Commercial Real Estate Loan? Things To Consider BEFORE Prepaying

There are different types of stipulations you have to follow if you are thinking about applying for a commercial real estate loan. In this brief article you will learn about how prepayment may affect the way your loan is handled.

No one likes having loans. Well, no one likes having to pay off loans over a long period of time. For most people that invest in a commercial real estate loan, however, are usually locked into a fixed rate of interest. Based on this agreement most lenders will allow you to pay off to 20 percent of your commercial real estate loan each year. For the business owners that do not follow that rule, there are some penalties that you may face.

It may seem like a weird way to calculate, believe it or not, many business and homeowners do can do this without even realizing it. For example, say you have a home that you are using to rent out to tenants. After which you decide that you want to sell the property you could potentially pay off your loan. Refinancing is another way that many people pay off their commercial real estate loan in full, as well. You do, however, end up with another loan on top of that. Once this happens you will have penalties that follow.

If you do decide to prepay your commercial real estate loan may run into more than one roadblock

When it comes to prepayment penalties there are two different types that you may face. They are called soft and hard penalties. When a lender allows a soft prepayment penalty option you are able to sell the asset your mortgage is based on. However, if you do decide to refinance it then you have to will receive prepayment penalty.

On the other hand, if your lender gives you a hard prepayment penalty in your agreement it is a little harsher.  In this case, if you were to sell your property or refinance it you would receive a prepayment penalty either way. With this type of prepayment penalty, it makes it harder for an investor that may want to back out of their business.

There are things you can do to soften the prepaying blow that your commercial real estate loan throw you

Defeasance is something that may help you with the prepayment penalties that come with your commercialreal estate loan. Defeasance is defined as an action that reduces and eventually nullifies what you have to pay. Usually, the institution that you are dealing with will have to review your assets and decide with you are able to use as collateral to cover the penalty on your commercial real estate loan.

Once that collateral is sold the borrower receives government securities so thereafter they can sell or refinance their property. Usually, this can take a little over a month to complete, however, it is possible to ask for a quicker sell. If you do decide to speed up the process, however, you do have to pay a premium for expedition services.

Dennis Dahlberg Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:      (512) 516-1177 
Dennis@level4funding.com
www.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.

How To Use Collateral When Applying For A Commercial Real Estate Loan

When purchasing a new property for your business you most likely will have to take out a commercial real estate loan. This article will show you how collateral works and what you can use as collateral for your property.

There are a lot of things business owners have to take into consideration when applying for commercial real estate loan.  One major issue some small business owners may run into is not having the assets to cover the costs of the loan itself. This is where collateral comes into the picture. Collateral is defined as an asset or assets that are pledged to a lender in the event that you cannot pay your loan back. This is a good thing because it forces you to loan against your assets. The amount of money you receive is calculated on a loan to value formula. The higher the value of your assets to more you could potentially be loaned.

This, however, does not mean you can use just anything for your commercial real estate loan

There are many different assets that you already have at your disposal that you may not even know you have. Collateral is broken up into two different categories, real and paper. Real assets you can use for your commercial real estate loan include cars, watercraft and homes. Most banks, however, do not usually accept vacant plots of land as a form of collateral.

Many large corporations will often use other properties to finance the collateral when applying for a commercial real estate loan. You can also use the equipment that your business has, as well. For example, if you have a logging company and you want to take out a loan for an office to run your operation out of you can use your trucks as collateral. You do have to make sure that the equipment that you are going to use as collateral has a new or long working life.

What else can I use for collateral with for my commercial real estate loan?

For business owners that do not have or do not feel comfortable using their real property, you are able to use paper assets. These assets are things that are intangible. Things that fall into this category include stocks, chattel paper, investment funding and payment rights. When it comes to using your company’s stocks you have to be careful of the market. Say your company hits a few roadblocks and your stock drops. The lender could potentially go head and sell off the assets you have pledged.

You are even able you to use the revenue of your company, as well. This type of collateral is based on the projection of your business over a set period of time. Depending on the bank that is planning on loaning you the money you could have a weekly, monthly, quarterly or even annually revenue payment plans.

Usually, if you are applying for a hard money loan this is a great option for your business. Since the loan itself does not last that long, depending on your business’ income you could repay the loan quickly. Before you look into using some of your assets as collateral you definitely want to make sure you look at the all the ins and outs of the plan you choose. 

Dennis Dahlberg Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:      (512) 516-1177 
Dennis@level4funding.com
www.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.

The Pitfalls of Having a Commercial Mortgage

Finding a new place for your new business to call home is a very exciting thing. Most of the time, people will forego renting and get a commercial mortgage on the property they want. But is that the best option for you?

You finally have the business that you have been dreaming about for years. You have a great product that you know people will want. The ad campaign that you have implemented has been driving thousands of customers to your company. Now all you need is somewhere to put everything. This is where a commercial mortgage may come in handy.

Having a place to have your business run out off should be the goal for every small business owner. Once you wade through all the searching and debating and you find where you want to move your business, what’s next? At this point you now have two options, either rent a space or go head and make a down payment on it. This is where commercial lenders come into the picture. Many small business owners will often choose to take out a mortgage on the space. However, there are a couple of problems you may run into if you take this route

.

Having a commercial mortgage means more than just owning a property

For many small business owners, money can be very tight the during the first stages of their business. Commercial mortgage lenders only loan out a partial amount of the property you are purchasing. The other portion, of course, comes from you. Usually, this is amount one-fifth of the cost of the property. This may not sound that bad, but you also have to factor in your regular business costs. Things like, supplies or advertisement this also becomes an issue if you have more than one employee. Adversely, if you rent the property you want you usually just have to make a deposit of one month’s rent for the property.

Along with the regular costs, you already have as a business owner you could potentially take on new ones. For example, you are the owner of a property that serves as a boutique for clothes. On a cold day, the pipes freeze and burst flooding your entire showroom floor ruining a large portion of clothes. You now are faced with a myriad of issues. You have to call a plumber to fix it of course. The clothes you had are now cannot be sold, and now you have to close you store to make repairs. Now you are stuck with all the bills and you may lose customers for a period of time.

Having a commercial mortgage on a property more of a commitment

Say the only place you could find that was affordable was in an area not conducive to your business. If you were to choose a commercial mortgage over renting you are basically locked into that property. Yes, you could always sell it, but with that, it consumes a lot of your time trying to find a potential buyer. Also depending on the market you are in it could take months before the deal is finalized. You also have to inform your mortgage lender of your plans throughout the process as well.

Dennis Dahlberg Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:      (512) 516-1177 
Dennis@level4funding.com
www.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.

The Real Deal On Commercial Bridge Loans

When you are looking into obtaining a loan from a lender you have many options at your disposal. Many people go the route of the bank, however, you do have hard money loans and commercial bridge loans, also.

From banks to life insurance companies, there are many different routes you can take to get a loan for your business. Most of the time people starting out in the commercial real estate business think the only way they can get a loan is through a bank. Banks are great places to go, however, it might take a while before you are approved for the loan you want. The process can take several weeks to complete and even then you are not guaranteed a loan at the end of the process.

Along with time constraints, you may not be approved for the loan if your credit report is not favorable in the eyes of the lender. Needless to say, if you have a couple of red flags on your credit report you might have to shop around for more than one bank to pitch your business plan. Some banks even go as far as doing a character check on some applicants. You may think this is not so bad, but you might have done some unbecoming things in college which may come back to the surface in your professional career.

Never fear hard money loans and commercial loans are here

So where can you go if you have these problems, then? The easy answer you can go to a private lender that specializes in either hard money loans or commercial bridge loans. You can use these loans to get the property that you want fairly quickly. In fact, a lot of investors starting out that do not have a ton of liquid assets can use this route to begin their career. Generally, it is a little easier to get either a hard money loan or commercial bridge loan.

What makes commercial bridge loans and hard money loans better?

Quite frankly they are both better when it comes to your credit report. Most lenders do not care about your credit report. When it comes to hard money loans most of the time the lender wants to make sure you have some form of collateral that you can offer. This means to be qualified for the loan 

itself, you have to possess something of equal or greater value that could potentially be auctioned off.

This happens in the event you cannot pay your loan back or you do not refinance it. Often people that are in the real estate flipping business go for a hard money loan; since they need to get financing quickly on properties. A commercial bridge loan is essentially the same type of process as a hard money loan, however, you usually apply for one while you are in between another transaction.

Say you have a home that you are in the process of fixing up and selling. However, another home becomes available on the market that you think would be a good buy. Applying for a bridge loan would be a good idea just to hold you over until the deal you have with your buyer is done. Hard money loans and commercial bridge loans great for these types of investments since they only last a few months to a couple of years, as well.

Dennis Dahlberg Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:      (512) 516-1177 
Dennis@level4funding.com
www.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.

How to Make Money With Commercial Real Estate

When you purchase a new property you expect it to be able to turn around a profit. In this article you will find out different strategies to earn additional income with your commercial real estate.

Commercial real estate is a hot commodity among investors. Quite frankly the possibilities are endless. You could have one location that is for your personal business. Another that you rent out to a tenant. Or one just for storage. It is all up to you when it comes to what you want to do with it. Fixing and flipping properties when done right is a very profitable, as well.

It's the little things that matter when it comes to commercial real estate

Taking the time out to make little repairs of cosmetic enhancements can make a vast difference in the amount of revenue that you end up making. Commercial real estate has hundreds of different variables that you can take advantage to bring in the best clientele. Many people make their money back if they take on a lot of the responsibility of managing their properties themselves. Why hire someone or a group of people to do something that can be done by you? You keep money in your pocket and in turn you can reinvest in something else.

 A great way to make money off of commercial real estate is to rent it out to multiple tenants. Say you have a property with roughly 2,400 square feet, instead of having one large business you could split it and have two businesses within the space. This is called a co-working space. Many of these types of businesses are popping up around the country. Depending on your assets you could buy a large piece of property and have two or three small companies renting space. Along with that, you can also give freelancers a payment plan in which you charge them to use the space. Judging on the different types of benefits and perks you have will also bring in more clients.

You can also do this with a home. Instead of having one family living in the house you have; instead, you can rent out the rooms and charge more than you would regularly with one person. By doing this you can make more money to pay off expenses that may come along renting out a space. For example, you may have to take out a commercial real estate loan to help cover the cost. If you were to rent off a home piece by piece you could possibly pay your loan off quicker.

What if I want to sell my commercial real estate property?

If you want to sell your commercial real estate you then should. As we stated before you have the power to do so. Judging on how must you put into your property the more you can possibly get for your money.  Say you bought a property below market value that does not need a lot of enhancements or repairs. You can sell it higher than market value. Or if you have a piece of commercial real estate with a business using it you can dissolve their tenure and sell it to them if they want the space.

Dennis Dahlberg Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:      (512) 516-1177 
Dennis@level4funding.com
www.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.

How to Get a Commercial Loan With Bad Credit

You want to purchase office space or a nice tenement in an upcoming area but you have a 320 credit score. This article will show you how to get a commercial loan even if you have a bad credit score.

Let’s face it debt and Americans go hand in hand. Most of us are trying to come out from under some form of debt. In a 2015 study, the U.S. Census Bureau concluded at least 38.1% of households in America have some form of debt. In the last quarter of 2015, the dollar amount of credit card debt in the U.S. was around $733 billion. In regards to mortgage debt, the amount was a staggering $8.25 trillion.

Needless to say, a few of us have a little debt in our name. But is that supposed to stop you from being able to by that nice home for your New England bed and breakfast? No. Everyone should be able to be an entrepreneur in this day and age. You can still get a commercial loan with bad credit there are just a few more things that you have to go through before you get the loan that you need.

Before you apply for a commercial loan plan ahead

First and foremost, you want to make sure you have a clear and concise business plan. You should be able to walk into your lender’s office and be able to give them the pros of giving you a commercial loan for your business. You want to make sure you give your lender a clear and in-depth plan of action. Show them the goals you want to accomplish with this business. Provide them with the tactics you will use to bring customers or tenants to the space you want to buy. Make sure you, yourself, know what you want to do with your business.

You could also make contact with your creditors. Trying to make payments on your debt can have a good impact on your credit score. As well all know this will not happen overnight. But making an attempt to rectify the situation looks really good in the eyes your lender. You may have to pay higher rates or addition fees, but with your commercial loan, you are one step closer to your property.

Where can I go to get a commercial loan if I have all of that?

Do not fret even though you may have bad credit you still have come options that you have at your disposal. There are some banks that will work with you however your options are kind of slim. An option that a lot of investors with bad credit look into is borrowing from hard money lenders. Most of the time hard money lenders do not worry about your credit score as long as you have a form of collateral. If for some reason you cannot pay your loan back, then the collateral used will be auctioned off for profit. The only drawback that you will most likely have is the higher interest rate that you will have to pay.

Here at Level 4 Funding we specialize in commercial loans for bad credit investors. You may end up paying a bit more interest but in the end it will be worth it to have the loan that you need to grow your business. Hopefully, this gives you the confidence to go and get your commercial loan for your news business.

Dennis Dahlberg Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:      (512) 516-1177 
Dennis@level4funding.com
www.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.

Is a Commercial Mortgage Broker a Good Idea?

Many people feel as though hiring a commercial mortgage broker may not be the right choice for them. Why hire someone else we you could do it yourself, right? This article is going to give you some insight on this valuable asset.

The process of finding commercial real estate can be very strenuous at times. When most people want to invest in a new property two thoughts usually run through their mind. “Should I hire a commercial mortgage broker to help me,” or “could I forgo a broker and do everything on my own?” You do tend to save a little bit more money when you do not use a broker, but there are advantages to having someone in your corner.

Having a commercial mortgage broker on your side helps

The biggest advantage a commercial mortgage broker has is experience. You do want to make sure that you are shopping around for the right broker. Make sure that they have a substantial amount of experience under their belt. This gives you the confidence that you are getting the best for the money you are spending. Using a broker gives you access to tons of connections and resources, as well.

Most reputable commercial mortgage brokers have great relationships with various banks and mortgage lenders. This takes a lot of pressure off investors looking for the right lender. Most people are busy which is very understandable. It usually takes several weeks to be approved for a loan it is a good idea to have someone that can check in and give you feedback. Instead of having to find time to wade through tons of features and rate plans, you have someone who will do it for you.

As we all know if you do not have knowledge in something you should ask an expert. That is what you are spending your money on. Someone that can correctly calculate the interest rate for you. Someone that is willing to sieve through all the intricacies of an agreement before you decide to commit with a lender. Hiring a commercial mortgage broker could mean a lot fewer setbacks and headaches at the end of the process.

 As stated before, a commercial mortgage broker’s main appeal is the fact that they are able to help you stop from making a bad decision. Many people that may consider taking on the process themselves may not take all the different fees into consideration. Anywhere from credit report fees to title search fees can be added on top of your regular payments. By having a commercial mortgage broker, you could potentially have some of these fees waived.

Commercial mortgage brokers really don’t do all of that, do they?

Believe it or not, they do. There are hundreds of different thing that could possibly go wrong when going through this process. Commercial mortgage brokers are there to help you with everything that you may have an issue with. Whether it is trying to find the right lender that fits your needs or acting as the liaison between all of the people that you talk to. 

Dennis Dahlberg Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:      (512) 516-1177 
Dennis@level4funding.com
www.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.