Learn To Be A Fix & Flip Investor: commercial real estate financing

Showing posts with label commercial real estate financing. Show all posts

Tuesday, October 17, 2017

The Best Ways on How to Evaluate Commercial Real Estate Financing Options

Before taking a dive into a big investment, it is a good idea to understand all of the difference between all of the different types of commercial real estate financing. Some of these types include office space, retail space and plenty of more properties.

Believe it or not, office spaces happen to be one of the most popular options to invest in. These buildings are broken up into three different classes and include single tenant offices and skyscrapers. If you're thinking of looking into commercial real estate financing for an office space, make sure to do plenty of research so that you know you are making the right decision. You will be able to find plenty of information on the property you are interested in so that you can get a better idea if it is going to be a smart investment.

Retail buildings and industrial buildings are also popular types of commercial real estate properties. Since retail buildings can range anywhere between a tiny 5000 square-foot space to a larger 350,000 square-foot space, commercial real estate financing options can definitely range. Warehouses and other industrial buildings are more commonly involved with investment opportunities.

Another popular commercial property you can invest in our multifamily units like apartments and condominiums. These buildings compared to office buildings or even retail buildings are a little different when it comes to the lease terms. The terms for these units are usually much shorter, so always keep that in mind. Also, keep in mind that usually the best properties are going to be in high demand, so it is best to focus on factors like location and property value.

Commercial Real Estate Financing can come with many benefits if executed right

When it comes to commercial real estate financing, you need to first decide if you want to go at it as an individual or with entities. Entities like corporations, partnerships and developers are often where the majority of investments stem from. But with the right documents and providing impressive numbers, you will be able to complete the application process easily as an individual as well. With the right numbers and documentation, individuals can still receive approval.

When done successfully, commercial real estate financing can be a win-win solution for all involved

Before taking a leap into your next investment, you must remember to take a lot of things into consideration. You need to first decide if you want to go about it as an individual or with entities. Next, you also have to consider if you are going to use the finances for an office space, for multiple units or for another type of property. There are many different options you can choose from and it is best to just evaluate the entire agreement to make sure it is in line with your plans and long-term business goals.

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Many Are Eager to See if Commercial Real Estate Financing Will Finally Bounce Back Towards the End of the Year

With the third quarter coming to a close quickly, many are hoping that the start of the fourth quarter will bring a boost to commercial real estate financing. Due to a slow start at the beginning of the year, the market has not quite recovered and there are a number of reasons that the industry is seeking improvements.

The numbers for the third quarter will be reported soon, but if we take a look back at the second quarter numbers, the commercial real estate financing in New York actually saw a decline, but it was extremely masked by massive size loans that were for just a few number of commercial real estate properties in the Big Apple. And because of the large size of these loans, many people didn’t even really notice the decline.

For example, one of the largest commercial real estate financing deals in New York happened to be the renovation of the well-known General Motors Building. The building is located on famous Fifth Avenue and is now home to an Apple store, which makes it the technology company’s flagship Fifth Avenue location. The deal was completed over the summer in June with a $2.3 billion-dollar price tag for the loan.

In May, the property located at 245 Park Avenue received $1.2 million dollars in commercial real estate financing. These two loans, along with a couple of other also larger loans happen to be significantly larger than any of the other loans approved in the New York City area during that quarter. Meaning that the top five loans in the city in the second quarter went on to total 20% (that is 1/5^th!) of the total loan amount for the entire quarter.

Commercial real estate financing didn’t see successful numbers in the second-quarter, but it also didn’t see a drastic decline

The numbers for the second quarter in New York City technically fell flat according to Forbes. But some of the good news is that after seeing a 12% dip from the second quarter in 2015 to the second quarter in 2016, the market has actually stayed stable, not really seen a declining shift. But considering that the top five loans made up 20 percent of the total loans, the numbers actually do show a slight decline, but nothing too extreme.

High expectations are still set for commercial real estate financing for the rest of 2017

But these numbers shouldn’t get you too worried or discouraged! They don’t necessarily mean that a slump is on the way and will be a common trend. It just means that the market experienced a bad quarter, but can hopefully it can bounce back quickly. The market just need to continue to focus on moving forward, but with caution, and keeping in mind the large amount of loans that are being approved.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Sunday, October 15, 2017

How Using Collateral Can Help You Secure Commercial Real Estate Financing

As you start or grow your business, you may come upon a circumstance when you need to secure a loan to boost your business or cover some important expenses. When seeking commercial real estate financing, using collateral can help you get the right loan terms.

In the world of commercial loans, collateral refers to assets that serve as a guarantee to a lender in the instance that you cannot pay back your loan. In this case, the lender has the rights to obtain ownership of said collateral, whether it is a building, your company’s equipment or machinery or even your own car or house. While this sounds scary, collateral can put your loan amount into perspective, so you only loan against your assets. In this case, your commercial real estate financing will be calculated on a loan to value ratio, and the greater the value or your collateral, the higher loan amount you can borrow, in theory.

These assets are defined a certain way, so you can’t use certain things as collateral against your loan. There are also items of value you have that you may not even have considered as collateral. Typically collateral can be split into two categories – real and paper. “Real” assets refer to cars and homes, as mentioned above, but also watercraft and other vehicles. While buildings can serve as collateral, banks and lenders typically won’t consider plots of land.

The other category is “Paper” collateral, which includes stocks, bonds, investment funding and payment rights. When it comes to company stocks, take into account the current state of the market because if your stock drops, your lender has the right to sell off the assets that you used as collateral. You can also use your business’s revenue as collateral, however you will have to have a solid projection of your company’s business earnings over a set timeframe. Payment plans could be required from the lender for your commercial real estate financing loan in increments of monthly, quarterly, or even annually.

When you are applying for a loan – put your cards on the table… even your collateral.

When it comes to securing a loan, it all comes down to one basic thing — lenders need to know that you will be able to pay back the loan or that they will get something of value (aka your collateral) if you are not able to repay the loan. Ultimately, they can’t risk losing the money they lend you.

Your collateral can be just the thing lenders need to approve your loan!

Securing commercial real estate financing with collateral is a great way to get the loan you need for your growing business. As long as you intend to repay the loan within the specified terms agreed upon between you and the lender, there is no reason to fear putting up collateral when you need a loan. So when you are shopping for a loan, make sure to let your lender know what kind of collateral you have to back up your loan.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

What is Credit Risk and How it Can Affect Your Commercial Real Estate Financing

When it comes to securing commercial real estate financing for your business, banks and lenders will typically want to see your credit score and report. That’s because they must determine the credit risk — before deciding whether or not to approve your loan application.

Credit risk is the chance that a bank or lender will lose value when outstanding loans go unpaid. While financial institutions and lenders have many factors to weigh when it comes to ultimately determining whether your application will be approved, credit risk is an important one of those factors. Lenders can assess the risk associated with taking on your loans by determining your ability to repay the funds borrowed to you.

This capacity is based on the revenue that your company generates along with other factors such as the amount of collateral you have to put towards the loan. These are important aspects that lenders look at when it comes to deciding if your loan is “worth the risk.” In any instance, the lender takes on a certain amount of risk, however, they look to mitigate that risk whenever possible. They certainly don’t want to loan money to a business that shows no capacity to be able to repay the loan within agreed upon terms.

Another way lenders will assess this risk is by reviewing your past repayment history – via credit history or other loans. This can be either personal or business debt. Beyond just the amount you’ve borrowed and paid back, they look to see if your previous debts were repaid in a timely and appropriate manner. If you have delinquent marks based on late or missed payments, lenders may find themselves quickly tightening their purse strings when it comes to your commercial real estate financing.

Even if you are considered a credit risk, you still have the ability to be eligible for a loan.

You can minimize your credit risk by maximizing your loan to value ratio or increasing the amount of personal equity you can put towards the loan. Sometimes these things are enough to help you persuade a lender to loan you the commercial real estate financing you are in need of.

If you are rejected for a loan, don’t give up — you can still seek alternative lending options

While a traditional bank or other conventional lender may not be able to look past your credit risk, that doesn’t mean you will never obtain the loan you need. Seek other options, such as alternative lenders that are more likely to “take the gamble” on a higher-risk loan scenario that you might be in. Continue to search until you find the right lender — and the right loan — for you.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Avoid Making These Mistakes When Applying for Commercial Real Estate Financing

Sure, we all make mistakes, but some are bigger than others and can make a lasting impression on the future and success of your business. When it comes to securing commercial real estate financing, try to avoid making these mistakes.

There is a lot to learn about applying for a loan for your business, but you can get a head start by understanding a few of the pitfalls to avoid. One of the biggest mistakes is making a hasty decision when deciding upon the loan you need and the lender who can supply said loan. Take plenty of time to research the types of loans that are best for your business, and determine which is best for your business before leaping into the loan application process (online or otherwise).

If you’ve never applied for a loan before, it’s also a good idea to then seek a lender who is experienced in that type of loan as well as the industry of your company, can be a very important key in the success of your commercial real estate financing loan application process. They can advise you through the process, and help you negotiate better terms for your repayment schedule. It’s important that you get a good feeling about the lender you work with, and that you feel you can trust them with your business’s financial needs. Without their advice, you may end up wasting both time and money having to resubmit applications and documentation or even lose out on a desired property.

Another mistake is trying to go through the loan approval process without the professional counsel of an attorney that specializes in commercial real estate financing. A loan of this nature is a huge transaction, and a legally binding one at that, so it’s important that you understand all the fine print, hidden fees and jargon before putting your signature on the dotted line. An experienced attorney can help you navigate unfamiliar terms, conditions and clauses that you might not fully comprehend. To ensure the contract is just and reasonable, get an attorney.

There are also some things you can do to increase your eligibility and chances of getting your loan approved.

Having a solid business plan is crucial — you want to be able to prove the a bank or lender that your business will make money (so you can repay the loan). It’s also important to show a high FICO score and clean credit history. However, don’t worry if you have a new business or are still establishing business credit, you can still be successful at obtaining commercial real estate financing, though you may need to seek alternative lender options.

Don’t rush through the process and you will avoid making mistakes

Understanding that seeking a loan of this type is a major commitment and a decision that should not be taken lightly. A large loan is an investment and it can be risky if your business doesn’t make money right away or hits a rough spot and money gets tight. Take the time to make sure you get the best loan for your business and that you are comfortable with all the terms, especially repayment, to ensure the best success for your growing business.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

How Commercial Real Estate Financing Can Be the Key to Managing Your Business Finances

If your business needs cash to help get out of a rough slump or to continue to grow to the next level, short term commercial real estate financing can often help. By having an extra cushion of cash business owners can more easily manage their budgets and take risks when it comes to growing their businesses, and with these tips, your company’s finances will allow you to grow while also being able to pay back your loan.

It’s no secret that as a business owner, you shoulder a great deal of financial responsibility — not only to the growth of the company, but to your employees, vendors and suppliers, and more. Keeping a tight hold on your budget and managing your finances responsibly from the onset will help you in the long run. However, just because you can run “a tight ship” doesn’t mean your company wouldn’t benefit from the extra cushion of hard money from commercial real estate financing.

Even with a loan, it’s crucial to keep your monies organized. You should always keep your business and personal finances separate — no matter how big or small your business is or gets. That means securing a bank account as well as a credit card in the company’s name, not your own. This can help you stay organized when budgeting but also when it comes to filing taxes and establishing separate business credit. Establishing business credit becomes very helpful if you need to secure a long-term loan in the future.

Experts can help you not only with your commercial real estate financing, but with managing your budget as well. Just because you know what your customers’ needs are, doesn’t mean you are an expert at finances. Everyone has an area of expertise and if yours isn’t dollars, it’s a good idea to get help organizing and managing your budget. Whether that means hiring an accountant to handle billing and payroll, or seeing the help of “DIY” programs such as Excel or Quickbooks, utilize the tools and experts that are available to help make managing your finances easier on you — so you can refocus your efforts back onto the success of your growing business.

Do you research before seeking out and applying for commercial real estate financing.

If you take a good hard look at your budget prior to research and applying for loans, you might be surprised that there are some areas in which you can cut back your spending to loosen up the tight times. Being realistic about where you can scale back can help you determine how much you should apply for when seeking a loan. When the loan amount is dialed in to exactly how much you need and not too much more, than you don’t have to worry about getting wrapped up in a repayment schedule and high interest rates that you don’t even really need.

When you decide you are ready, consult the professionals.

Upon determining your desired loan amount, find a lender who will negotiate terms that will work for you so you are happy with the payment amount and it fits into your budget.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

What You Need to Know About Working Capital Commercial Real Estate Financing

If you need cash fast to get through a rough spot in your business or to catapult your business to the next level, you may benefit from working capital commercial real estate financing. Before applying for this type of loan, find out the benefits, and drawbacks, of this loan so you can up your chances of being eligible to receive funding.

When you need a loan, you may hear the term “working capital.” While it sounds formal, it’s really just a term that means the cash that a lender can loan to a borrower. This working capital can be used for important company needs for continued business operations such as employee payroll, monthly utilities, paying invoices and rent. There is always the chance of a company getting tight on funds and in that instance, working capital commercial real estate financing can be very helpful. A loan like this can make sure you keep your business running through tight times, even if you are low on cash flow and don’t have the ability to liquefy any assets.

Working capital loans have multiple benefits. They usually don’t require a lengthy or complication application process or approval time. The application process is not as strict as conventional loan processes sometimes can be, so this speeds up the process as well. Also, once a business is approved for the finances, funding can be received very quickly. Usually, once approved, funds are available to the borrower within seven working days. Another benefit is that the company is not required to use the funds for a specified purpose, unlike conventional bank loans that sometime have restrictions on how borrowers can use the working capital funds. Finally, companies that have less than perfect credit scores or history are still eligible for this type of financing.

Along with the benefits of working capital commercial real estate financing, there are some downsides. Though credit report review and application approval may be a bit ore lenient than a conventional application process, you may be responsible for more collateral to secure the funding. These loans also have shorter terms, which usually equates to higher interest rates than traditional long-term loans that have longer repayment schedules.

If your business represents a niche market, you may find that working capital commercial real estate financing is the right loan for your company.

Even if your business is a bit “out of the box” for traditional lenders to approve your loan, with certain loans that don’t require the loan money to be used in a specific way, this is ideal for new companies and small businesses in need of cash. This financing can be very helpful for companies that need to purchase inventory, supplies, equipment or other business needs. But beyond that, even if the company does need to use the funding for other purposes, it’s not an issue.

When you are in need of working capital, find a lender that specializes in this type of loan.

There are many lenders that focus on this type of loan, and know how to help companies like yours get the loan approval you need. Do your homework prior to meeting with a lender to ensure they can help you get the kind of working capital loan you need to help your business grow and succeed.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

The “Pros” of Short Term Commercial Real Estate Financin

To grow any business to the next level, it’s important to have the financial backing in place to be order to afford expenditures of expansion. Short term commercial real estate financing can take your company to next level but first you’ll need to understand what will be required of you to make sure you are eligible for this type of loan.

Short term commercial real estate financing can be just the solution to the problem of coming up short on cash. Unlike conventional financing options that have five or ten year repayment terms, the repayment schedule of a short term is typically much shorter — likely between three and six months. This type of financing is also usually approved easier than traditional long-term loans and the payment restructure can be made in not only smaller, but also more frequent payments – whether daily or weekly – versus a monthly lump sum. When securing this type of financing its important to figure into your budget the repayment.

Another “pro” of short term commercial real estate financing is that you can get the cash you need relatively fast. This is important when your company is in a tight spot and it’s also a good way for new companies to establish some business credit, which can be beneficial, and help them improve their chances of getting approved, if they need to apply for a larger conventional long-term loan later on. The ability to show a lender that you have had, and paid off, previously loans, helps your eligibility.

Short term financing is great for new companies and businesses with not so great credit history that are working on rebuilding their credit scores. These types of loan application processes don’t typically require a high minimum credit score for approval, which conventional lenders and banks usually do. However, if you are able to get approved for this type of loan and are able to restore your credit score by repaying the loan as outlined in the loan agreement, this can make other loan applications you may apply for later on look more desirable.

With short term commercial real estate financing, you don’t have to wait too long to get the money you need.

After applying for the loan, going through any additional necessary steps of approval, and finally, actually getting approved, you can receive the cash in as little as a day. For companies that are really in need of cash very quickly, this type of loan can really save the day!

As with any upside, there are some downsides, too. There are a few “cons” that are involved with this type of short term financing.

While these loans can be very helpful for new businesses and companies that are experiencing some growing pains and need cash fast, there are a few things to be aware of. These loans are associated with much higher percentage rates of these than the average APR associated with conventional long term financing. This is because the repayment window is much shorter. The APR is higher comparative to the length of the loan schedule, usually between three and six months. To estimate and convert the APR, add the finance charge plus the interest rate. Typically, lender fees will also be required for this type of financing.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tuesday, October 10, 2017

Foreign Investors are pulling back from the US market. Evaluating what this means for the rate of commercial real estate financing?

Commercial real estate financing has been expanding rapidly in the face of historic rates of foreign acquisition. But it appears many foreigners may have lost interest in the US commercial real estate market this year.

Foreign commercial real estate acquisitions in the US are down from their record highs in 2015. Chinese and Canadian investors have been particularly active in US commercial real estate. Both groups accounted for 44 percent of all US commercial real-estate acquisition by volume in the 4 quarters preceding March 31^st of this year.

But this year has seen some pull back on the part of foreign investors. Foreign Investment in commercial real estate has declined at far greater pace than investment by US citizens. In the four quarters leading up to March 31^st, the rate of foreign investment fell by 33 percent when compared to 2015. Investment by US citizens in commercial real-estate fell by just eight percent over the same period. Analysts give many reasons for this apparent decline in the purchase of commercial real estate by foreign investors.

The rate of foreign investment is perhaps being hampered by a particularly strong US dollar. Other reasons may include political uncertainty, in particular with regard to the Trump administrations tax reform agenda. But the consensus among many analysts appears to be that real-estate assets particularly in traditional gateway markets like New York or San Fransisco are simply overpriced. Bob O’Brien, Deloitte’s global and U.S. real estate and construction sector leader, claims that the decline started with the perception that, “particularly in some of our major gateway cities, real estate was starting to look pretty fully priced.” In essence the record pace of foreign investment in 2015 may have pushed prices in certain real estate markets to unsustainable highs.

US Commercial real-estate remains strong. New deals and the rate of commercial real estate financing will more than likely stabilize from the record highs of previous years.

The question is what fueled the record rates of commercial acquisitions by foreign investors in the first place? Brexit and other factors supported the perception of global instability from 2015 to 2016 , which made US real estate seem particularly attractive. There were also concerns (which still remain) of a debt bubble in Chinas real-estate market which fueled real estate acquisitions by Chinese citizens. The first half of 2016 saw a 19 percent year over year increase in commercial real estate investment on the part of Chinese nationals. While this rate may be declining, the US market remains strong and some speculate foreign investors are simply waiting for prices to stabilize.

The decline in foreign investment isn't likely to have a long term impact on the rate of commercial real estate financing. Foreign investors are not retreating entirely from US commercial real estate.

Foreign commercial real estate investment still remains above historic norms. Deals brokered on behalf of foreigners still accounted for 14 percent of all the deals that closed this year. While this is down from 2015, such rates of foreign investment in US commercial real estate were likely unsustainable. “Investment volume in calendar 2015 hit an astronomically high level and not what I would consider would be a sustainable level,” said O’Brien, “it created an investment environment in 2015 that was just off-the-charts strong. The pullback is somewhat natural.” Analysts speculate that many foreigners are simply waiting for prices to return to normal. Foreign money will likely return to the US commercial real estate market once investors can purchase properties at a greater value.

In spite of the apparent decline of foreign interest in US commercial real estate the fundamentals of the market remain strong. Foreign investment will likely stabilize closer to historic averages and as demand cools prices are likely go down.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Featured Post

Tuesday, October 17, 2017

Before taking a dive into a big investment, it is a good idea to understand all of the difference between all of the different types of commercial real estate financing. Some of these types include office space, retail space and plenty of more properties.

Commercial Real Estate Financing can come with many benefits if executed right

When done successfully, commercial real estate financing can be a win-win solution for all involved

Commercial real estate financing didn’t see successful numbers in the second-quarter, but it also didn’t see a drastic decline

High expectations are still set for commercial real estate financing for the rest of 2017

Sunday, October 15, 2017

As you start or grow your business, you may come upon a circumstance when you need to secure a loan to boost your business or cover some important expenses. When seeking commercial real estate financing, using collateral can help you get the right loan terms.

When you are applying for a loan – put your cards on the table… even your collateral.

Your collateral can be just the thing lenders need to approve your loan!

When it comes to securing commercial real estate financing for your business, banks and lenders will typically want to see your credit score and report. That’s because they must determine the credit risk — before deciding whether or not to approve your loan application.

Even if you are considered a credit risk, you still have the ability to be eligible for a loan.

If you are rejected for a loan, don’t give up — you can still seek alternative lending options

Sure, we all make mistakes, but some are bigger than others and can make a lasting impression on the future and success of your business. When it comes to securing commercial real estate financing, try to avoid making these mistakes.

There are also some things you can do to increase your eligibility and chances of getting your loan approved.

Don’t rush through the process and you will avoid making mistakes

Do you research before seeking out and applying for commercial real estate financing.

When you decide you are ready, consult the professionals.

If your business represents a niche market, you may find that working capital commercial real estate financing is the right loan for your company.

When you are in need of working capital, find a lender that specializes in this type of loan.

With short term commercial real estate financing, you don’t have to wait too long to get the money you need.

As with any upside, there are some downsides, too. There are a few “cons” that are involved with this type of short term financing.

Tuesday, October 10, 2017

Commercial real estate financing has been expanding rapidly in the face of historic rates of foreign acquisition. But it appears many foreigners may have lost interest in the US commercial real estate market this year.

US Commercial real-estate remains strong. New deals and the rate of commercial real estate financing will more than likely stabilize from the record highs of previous years.

The decline in foreign investment isn't likely to have a long term impact on the rate of commercial real estate financing. Foreign investors are not retreating entirely from US commercial real estate.