Wednesday, February 1, 2017

Shopping Malls Could Certainly Use A Helping Hand With Their Commercial Loans

As online shopping becomes more and more prominent, shopping malls around the country are finding it harder to stay in business. With billions in commercial mortgage loans about to mature it would not be shocking to see the traditional shopping mall’s decline continue.

There was a very good reason why 1980s pop star Tiffany appeared in shopping malls early on in her career. Her album wasn’t selling so the 16-year old artist needed to do something to spark interest and boost sales. So she went to where her audience would be and performed—the local shopping mall.

Everyone likes a free concert, so people stopped, listened, and then went to the record store to buy her CD.

If a future pop star were to try the same strategy, they would likely not have the same success that Tiffany did. It would have nothing to do with talent. With the rising popularity of online shopping, the local malls are not filled with people most of the time (outside of the Holliday Season, that is).

The American shopping mall is dying. If that sad fact wasn’t enough to depress investors, billions in commercial mortgage are set to mature over the next 18 months. With occupancy declining, it will not be surprising if many have trouble paying them off.

Lenders Eager To Loan Approved About $47.5 Billion In Commercial Mortgage A Decade Ago

At the time, the lenders thought they were getting involved in something that was guaranteed to make money. Americans love to shop and loved to do so at their local shopping malls. So approving a commercial mortgage for a future shopping mall probably seemed like a safe bet.

But as online shopping became easier, more convenient, and affordable, people started going to shopping malls less and less. Why leave the comfort of home if you don’t have to?

Over the years, more people opted to shop from the comfort of home putting the future of the shopping mall in danger—and the loans that backed them.

Some Shopping Malls Already Defaulting On Commercial Mortgage

The Lakeside Mall in suburban Detroit is anchored by stores like Sears, Kay Jewelers, and Bath & Body Works, but when it came time for the property owners, General Growth Properties, to make their monthly payment they didn’t make it.

If there was ever a sign of potential trouble for the commercial mortgage industry it would be the second-largest mall owner in the country—General Growth Properties-- defaulting on a loan. Over the next year and a half, there are $47.5 billion in loans that are set to mature. Extensions may help some and refinancing may be possible for others, but with purse strings tightening there will be some that may have to face the cold, hard truth about their business.

Two large chains that can be commonly found in malls, Aeropostale Inc., and Sports Authority Inc., have filed for bankruptcy. It would not be shocking to see others follow suit in the near future.

Happy senior business man making his notes at work 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 real estate loan,commercial lending,commercial loans

How to Evaluate Commercial Lenders

Learning how to evaluate commercial lenders is very much like evaluating any other kind of lender—you need to compare and contrast lenders that work for you and your needs. But, for many individuals, this process is easier said than done, so let us review some of the basics of conducting a lender search.

Commercial lenders, clearly, are their own niche but that does not mean you have done everything you need to in order to find your niche or market. Thus, the very thing you should when searching for commercial lenders is to tailor your search to your particular niche or market. In doing so, you will then be able to evaluate the different lenders and programs that they offer.

Similarly, just as you are coming up with a list of criteria for your perfect lender, the same is true for a pool of lenders. Thus, you should make it a point to find out what your top five lenders are expecting from you i.e. their criteria. Ultimately, this will help you determine what lender is best for you and what you are bringing to the table.

However, if finding a lender were as simple as knowing your niche and finding lender criteria that you can meet, there would be nothing left to say. Well, clearly that is not the case. The reality is your search and your evaluation process are really never complete. Nevertheless, at some point in your search, you have to feel comfortable with who you are choosing to work with for the foreseeable future. Of course, at this point, you may be wondering just how you are ever going to feel comfortable with one lender in particular? Well, the good news is that there are few more tips to discuss that will more than likely make all the difference.

How to get Comfortable with your Commercial Lender

After you have found a lender that meets your niche or particular commercial market and you have come to terms with their standard criteria, there is no need to pull the trigger just yet. Unsurprisingly, once you have your eyes set on a particular lender for commercial financing, the next thing you should is more research. This means looking for BBB ratings, speaking with business owners your potential lender has worked with in the past, evaluating their level of stability when it comes capital and much more. Lastly, you can learn about your potential lender’s repayment terms before moving forward with them. By learning as much as you can about your future lender, you will definitely feel more at ease when you do finally start the commercial lending process.

Suggestions and Advice from a Commercial Lenders

In the end, your lender search boils down to how prepared you are and how much research you are willing to do. Therefore, you should make it a point to set aside some time to get organized as well as some time to do extensive research. Remember, commercial financing is not just another route to take; it is a very diverse financing option that can affect your business for years to come.

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 real estate loan,commercial real estate lenders,commercial real estate lending,commercial lenders,commercial lendng

It Will Soon Be Easier To Refinance Your Commercial Loans

On occasion it can be beneficial to refinance your commercial loan. With the U.S. Small Business Administration bringing back the SBA “504” loan refinance program it is about to become a lot easier.

Small business owners may be interested in refinancing their commercial loans for any of a number of reasons. Maybe they want to lock in a fixed, low-interest rate for a long period. Maybe they need to improve the business’s cash flow. Maybe they are trying to pay off their loan early and want to refinance at a lower interest rate in hopes of being able to absorb the prepayment penalty or maybe they have multiple debts and just want to consolidate the payments into one.

Whatever the reason, come June 24, it will be easier for small business owners to refinance their loans. Why?

The U.S. Small Business Administration will be bringing back the SBA “504” loan refinancing program.

Refinancing Your Commercial LoansUsing SBA 504 Is Right For You

Some version of the Small Business Administration has been around since 1932. The SBA as it is known today was not established until 1953 with the passing of the Small Business Act. Since its inception, the organization was tasked with helping small businesses.

In 2011 a program was established so the SBA could help small businesses refinance their loans—the 504 Loan Refinance Program. However, it was meant to be temporary and shut down on September 27, 2012. Qualifying businesses were allowed to refinance their high-interest rate loans with low, fixed rate loans offering longer terms.

Borrowers were not required to expand their businesses with the influx of cash they would receive, but could instead build up their wealth.

Things To Consider When Refinancing Your Commercial Loans

Like every other government mandated program, there are restrictions and key issues that borrowers need to keep in mind when they start to consider refinancing their commercial loans. For one, the mortgage to be refinanced needs to be at least a couple years old. You must be able to prove that you have made all your payments in the last year.

The property the mortgage is for has to be at least 51 percent owner occupied and meet all normal requirements of the 504 loan program. Existing government-backed loans are not eligible; only loans from commercial institutions. Businesses can only receive a loan with a maximum value of 90 percent.

If you want to take advantage of this program, you better be ready to act once the program becomes active again in a few days. It took some time to get the refinancing part of the program reinstated, and it would take no time at all for the federal government to decide to shut it down.

So you are better off doing it sooner rather than later if you want to take advantage of a useful government program—because we all know those don’t come around every day.

Technorati Tags: commercial real estate loan,commercial lending,commercial loans

Knowing The Different Types Of Commercial Real Estate Lenders

At one point in time, the only lender available to entrepreneurs was the bank, but not there are several types of commercial real estate lenders to choose from.

There was a moment in time when the only avenue one had to satisfy a need for a commercial loan was the bank or “that guy” your buddy knows that charges an insanely large interest rate and gets aggressive if you miss a payment. That is certainly not the case anymore as several different types of commercial real estate lenders have developed over the years and are now available to meet existing demand.

While it is nice to have options, depending on your intended purpose, one type of lender may be better suited to meet your needs than another. But to figure out which one is right for you, it helps to have a better understanding of your options.

Six Most Common Types Of Commercial Real Estate Lenders

Before you get started looking for a lender, you should review what the six most common ones are:

- Banks: An oldie but a goody, banks have been involved in commercial real estate loans for centuries and likely always will be. They tend to have a significant amount of capital at their disposal (thanks to their deposits) and will get involved in a variety of types of projects. When looking into banks, it is important to keep geography in mind. Local or regional banks are more likely to only approve loans for projects in their region or community. Nationwide chains are typically not too concerned with geography.

- Life Insurance Companies: if you think about it, it makes sense that they would be involved in the commercial real estate. They have millions of people paying premiums, so they have capital on hand. However, they can’t afford to take risky loans and tend to gravitate towards safe, long-term projects with reliable returns.

- Bond Market (commercial mortgage backed securities): These are loans backed by bonds that may be as safe as can be to some that entail a lot of risks, but hold the potential for greater reward. The market is monitored by independent rating agencies that provide bond buyers with the information they need about investments.

- Debt Fund: this is an investment opportunity that allows investors to get involved in lending and/or buying loans. Investopedia.com defines a debt fund as “an investment pool, such as a mutual fund or exchange-traded fund, in which core holdings are fixed income investments.” They are common among construction loans

- Government Sponsored Entities: The purpose of these is to achieve some sort of public purpose by having a government created and controlled entities get involved in private financial dealings. They are not direct lenders but allow other institutions to originate a loan and then assume it.

- Marketplace Lenders: This is simply an online lender that matches a borrower with the appropriate investors. Crowdfunding is a common type.

Which Type Is Best?

When figuring out which of the many commercial real estate lenders you should go with, it can help to understand where they came from. Of course, if you aren’t sure which is best, talk to a few and ask questions. The ones that want your business will answer as honestly as they can, even if it means possibly losing your business.

Technorati Tags: Commercial lenders,commercial lenders,commercial loans,commercial lending

How To Tell Which Online Commercial Lender Is Right For You

Nowadays, everything is done online, but the problem with that can be figuring out who is legitimate and who is a “Nigerian prince that needs your help moving a few million dollars”. For real estate investors, there is a way to determine which online commercial lender is right for them.

Millennials will likely never know what it was like to have to physically write checks to pay their bills or have to go through the process of having to find enough stamps for each envelope. They will not have to worry about whether they mailed the bill far enough in advance for it to be processed before the due date.

They just do it all online.

More and more can be done online; including investing in real estate. But when all you have is a computer screen and a set of facts provided by the lender, how can you tell which online commercial lender is right for you?

Evaluating An Online Commercial Lender

First off, when online, you will not just be evaluating a commercial lender online, but the real estate investment opportunity the lender is offering. So, when conducting an evaluation, both need to be taken into consideration.

Okay—so what factors do you need to take into account when evaluating them?

- Technology: a large part of what makes the opportunity unique is that it is online, but beyond posting pictures to a website, it is important to consider how the lender uses technology in regards to the investment opportunity. Is it just to post pictures on a website? Or is it used in a way that enhances the experience and makes the opportunity a little challenging to pass up?

- Expertise: this is pretty self-explanatory. Do you want to go into business with someone that is well-versed in commercial real estate or are you comfortable using an online commercial lender whose expertise lie in web design and social media instead? If the online lender does have experience in the industry, they will be better equipped to answer any questions you may have much better than your webmaster.

- What Is Being Offered: What types of investment opportunities is this online lender offering? Depending on the platform, the rate of return will vary with the amount of risk you are willing to accept. Some opportunities will allow you to get involved with a particular loan and allow you to evaluate each, individual opportunity. Others will be funds that work with a variety of properties and deals.

What Does The Future Hold For The Commercial Lender?

In the years to come, technology will likely continue to advance, making it possible for investors and commercial lenders to do even more online than they already do. As more and more is done online, it becomes vital that investors know and understand how to evaluate an opportunity properly.

If they don’t, they could find themselves hoping their Nigerian prince does need help getting his millions out of the country before the rebels seize it.

Technorati Tags: Commercial lenders,commercial lenders,commercial loans,commercial lending

Private Equity Groups And Insurers Taking Care Of Commercial Real Estate Loans UK Banks Not Willing To Touch

When the banking crisis hit the UK in 2008 many banks were hit hard because of the commercial real estate loans they had taken on. In the years since many banks have been reluctant to re-enter the market leaving private equity groups and insurers to pick up the slack.

Hollywood recently made a feature film about the housing crisis that hit the United States in the mid-2000s. What many people may not know is that banks were making costly mistakes in other parts of the world as well. When the crisis hit banks in the UK in 2008 many that were heavily invested in commercial real estate loans were hit the hardest.

When the smoke cleared, the government ended up cracking down on banks in the years following the collapse by mandating tougher regulations and requiring lenders to have more capital on hand.

As a result, many banks are not as involved in commercial real estate loans as they once were leaving a door open for another entity or entities to fill the void.

Private Equity Groups And Insurers Filling The Void with Commercial Real Estate Loans

In the UK last year, there were over $76 billion in new loans issued (£54bn). This amount was 19 percent higher than the amount issued in 2014 and 80 percent higher than 2013. Of the loans issued in 2015, only about 34 percent of them came from banks and building societies.

This was the highest amount of new commercial real estate loans issued in a given year since the bank collapse in 2008, and the lowest percentage issued by banks since De Montfort University began studying the market.

Someone had to step in to pick up the slack while banks dealt with all the new regulations. Private equity firms and insurance companies were more than happy to fill the void. Insurance lenders made the biggest gain in the last year by increasing their share of the market to 10 percent.

According to Peter Cosmetatos, chief executive of the Commercial Real Estate Finance Council for Europe the dramatic increase in new loans was due in large part to lenders being very eager to approve commercial real estate loans in 2014 and the first six months of 2015.

However, since then the market has begun to stabilize, lenders have begun to take risk into consideration more than they were. Officials do not feel that the high amount of debt could be setting the economy up for another fall because this time it is more equity driven than it was back in the mid-2000s.

Not All Banks Are Out Of The Commercial Real Estate Market

While it may not be easy, there are some banks that are still willing to get involved with commercial real estate loans. Last year the Lloyds Banking group approved its largest commercial real estate loan since the banking crisis, a $262 million loan (£185m) to finance a designer outlet mall near London’s O2 Arena.

Technorati Tags: commercial real estate loan,commercial lending,commercial loans

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Wednesday, February 1, 2017

Shopping Malls Could Certainly Use A Helping Hand With Their Commercial Loans

As online shopping becomes more and more prominent, shopping malls around the country are finding it harder to stay in business. With billions in commercial mortgage loans about to mature it would not be shocking to see the traditional shopping mall’s decline continue.

Lenders Eager To Loan Approved About $47.5 Billion In Commercial Mortgage A Decade Ago

Some Shopping Malls Already Defaulting On Commercial Mortgage

How to Evaluate Commercial Lenders

How to get Comfortable with your Commercial Lender

Suggestions and Advice from a Commercial Lenders

It Will Soon Be Easier To Refinance Your Commercial Loans

On occasion it can be beneficial to refinance your commercial loan. With the U.S. Small Business Administration bringing back the SBA “504” loan refinance program it is about to become a lot easier.

Things To Consider When Refinancing Your Commercial Loans

Knowing The Different Types Of Commercial Real Estate Lenders

Six Most Common Types Of Commercial Real Estate Lenders

How To Tell Which Online Commercial Lender Is Right For You

Evaluating An Online Commercial Lender

What Does The Future Hold For The Commercial Lender?

Private Equity Groups And Insurers Taking Care Of Commercial Real Estate Loans UK Banks Not Willing To Touch

Private Equity Groups And Insurers Filling The Void with Commercial Real Estate Loans

Not All Banks Are Out Of The Commercial Real Estate Market

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