #2 - Price Range - The price range of the properties that you use for comps should be close to the asking price of the commercial real estate you are planning on purchasing.

Consideration #3 - Location of the Property - Another consideration to remember when you are looking for the best comps is the property location. You should choose comparables that are on a similar piece of property that your prospective property is on. If you are looking at commercial real estate on the water, then make sure your comps are on the water as well. Geographically speaking, your comps should be within a mile for the best comparables, although you can go up to five miles away if you have to.

Consideration #4 - Property Condition - You should also be sure that you take the condition of the property into consideration. If the commercial real estate you are considering is in great shape, you won't want to look at comps that are on run down properties.

Consideration #5 - How Long on the Market - You should also check how many days the like kind comps were on the market before they were sold. If the property took a long time to sell, then there is probably a reason. Also, if it sold fast, there is probably a reason behind that as well.

Consideration #6 - Amenities of the Properties - Another thing to keep in mind when researching comps, is the amenities of the properties. Make sure that the comparables have very similar amenities to the commercial real estate that you are planning to purchase.

The Exceptions to the Rule

In some cases you may not be able to find comps that are in the immediate area, in which case you'll have to look for comps in the same city. If you have looked for comparables that are within 5 miles of the property you are considering and you cannot find them, it will usually be okay to go ahead and go for comps in the same town or city.

In some cases you may not be able to find any up to date comparables for your prospective property. This may cause you to use comps that are as old as 2 years if there are just no matching recent comparables. If these are the only comps you can find, then you'll probably have to go with them.

Locating Your Comps

You may be wondering how you can find good comps. Well, there are several different ways to find good comparables. One great way to get the comps you need is to ask the broker that you are working with for comps. Another option is to use the MLS system that is used by realtors if you can get access to it. There are several online sites, such as CoStar.com and Loopnet.com that can supply you with the comps you need. The more comparables you can get, the better, so work to get as many as you can.

3 Types of Comps

There are three different types of comps that you may be gathering, depending on the type of property you are looking into. Here are the three types of comparables you'll need to be familiar with.

Comps that are "As Is" - These comps are properties that are similar to the commercial real estate you are considering in the current state of disrepair and current zoning. You cannot use comps that have been rezoned or improved.

After Developed Value Comps - This is a comp that involves land that has been improved with the infrastructure needed for building construction. This can include sidewalks, curbs, streets, utilities, gutters, and sewer.

After Repaired Value Comps - These comps are used when you have a building that needs to have some repairs done. This deals with the price that the property will be worth on the current market after you have restored it to good condition.

As you can see, having accurate comps is very important when getting into a commercial real estate deal. If you cannot get your broker to give you the comps you need, then you may want to tell them you'll have to either get out of the deal or find another broker that can help you find the comparables you need to make an informed decision. Usually, this will help motivate the broker to get the comps you need, since the broker won't want to lose the deal or their commission. Either way, make sure you find strong and accurate comps that allow you to make an informed decision on your commercial real estate deal.

Do Hard Money Lending Rates Vary From State To State or Are They The Same Nationwide?

In most of the United States, there is no cap on hard money lending rates. That's why it is so important to shop around, if you want to get the best deal. The majority of private loans are made to real estate investors for construction, remodeling or improving existing houses, in order to resell them at a profit, rent them out, or simply refinance them at a later date. If you are looking for funding for one of those purposes, you will find that the best source is a private lender that specializes in rehab funding.

It is true that interest rates for hard money loans are typically higher than those charged by commercial banks, but there are other things to consider. Rehabbers generally deal with motivated sellers, people who need to close quickly. It takes 4-6 weeks to close on a conventional loan. Private lenders can close in two weeks or less.

Most financial institutions charge early repayment penalties. The cost of those penalties could be equivalent to more than the interest charged by a private company, especially since those who specialize in funding rehab projects often charge nothing for paying the loan off early.

Since it is a short term loan, typically running for 12 months or less, the annual interest rates for hard money are less important than say the APR for a 15 year mortgage. If you know what you are doing, it is not going to take you very long to repay this loan. If you are investing in rental property, you would take the hard money to close on the property quickly and then look for conventional financing, with a better long-term rate.

If you are rehabbing, you should be able to repair and resell the property within six months, but you have a year and your monthly payments are interest only. If you dealt with a bank because the interest was less than the hard money lending rates, your monthly payment could still be higher, because it would include principal and interest. Higher monthly payments restrict your cash flow and can limit your ability to make improvements or make additional purchases.

According to a recent article in the New York Times, the experts say that typical interest rates for hard money are at least 12%. But, that information can be misleading. Some lenders charge 10%, others charge 5% and of course, some charge more. You have to do some comparison shopping. Since, the "experts" say that they charge at least 12%, you might be tempted to sign up with the first provider that you find. You could be making a mistake.

Even between two providers that have the same hard money lending rates, the services that they offer could vary. The differences could mean less money in your pocket and less profits overall. If you take a little time and find the right provider, you will probably find that private funding is a good choice for your future rehab projects.

Business Owners Need To Examine New Commercial 30 Year Fixed Mortgage

Business owner that own their commercial building need to take a hard look at the new commercial 30 year fixed program that has become available. It has some features that set it apart from the typical 5 year fixed, 20 year amortization bank loan.

First of all, as the name implies, this loan, just like the traditional residential 30 year fixed is fully amortizing over 30 years and the rate is fixed for the entire term. Further the program is designed for owner users (business that own the facility they operate their business out of) and is a suited for a broad range of building types, not just the typical office, industrial, retail. Properties like automotive, restaurants, daycares etc are acceptable.

Besides the obvious benefit of not having to worry about an adjusting rate or pending balloon, the cash flow savings can be a significant for a small business that is trying to reduce monthly costs. On average we see a 20% cash flow savings when compared to a 20 year amortization loan.

To be fair, the reduction in payment is due more to spreading out the loan, than a true savings, but many business owners are more concerned, especially in our struggling economy, on keep their monthly outlay down and cash flow up. Other benefits include ability to pay the mortgage down by 20% per year without incurring the prepayment penalty and that rates/fees are right in line with traditional loans.

How and why haven't you heard of the Commercial 30 Year Fixed before?"

Couple of reasons. The evolving commercial secondary market is one of the sources behind this loan program (and others). Historically, banks originated and funded loans basically with their own money, primarily from deposits. They were (and still are) at direct risk of losing that capital should the borrower default.

The secondary market is different than the traditional system. Loans are instead "pooled" together and sold to investors in the form of bonds, creating greater diversification and less risk for the entities holding onto the loans. This diversification is one of the fundamentally differences, that enable major lenders to create and underwrite loans outside of the norm.

What are the negatives? Few. Prepayment penalties are higher than traditional loans. Most banks will ask for a 5,4,3,2,1% while this loan may have a straight 5% for five year or as high as 10% for five years depending on the particulars. Interest rates are typically .1 - .4% higher than on traditional programs but the increase in amortization, as stated above, normally increase cash flow by 20%.

Commercial Mortgage Loan Types - Mezzanine Loans, More Than Just 2nd Mortgages

Many people, even some experienced commercial real estate developers, mistakenly believe that a mezzanine loan is simply a 2nd position commercial mortgage loan against a commercial property. It is not, mezzanine financing is a highly sophisticated form of lending that requires specialized business and banking knowledge.

Many acquisition and development projects require additional financing beyond a traditional first mortgage. The simplest, fastest and least expensive method of borrowing in these situations is to have the seller or another lender write a traditional 2nd mortgage. Unfortunately, especially in today's era of tightened credit, 2nd position liens are often impossible, due to an equity shortage, or disallowed by mortgage covenants mandated by the 1st position holder. The-fact-is that there are many scenarios where the option of a simple 2nd is just not available. These scenarios give rise to what's known as mezzanine lending.

Unlike a mortgage, a mezzanine loan is not a lien against a piece of commercial real estate. It is a loan secured by the assets of a business entity. A title search will not turn up mezzanine loans because they are not attached to a properties ownership documents. In this way they do not violate any provisions of a 1st mortgage that precludes a 2nd.

With the cooperation of the borrower, a mezzanine lender sets up a single purpose, business entity, such as an LLC or a Trust. Title and ownership of the target real estate and corresponding businesses are placed in the entity so the whole project is owned by the new company. The company is run by the borrower. The actual mezzanine loan is made to the company but is also personally guaranteed by the principle borrowers. The loan is secured by the assets of the company (the real estate and its operations) and allows the lender to take over full ownership and operations in the event of default.

Although simple in concept, mezzanine lending is complex and difficult in practice. Attorneys for both the borrower and the lender must be very involved in drafting the provisions of the loan and making sure the new entity is properly set up and maintained. Borrowers want their rights protected while lenders need to make sure their security interest in the firm and, indirectly, the real estate is legally binding. Often the real estate, the borrower and the lender are domiciled in different States making the whole enterprise subject to interstate commerce regulations and further complicating the loan.

The legal and closing costs as-well-as maintenance costs associated with mezzanine loans are extremely high compared to conventional lending. For this reason mezzanine financing structures are wholly inappropriate for small deals. It's very difficult to make mezzanine capital cost effective in projects worth under $10MM.

Mezzanine loans certainly have their place; their loan volume can be counted in the tens of billions of dollars. When they're needed and when done correctly they are true deal savers. A partnership with a mezzanine lender can be an invaluable resource to a developer or commercial real estate investor. However, investors and developers need to understand exactly what a mezzanine loan is and be ready for the costs that come with them.

How Commercial Property Can Pay Off Your Las Vegas High Rise Condo

With the way the mortgage industry is these days, it's getting harder and harder to find solid investments. Couple that with the fact the stock market isn't much better than real estate, the question arises "Where should I SAFELY be investing my hard earned money TODAY?" Note the two bolded words: Safely and Today. Now consider those words when you hear the question: How can you turn one solid investment into two... without your pocketbook or bankroll even feeling it? Luckily for you there's a way to do just that. Here's how it works:

Say you have $600,000 that you're looking to invest. It could be in the form of cash, a bank CD, an IRA, whatever. There are commercial property sponsors out there that allow you access to grade "A" commercial real estate, including office buildings, retail centers, multifamily, etc. where you can purchase Tenant in Common (TIC) interests depending on how much money you need to invest. This is not timesharing! This is fee simple deeded real estate with all the benefits of traditional real estate ownership. What's great about TIC properties in general is that they're totally hassle free investments with absolutely no management issues on the investor's part. You'll never have to find a tenant, evict a tenant, do repairs, or anything else associated with investment rental property. The sponsor takes care of that all. You're left with a completely no-hassle investment in high class commercial real estate.

Now let's say you put that $600,000 into a TIC property that's paying you 6.5% interest contractually, even if the property is unrented (we'll go into that later). You've now bought a substantial real estate position which is earning you an interest payment each month in an appreciating asset. Then what you do is you put a deposit on a high rise condo unit. Let's just say you buy a unit at Juhl for $400.000 and put down 15% as an investor. Even in today's crazy market, you'll still find an investor loan at less than 6.5%. So what you do is you have the interest from your commercial purchase (which again is guaranteed and hassle-free) pay off your mortgage on your Las Vegas high rise condo unit. You'll never have to physically make a payment plus you'll be getting the spread difference from whatever your mortgage rate is and the 6.5%! So fast forward a few years and you'll not only be the owner of an appreciated commercial real estate asset, but you'll have your mortgage paid off and substantial equity in your condo - without even feeling it!!!

I'm surprised more investors with the means aren't already doing this. The key to all this is selecting the right TIC property sponsor. The Spectrus Group is one of my favorites due to its impressive and consistent record providing outstanding results to their investors. In 28 years of operation, they have never missed a payment to an investor and never have been late either. They provide investors with outstanding solid commercial property investments via their NNN Plus lease, which as mentioned previously, pays the investor on a contractual term regardless if the property is even rented or not. And if that's not enough, when it comes time to sell the property, 100% of the profits goes straight to the investor as well. It's low risk and you can do this today.

Cash flow..., appreciation over time... quality Class "A" commercial investment property. And if you do it right, a high rise condo to boot! What are you waiting for? Let's do this!

Commercial Office Space Things to Look For

In today's economy there are many ways to insure that you get a great deal in the real estate market. This is especially true in office space in the dallas keller uptown grapevine plano areas of the DFW metroplex.

A few things to look for are:
1. As in any area of real estate location, location, location! This is important for many reasons. Will customers be visiting your office? If so it should be easy to access. Are drive by customers an important part of your business? If so the location on a major street with no construction is huge. You can find out from the city if construction is being planned for the next year.

2. Talk to the current tenants and discover how the feel about the landlord. Do the phones work all the time? Is the internet service working? is this office clean? Would the current tenants rent from the landlord again?

3. What is the financial position of the owner of the building? It is not a fun experience to find out one day that you have to move because you building is being closed down.

4. Use services like google to discover the reputation of your landlord in the community

5. Is the current market value fair? Search all office space within the $ per square footage? Search local office space and determine what the price per square foot average is in your area and do not pay more than this!

6. Does your office offer phone answering service, fax service, copy machine service, conference rooms and other services?

7. If you don't like the number of months offered in the lease contract then suggest a different number of months

8. Many landlords will offer a graduated rent scale. This means the first month you may pay $500 then $600 then $700 and work your way up to your final rent total. This is justified as a new business getting started and office expenses you will have such as furniture

9. Keep a copy of your lease contract in a safe place and never let the landlord charge you for something that you don't owe!

10. Research and ENJOY!

Commercial Property Loans Are the Friends of Your Business

People interested to buy property, extend or develop own business premises for owner occupation can easily materialise their dreams with the help of specific loan plans available in the UK loan market. The UK loan market offers flexible, tailored loan plans to structure your commercial mortgage loan finance according to your needs. These are specific to the purchase of commercial property only with scores of borrower friendly features.

The borrower can select a mortgage repayment period between 2 and 30 years while taking these loans. They are secured in nature and the loan applicant can borrow up to 75% of the purchase price or professional valuation, whichever is the lower.

The minimum loan amount is £25,001, and there is no maximum as the real estate price fluctuates on daily basis. According to your personal and financial condition, you can select a fixed or variable rate mortgage. You can also choose to pay mortgage interest either monthly or quarterly.

You can choose to take capital repayment holidays for all, or part of the first 24 months while the repayment of Commercial Property loans is continuing. There is also option to defer up to two commercial mortgage loan repayments in any year. Protection against interest rate rises for loans of over £250,000 is associated with these loans. The most beneficial things are these loans are easy and straightforward to arrange. A quick response to your lending requirements is given by the lender as there is stiff competition in the UK loan market.

The Commercial Property loans can finance the property you are looking to fund is office, retail, warehouse or industrial premises. You can also avail these loans for the purpose of letting under formal tenancy agreements. These loans also offer the residential Buy to Let landlord a choice of market leading. At the forefront of these loans the convenience of the loan applicant is being given the utter priority. This loan available for almost all property and tenant types, including more difficult to fund niche property types including HMOs, block of flats and DSS tenants. The expert consultant and administrator of the lenders will work with you throughout the mortgage process to ensure that your loan application goes as smoothly as possible. The loan decisions in principle can be obtained within minutes. Currently 85% loan to value and 100% rent to interest cover calculation are offered to the borrowers.

Credit scoring is used by the lenders to reject or deject the Commercial Property loans application. The credit score includes detailed past records of the relationship an individual has established with other creditors. These loans are the secured plans and differ from the unsecured loans in a large magnitude. In case of new businesses ventures you do not yet have established accounts, or cannot prove your income, and have a limited amount of equity or limited cash deposit. In such cases, the Commercial Property loans help you. Many people are more suited to interest only mortgages which the online lenders lenders are willing to offer. There are lenders who specialise in non-status interest only commercial mortgages and lend against the "bricks and mortar" value of your property. They require no accounts or proof of your personal or business income for loan approval.