Learn To Be A Fix & Flip Investor

Thursday, February 2, 2017

Common Mistakes Brokers Make In Loan Applications Sent To Commercial Hard Money Lenders

Trying to get financing through a commercial hard money lender is not the same as from your traditional hard money lender. Many traditional brokers do not realize this and end up making some common mistakes.

In a perfect world, we would all have good credit and would have no problem getting approved for a commercial loan of any kind—but our world is far from perfect, much like our credit ratings. But to get approved for a traditional commercial loan you typically need to have a pretty good credit rating.

The importance of goo credit in getting a loan approved does not mean every business person out there has great credit. Chances are many of them do not. So how did they get a loan approved? They—or their broker--worked with commercial hard money lenders.

These types of lenders understand that they are taking on clients that are at a higher risk of defaulting. So they have the terms of the loan reflect the risk they are taking. While they may not be fond of them, if a borrower had a better option they would take it.

However, the process of getting approved for one is a little different than a traditional loan. If you are not careful, you may find your commercial hard money lender rejecting your application.

Things To Consider When Applying For A Loan From A Commercial Hard Money Lender

Filling out a loan application can be a confusing and difficult task no matter what it is for, but when you apply for one from a commercial hard money lender there are certain things you need to do that you probably did not in your application to the bank and credit union:

Tell your loan’s story. Don’t just tell your lender that you need the money. Since the risk is higher for them, they often want to know more. Tell them why you want the money, what you are going to use it for, and what you are hoping to accomplish with it. Give the lender the story behind the deal.

Don’t just submit a ton of information and data. Submit the right data. It is not uncommon for a broker to turn in an application that has way too much information and data in it, but not have the right stuff. For example, an application includes the borrower’s tax returns but fails to include the exact amount being requested.

Loan packages can be pretty big making it easy for something important to get overlooked. Including a summary of the major points and data with your application along with an executive summary can take care of this issue. This can also be a great way to get on your loan processor’s good side.

Everyone appreciates it when they don’t have to work as hard to get their task accomplished. Organizing your application can be a great way to earn brownie points with the loan processor.

Who doesn’t like brownie points?

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 bridge loan,commercial lender,commercial lenders,commercial lending

Why Commercial Bridge Loans Can Be Dangerous To Investors

Commercial bridge loans can be great for investors looking not to have their money tied up for years, but they also come with some inherent risks that could make investors think twice before getting involved.

How many times have you known someone to inherit a large sum of money, talk about investing it, and six months late they are broke wishing they had invested it so the money could have grown? We all would like to see our money grow. The question is how to make it happen.

So you talk to a financial adviser, and he tells you to take commercial bridge loans under consideration. They are short term loans, so you don’t have to wait years to get your money back, and you’ll make a nice little profit in the process.

But like any other investment, there is risk involved. Before deciding to get involved in commercial bridge loans, you may want to take a few things into consideration.

Things To Consider Before Investing In Commercial Bridge Loans

Unlike the initial commercial mortgage, the amount of money involved is a lot less, and you have the benefit of seeing the concept in action. You have a track record to review when considering whether you want to get involved. When you see a business that appears to be on the right track, it may be real tempting to get involved.

But then you start to think—and you end up thinking too much. You go from being excited about being in on the ground floor of something awesome to be nervous you will never see your money again. So rather than give him the amount he requested, you give him a third of it. You tell him that’s it and to make it work.

So he tries. He starts to cut corners. He lets a few people go. He skips an update or two. Before you know it, you’re brave, confident entrepreneur has become afraid of running out of money. Rather than make decisions that help the company progress and succeed he makes ones that doom it to failure.

All because you wanted to believe, but didn’t.

Either Do It Or Don’t

As an investor, you want to see your money grow, but you don’t want to lose it. It can be easy to get caught up in the excitement of the moment, so you mentally force yourself to be pragmatic. You know the business owner is going to be full of optimism and hope because he has to convince you to have it.

So you prepare yourself mentally to remain objective and cautious when deciding what to do. In your mind, giving the business owner some money is better than no money at all. However, in many cases, insufficient funding is the same as dooming a project to failure.

So when you are deciding whether you want to get involved with commercial bridge loans or any other type of commercial lending don’t sit on the fence. Do it or don’t do it. If you are all in, you are more likely to succeed, and if you are all out you can’t lose.

Technorati Tags: commercial bridge loan,commercial lender,commercial lenders,commercial lending

Working With A Small-Balance Commercial Lender Can Help Solve Some Common Pitfalls

If you need a loan to buy a property for your business, you go to a bank. But if you just need a small loan to fix something or replace a vital piece of equipment you will want to look for a commercial lender that handles smaller loans.

In theory, you would think a bank would be open to lending any amount, but some prefer to stick with larger amounts; enough to purchase the office building, restaurant space, warehouse, or workshop. They don’t want to waste time doing the work for loans that are just “small potatoes.”

Of course, just like there are benefits to working with a bank when you need $3 million to buy a self-storage facility, there are benefits to working with a commercial lender that specializes in smaller balances.

What A Small-Balance Commercial Lender Can Do For You

What can a small-balance commercial lender do for you? They will give you an opportunity where a large bank would not. How so? Well—rather than turn you away because of certain issues, they figure out a way to work with or around them so that you can be approved for a loan:

- Income Verification: one of the many things large banks will turn you down for is if they can’t verify your income. They want to make sure you can pay your monthly note, so they want to see what money you already having coming in and what will be coming in. They will want to see bank records and tax returns. Small-balance lenders will look more towards other financial documents.

- Past credit issues: If you have a bad credit history, you might as well not even bother walking into a bank, but small-balance lenders tend to be more forgiving of past credit issues. Just how forgiving will be reflected in the terms of your loan, but at least you can still be approved.

- Tax Liens: If you are behind on your taxes, don’t even bother to print off the paperwork for a bank loan. You will not get it. But many small-balance lenders will work with you to resolve those issues.

Don’t Let Past Mistakes Stand In Your Way of a Commercial Loan

One thing that banks tend to forget—or at least not forgive—is that we are all human. As humans, we are going to make mistakes. Does that mean we can’t open a business? Does that mean we can’t be responsible for our bills? Absolutely not!

But at the same time, can you blame them for being cautious when it comes to approving loans? Would we want our own bank to be handing out money to whoever asks for it? No, or course not!

So, it is good that a commercial lender can come in forms other than a bank. While the terms may not be as nice as what a bank will offer, at least the borrower can get the money needed to help fulfill the dream.

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 lenders,commercial lenders,commercial loans,commercial lending

Why Commercial Bridge Loans Can Be Dangerous To A Borrower

When your business needs money a commercial bridge loan may seem like a brilliant idea, but it could cause more harm than good.

When you are getting into business or just trying to keep one afloat, you need money. You may not care where it comes from, but if you are not careful, you may end up accepting terms that are just going to harm you in the long run.

The $500,000 that guy your Uncle Vinny knows will come in handy as you wait for your next round of financing to come through, but can you really afford the interest he’s going to charge?

Not to mention what may happen to you if you miss a few payments…

Typically, when a business is in need of cash so it can make it till the next round of financing comes in it will apply for a commercial bridge loan from a bank, private equity firm, or credit union. However, while it may seem like a good idea at the time, you may find it does more harm than good.

Pitfalls Of A Commercial Bridge Loan

Surely receiving the necessary infusion of cash so your business will stay open can only be seen as a good thing, right? On the surface, yes, but below the surface, it can change the very future of the company.

Initially, you thought you would be fine with the financing you had, so you conducted business without fear and made decisions with nothing but forward progress in mind. But your concept did not take off as soon as you had hoped. Now you are running out of money, can’t make payroll past next week and have more bills on your desk than you can count.

As far as new investors are concerned, you haven’t really proven your concept, but as long as you can keep your doors open, you will. So you apply for and get approved for a commercial bridge loans. You get it, but you only get enough to cover the bare minimum. If anything goes wrong, you may find yourself in need yet again.

So rather than conduct business as usual, you become overly cautious and even a little timid. Rather than make decisions like you always have, you start to cut corners. You are thinking you are saving money, but what you are doing is compromising your business.

A Commercial Bridge Loan May Not Be Right For You

It may appear that you are trying to safeguard your business from risk, but what you end up doing is not take the risks that made your business a success in the first place. You may skip a conference where you would have made some great contacts or met new clients. You may delay rolling out a new model or some important modifications. As your decisions become more cautious, the mood within the company goes from ‘confident entrepreneur’ to ‘too frightened to move,’ and you and your business are now doomed to fail.

So before you decide to apply for a commercial bridge loan, make sure you think the decision through completely before doing so.

Technorati Tags: commercial bridge loan,commercial lender,commercial lenders,commercial lending

Benefits of working with a Commercial Lender

You may think you know which commercial lender to work with when you decide you need commercial financing, but you may want to think again. Every commercial lenders is different and offers different benefits.

In general, you quickly see that working with any commercial lender can be beneficial. However, you should make sure that the particular lender of your choosing is offering you the benefits that are tailor-made for your market or niche and overall commercial venture. In other to do that then, you need to ask yourself, what kinds of benefits are you looking for?

For instance, you may be considering securing commercial financing from your local credit union versus a more traditional lender, which is fine. However, it is important that you note the potential benefits. For example, most credit unions have stood the test of time or rather the economy, thus they are able to lend more money. Moreover, credit unions offer flexibility, which means that you are more likely to get approved for commercial financing, even if you are a small business or startup.

Continuing with the credit union lending scenario, you will also find that these particular lenders are able to offer financing with better rates as well as lower fees. Being able to secure financing with lower fees and rates that are more formidable, definitely sounds like a benefit that most borrowers would want. If you are curious as to why credit unions can offer such benefits as these, well the reality is that credit unions are in a different class than traditional lending institutions. In other words, credit unions are actually non-profits thus the money exchanging hands would be similar to using a private lender. Consequently, you benefit from their classification because they can offer the typical benefits you would see if you were working with a business associate, family member and so on.

A Helping Hand from Commercial Lenders

In addition to the above-mentioned benefits, lenders such as credit unions are also able to streamline the approval process for several reasons. One reason, in particular, is that credit unions who offer commercial financing tend to be local, which means you know more about the local credit union and its operations. This allows you to work with people in the community who under your market. Furthermore, they know what you and your business are capable. Ultimately, this makes the lending process less complicated.

Advice for Getting the Most out of your Commerical Loan Deal

With that being said, you can see how even just facet of lenders such as credit unions can offer different benefits than say your standard lending institutions. This is why it is important to do your research and play around with your options—do not just pick the lender everyone picks. Ultimately, once you decide which lender is best for you and your needs, give yourself a helping hand by showing up prepared. This means having your business plan, getting organized as well as offering tangible proof that you can, in fact, pay back your loan then there will be nothing left to do but reap those benefits.

Technorati Tags: commercial real estate loan,commercial real estate lenders,commercial real estate lending,commercial lenders,commercial lendng

Atlantic City In Need Of A Good Commercial Bridge Loan

Industries have needed to get a little help from the government in the past, but this time it is not an industry but a city—Atlantic City. The resort city could use a good commercial bridge loan, but it hoping to get one from the state.

When the U.S. government stepped in to bail out the banking industry, many wondered why. Their troubles were their own fault, and they should suffer the consequences. The same can be said for the auto industry and every other time the government has stepped in to bail an industry or a corporation out.

Maybe the business couldn’t get approved for a commercial bridge loans or maybe it was beyond the help a short term loan like that could give. Whatever the reason, there have been several industries and corporations that have needed government assistance to stay afloat.

There has even been a city or two. The federal government had to bail out the city of New York in 1975. It looks like the state of New Jersey is trying to do the same with Atlantic City.

Giving A Casino In Atlantic City A Commercial Bridge Loan Too Risky?

It is not unusual for a business to need an infusion of cash to make it through a tough stretch or until primary financing comes through. That is what commercial bridge loans are meant to accomplish. They are intended to make sure a business can pay its bills, employees, and whatever else it needs to in order to keep the doors open.

So how come the casinos and businesses in Atlantic City aren’t doing just that?

Well—maybe they are, or maybe they have tried, but with business dropping in recent years and with the state considering making gambling legal throughout the state, banks, and lenders do not see giving more money to Atlantic City as being smart business.

Why throw more money into a sinking ship if there is a good chance you’ll never see it again? If they default, the lender will get whatever property they use as collateral

But who wants a failed casino in a dying resort town?

Government To Lend A Helping Hand To Atlantic City With A Bridge Loan

It would not be good for the state of New Jersey if its biggest attraction—Atlantic City—were to end up turning out the bright lights. Why else would people visit New Jersey? What about all the jobs the casinos and attractions provide to locals? What about the tax income? So it only makes sense that the state steps in with a bridge loan.

Since there is likely not a lender willing to underwrite a sufficient commercial bridge loan the government has to—and it is. New Jersey Governor Chris Christie recently signed a pair of bills that approve a bridge loan that will hopefully be enough for the once proud tourist attraction to get back on its metaphorical feet.

Technorati Tags: commercial bridge loan,commercial lender,commercial lenders,commercial lending

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Thursday, February 2, 2017

Common Mistakes Brokers Make In Loan Applications Sent To Commercial Hard Money Lenders

Trying to get financing through a commercial hard money lender is not the same as from your traditional hard money lender. Many traditional brokers do not realize this and end up making some common mistakes.

Things To Consider When Applying For A Loan From A Commercial Hard Money Lender

Why Commercial Bridge Loans Can Be Dangerous To Investors

Commercial bridge loans can be great for investors looking not to have their money tied up for years, but they also come with some inherent risks that could make investors think twice before getting involved.

Things To Consider Before Investing In Commercial Bridge Loans

Working With A Small-Balance Commercial Lender Can Help Solve Some Common Pitfalls

What A Small-Balance Commercial Lender Can Do For You

Don’t Let Past Mistakes Stand In Your Way of a Commercial Loan

Why Commercial Bridge Loans Can Be Dangerous To A Borrower

Pitfalls Of A Commercial Bridge Loan

A Commercial Bridge Loan May Not Be Right For You

Benefits of working with a Commercial Lender

A Helping Hand from Commercial Lenders

Advice for Getting the Most out of your Commerical Loan Deal

Atlantic City In Need Of A Good Commercial Bridge Loan

Giving A Casino In Atlantic City A Commercial Bridge Loan Too Risky?

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