Commercial Mortgages: How To Evaluate Your Eligibility

Before you consider commercial mortgages, it is important to know what you need to qualify for one. Lender requirements are often just the beginning.

Commercial mortgages i.e. non-residential mortgages are nothing to sneeze at. In other words, you’d be surprised how much of an impact commercial mortgages have on the overall financial future of companies. Consequently, when it comes time to enter the vast world of non-residential mortgages, it is extremely important to your eligibility. Of course, you may be asking yourself, aren’t non-residential mortgages loans similar to most mortgage loans? Well, obviously the answer to that question is no.

In general, non-residential mortgages are viewed as high-risk loans for most lenders, banks, and insurance companies. Due to this industry fact, most lenders or banks have several requirements that a borrower must meet. Moreover, if a borrower is unable to meet all the requirement set out by the lender or bank then there simply is no commercial mortgage in that borrower’s future. At first glance, this may should a little harsh, but as previously mentioned these particular mortgages have a direct impact on the future of the company, which means the borrower’s ability to meet their repayment terms often rest on these requirements.

At this point, you may be fearful of your lender’s requirements for commercial mortgages. But, you shouldn’t be. Your eligibility and your potential lender’s expectation do not have to be at odds if you know what you are up against.

Understanding Your Lender’s Expectations For Commercial Mortgages

Thus without further ado,  these are the standard requirement for most commercial lenders—clear documented property value that is equal to the value of the mortgage, a steady net property cash flow and a named guarantor of income and assets.  

A clear document property that is worth the mortgage is just another way to ensure that there is a loan-to-debt ratio that is acceptable. Typically, this means that a minimum of 75 percent for a non-residential loan.

 A steady net property cash flow is just the long way of saying that your business income needs to be more than your carried debt—at least 20 percent more to be specific.  Lastly, a guarantor of income and assets is a fancy title for, generally, the business owner. But, nevertheless, a guarantor of income and assets is someone who agrees to pay in the event of the business defaulting.  With a guarantor, it is important to note that most lenders will require the standard financial documentation (credit history, personal income, other assets, etc.) to verify that the person left potentially holding the bag can, in fact, pay.

Avoid the Pitfalls of Commercial Mortgages

Now that you know what is required of you for a non-residential mortgage make sure you avoid the pitfalls along the way. This means plan, plan and plan some more. As a future commercial property owner you should always have a clear vision for that property, you should make it a point to shop around before choosing a lender, you should clearly care about the interest rate but make sure it isn’t the only thing you care about and finally make sure there is a true financial future in the property you seek. Taking the time to do all of the above will ultimately save you from unnecessary hardship.

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.

Commercial Mortgage: The Real Deal On Commercial Lenders

If you need a commercial mortgage, we have many options to fit your budget and needs. Read on to learn more about commercial lending and how it can help you grow your business. 

The commercial real estate market is forever changing and if you do not take the time to keep up, you may be lost when it comes time to consider getting a commercial mortgage for your next endeavor. The truth is that more people than ever are creating new companies and running their own businesses. Moreover, many of these individuals have never had to borrow money for business—unless you’re counting student loans. But, all joking aside if this is your first-time “borrowing for business” you may be surprised at all the things you just didn’t know.

For starters, if you thought Fannie Mae or another governmental institution was going to be your new best friend think again. Though you can still count on these governmental mortgage institution for such commercial properties as multifamily housing,  if you are not in the business of property management  then you will more than likely not be dealing with old’ Fannie or Freddie. Thus, the majority of commercial mortgage loans are brought to you by banks, insurance companies and lenders. Here at Level 4 Funding, we have a specialized commercial mortgage team that can help with all of your commercial lending needs. 

So, now that you know just who you are dealing with, let’s talk about what happens next. Typically, before you reach out to a lender, bank or insurance company for financial assistance with your commercial venture, you should be clear on just how you are going to meet your future repayment terms and you should be clear on how much you actually need to borrow. These are important things to be clear on because your future commercial mortgage more than likely will be a nonrecourse loan i.e. the bank or lender can take the property in the event of a default (generally if you owe more than the value of the property at time of default, your other assets cannot be seized with a nonrecourse loan.).

Things to consider when Borrowing for Business

Besides knowing how you are going to meet your repayment terms and how much money you actually need to borrow, there are a few other important factors to consider once you’ve set your sight one a few commercial lenders or banks and they include:

1.      Reputation and convenience

2.      Interest rates and available programs

Clearly, you want a mortgage that will meet your needs and without causing you hardship later down the road.

            Refinancing Advice

Speaking of hardship later on, if you already have a mortgage but are interested in changing your business’s financial outlook, then you definitely should consider your possible commercial refinancing options. Remember you have several options that can help your business bottom line. For instance, you may have borrowed for business at a not-so-great interest rate; instead of kicking yourself while you are down why not take advantage of a lower rate or even switch to a fixed rate?  Either of these commercial refinancing options are great ways to reduce total loans cost.  Moreover, there are several other commercial refinancing options out there—all you have to do is ask your lender or broker for more details.

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.

Commercial Hard money Lenders: Lending a Helping Hand with Commercial Loans

Hard money loans lenders understand that even some of the most unlikely investment are still investments. You can even find commercial hard money lenders to fit all your needs! So, if you thought there was no way you could quickly find financing for a foreclosure or another unlikely investment property with your credit think again!

Dealing with commercial lenders is never a walk in the park. But, with the right tools and clear plan you can easily navigate them. For instance, if you are dealing with commercialhard money lenders, then you may already know that there are lenders that often deal exclusively in one property type i.e.  you will more than likely being dealing with niche lenders for hard money loans. Consequently, if you are actively looking for short-term commercial financing then it is clearly in the best interest of time to make sure that you are dealing with commercial hard money lenders in your particular market or property niche.

As previously suggested, hard money loans are ideal for such property types as foreclosures, land loan, construction loans, fix and flips, short sales, when you or your business need to move quickly and for when the potential buyer does not have the best credit or rather has certain credit issues. Moreover, lenders that typically offer these kinds of commercial loans are not banks. Thus, if you know ahead of time that you will not qualify for conventional financing, say yourself some time by not going through the lengthy process of applying for a bank loan.

So now that you know when to call on commercial hard money lenders and how to narrow down your potential list of lenders, let’s go over what to do if you are experiencing some difficulty actually finding a few good hard money lenders in your area and in your property niche.

 How to find your Hard Money Lenders

For starters, it almost goes without saying that doing your research is absolutely key to finding the right lender for you. But, nevertheless, you would be surprised how many quality hard money lenders you can find by doing a simple internet search. Moreover, if need more than a few online research hits to peak your interest most cities have real estate seminars and meetings that focus specifically on obtaining hard money financing. These kinds of regularly held seminars and meetings not only will provide you will direct exposure to local lenders that understand your needs, they will also provide you will valuable information on such things as regulations and hard money loan requirements. Lastly, you can mingle with real estate professionals who know the business inside in and out, which will allow you to expand your network and ask for hard money lender referrals.

Requirements and Regulations

Obviously, once you’ve found your commercial hard money lenders in your area that has reputable experience with your particular property niche it’s time to get down to business. Remember, most hard money lenders are concerned with the amount of equity you are bringing to the table and your overall plan for the property. So make sure that you actually have the necessary collateral, especially if you do not have stellar credit, and that you have a detailed plan in place of just how you intend to pay off your loan.

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.

Commercial Bridge Loan and You: What You Need to Know

Dreaming of an Investment Property? Well, find out if a commercial bridge loan is your dream come true or a nightmare.

In any industry things can move quickly, commercial real estate or investment properties are no different. Sometimes, it is your best interest to move quickly with a purchase. For instance, say you are interested in a foreclosed property time is usually of the essence i.e. you need to move quickly in order to purchase said property before someone else does. This particular scenario is when most commercial buyers consider applying for a commercial bridge loan.  Other instances where many companies looking into bridge financing is when their current mortgage is due and they have yet to find or rather secure a replacement mortgage or if a company needs to cover shortfalls in regards to general capital say for an upcoming balloon payment.

If you are not quite sure what a bridge loan is? There’s no need to panic, as you will become very familiar with this kind of commercial loan, especially if you are interested in moving fast on future investment property. Thus, without further ado, a bridge loan, as suggested is a quick fix to financing. In essence, this particular type o f loan is a short-term loan (can over a period as short as two weeks or up to three years) and it essentially gets its name from bridging the gap between until long-term financing is secured.

Generally, a commercial bridge loan is not overly complicated or difficult to apply for.  Nevertheless, the real issue with this particular kind of commercial loan is that for all its advantages such as a possible lack of prepayment penalty, there are definitely some setbacks to this kind of financing options. Thus, it is important that you manage your expectations when looking for short-term financing.

Managing Your Expectations with a Commercial Bridge Loan

Of course, managing your expectations may sound daunting, but what this really means knowing what you are getting out a  commercial bridge loan.  In other words, you are getting short-term solutions at a higher and more expensive interest rate. Moreover, as previously mentioned, understand your definition of short-term financing. If you need short-term financing but do not fall within the standard timeframe, then it’s probably time to get creative versus applying for a bridge loan for your commercial property or business. Lastly, it is common practice to pay off or repay your short-term financing in full upon receiving your replacement loan-term capital (new mortgage loan, new tenants, refinancing or selling and purchasing) and by time the necessary improvements have been made. Clearly, this common practice of repayment in full as soon as possible makes perfect sense due to the higher interest rates and overall costs of utilizing a non-residential bridge loan.

Learn More

Ultimately, if you still have questions or think that a bridge loan i.e. short-term financing will work for your commercial needs then it never hurts to do your own research in addition to speaking with a lender that has experience with non-residential bridge loans for more details.

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.

Commercial Bridge Loan: How to Evaluate the Pros and Cons

You are more than likely aware of your commercial short-term financing options and how they can help you achieve your long-term goals at this point. Nevertheless, if you are leaning towards a commercial bridge loan, make sure you weigh all the pros and cons before making your final decision.

The commercial bridge loans are a lot of things. For instance, these particular kind loans may be just what you need for your future endeavor, they can be the capital you were hoping for and they can help you realize your investment goals in record time. But, for all the good that comes with commercial short-term financing, there are still a few minor disadvantages and one major disadvantage to this particular kind of commercial financing.

In fact, the story always starts out the same. So often you will see a bright, business savvy person with a great investment plan get a commercial bridge loan without weighing the pros and the cons. Consequently, their great investment can easily blow up in their face because they did not truly take the time to consider one of the biggest disadvantages—larger or rather costly regular payments. Sure, this business savvy individual more than likely was aware that short-term financing is just that short-term and with all things short-term there tends to be a price. But, like most people, this bright, savvy business person simply did not realize exactly how short-term affects the repayment process.

Additionally, most commercial bridge loan lenders are simply not flexible with it comes to delayed or delinquent payments. This means before you know it you could be struggling to pay late payments, penalties, and even larger loan fees. You may even think well making sure you have permanent financing lined up will ensure that you won’t end up owning an absorbent amount of money on regular basis. Well, of course, long-term financing that is readily available will help solve this problem, but long-term financing that isn’t quite yet available means you still incur interest (high interest) on your commercial bridge loan in the meantime.

Beyond the Pitfalls

So at this point you are probably wondering—well if bridge loans have the ability to turn into a financial nightmare, why are they still so popular in the investment property industry? Well, as previously mentioned, when handled right, bridge loans can ultimately help get the job done. Moreover, most lenders allow their borrowers to choose from several repayment options. Thus, if you take the time thoroughly think through your current and future financial situation, your plans for your commercial property as well as just how you plan to pay your loan back in full then a bridge loan isn’t a nightmare waiting to happen.  

Dreams come true when you think things through

Ultimately, as previously mentioned, short-term financing may be just what you need to get your next business venture going. But, it is always in your best interest to look at a commercial bridge loan or any other kind of short-term financing from every possible angle to ensure that you are not putting yourself in a worse position than you started out in.

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.

Applying For A Commercial Bridge Loan

So you’ve decided that short-term financing is the best option for your new construction or upcoming investment. But, you’ve never applied for a commercial bridge loan before—no worries let’s go over the basics.

Applying for a commercial bridge loan is not necessarily any different than applying for any other kind of commercial loan. In other words, you still need the right documentation and a lender that understands your particular business needs or market. Thus, if this is not your first commercial loan, which it more than likely is not, you’re in luck. You do not have to lose sleep over narrowing down your short-term financing options.

With that being said, it may be more beneficial for you to focus on why a commercial bridge loan is right for you next project. For instance, say you already have an investment property or two underneath your belt and you are looking to make a few upgrades or improvements. If this scenario sounds familiar to you, then great! This is exactly the time for a short-term financing. Generally,  you can be approved for this particular loan if your new construction will take some time but will not exceed three or more years depending on your specific market( hint: construction that takes longer than three years, in general, is not a little upgrade).  In fact, non-residential bridge loans can be for a small time period of say two weeks or you if you go with a more traditional lender you may find bridge loans that range from 45 to 60 days.

Ultimately, when you start talking about years’ worth of upgrades you may want to rethink your need for short-term financing. However, it is important to note that you may be able to find a lender that offers what is known as bridge-to-permanent programs. These particular kinds of programs can make the transition from short-term financing to long-term financing more seamless (for a price of course).

                                  

Is a Bridge-to-Perm Loan a Win-win Solution?

Yes, in many ways a bridge-to-perm loan is a win-win solution, especially if you are not necessarily interested in taking the time to secure more financing or possibly work with another lender all together. The fact is it is often a lot easier to stay with the lender or bank you know. Thus, if you are currently working with a lender or bank that offers such programs, it would definitely be in your best interest to check out a bridge-to-perm loan programs or two.

Not to be confused with a Mini-Perm loan

As a side note, it is also important to understand that a bridge loan, a bridge-to-perm loans and a mini-perm loan are different from one another in what they ultimately offer. At this point, you probably are clear on the first two kinds of loans and what they can do for your commercial venture. Thus, the last thing to cover is what a mini-perm loan offers. A mini-perm is still a first mortgage on an investment property for mainly construction, but the terms of the loan differ i.e. typically this is a bank loan  that covers a  two to three years  period and it can either be an interest only loan or an amortized loan.

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.

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.