Obtaining Commercial Mortgages

Commercial mortgages are loans obtained for acquiring or developing commercial properties. 2017 has seen some significant changes in the many segments including multifamily, retail, industrial and office space.

Commercial mortgage brokers, lenders, borrowers and investors are paying close attention to the varying sectors of commercial real estate. With the increase in building and investments that 2016 saw, those in the industry are wondering when the peak will hit and supply will out-number demand. This is particularly true in the multifamily sector. Apartment complexes have been a hot ticket from both lender’s and developer’s perspective. In fact, the U.S. is expected to see more than 345,000 new apartments across the nation—a number that has not been surpassed in 20 years. Particularly strong markets have included Atlanta, Austin and Charlotte. One of the hottest—Dallas—has 25,000 new apartments in the works for 2017, up 61 percent from 2016. Lenders and borrowers are wondering when Dallas will succumb to too much supply and the massive new construction will lead to decreased rents as seen in the bigger cities of Boston, New York City and San Francisco.

Commercial mortgage brokers and lenders have shied away from retail for sometime due to the changing trends, diminishing sales at brick and mortar locations, and online mania. One interesting development is that while suburban retail markets are finding it difficult to compete and coexist with the vast number of brick and mortar locations, urban areas are needing to expand to meet the increased demand that newer generations are placing on them. These young adults appreciate convenience and the ability to walk to neighborhood shops and eateries, making urban living their present primary choice for housing.

The industrial segment is seeing a strong drive in distribution centers as online businesses continue to thrive. These are popping up in areas with space that are close to larger cities. The newer generations are not only affecting the housing arena, they are changing the structure of office space as well. Their need for collaboration, desire to lead a balanced life and to work for companies that want their employees and the community at large to thrive have significantly impacted this sector. Green buildings are a big trend as well as multi-use developments that offer shopping, restaurants, commercial and residential spaces.

Banking Institutions

Because of the rapid growth in several sectors, the continuing and lengthy economic recovery, as well as the uncertainty in the present administrations ability to carry out promised tax and regulatory reform, banks are increasing their underwriting standards and becoming more cautious. This has led to not only less approvals, but lower commercial mortgage amounts as well.

Alternative lenders are stepping in to fill the gap.

Private hard money lenders are one of the alternatives that developers and contractors are turning to. These asset-based loans offer fast approval and time to funding, getting them the capital they need when a promising property hits the market. At Level 4 Funding, we work with hundreds of private investors who often specialize in one of the sectors of commercial real estate development. Our rolodex may just have the investor you’ve been looking for.

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

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

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Hard Money Commercial Loans

Businesses turn to commercial loans when they need to expand as well as when times are slow such as in non-peak seasons. There are several lending options available to those entrepreneurs that have decided to go out on their own and sink or swim.

Small Business Administration (SBA) loans are often the first choice for businesses. This is due to their low interest rates and longer terms of payment, usually 7 to 10 years. They will want to know what you plan on spending the money on be it inventory, working capital, newer equipment or a business acquisition. SBA commercial loans do, however, have very stringent underwriting standards and are not available to everyone. You will need to have excellent credit and been in business for two years.

Unfortunately, it is not just SBA loans that require you to be in business in order to get a loan, a catch-22 for start-ups. Most lenders look to your cash flow in order to qualify you. After all, it is this cash flow that will ultimately repay them. If you are just joining the ranks of the self-employed, you will need to look for alternative commercial loan lenders outside of banks, credit unions and the Small Business Administration. The growing crowdfunding campaigns are one way new businesses are finding capital. For small businesses that are looking for short-term loans less than $35,000, a micro lender may be an option. These are non-profit organizations that will require a business plan as well as financial statements. Another alternative is a private hard money lender.

Hard money loans generally come from private investors or small groups. They are always secured by a “Hard” asset—hence the name. You can use your business’s equipment or real estate as collateral. If your business does not have enough equity or collateral in it, you can opt to use your home or another asset. Of course, should your business go south, your asset will follow, so be sure to understand the ramifications and know that you can live with that decision. Some lenders make loans on future earnings and receive payment based on a percentage of credit card purchases. These types of lenders often go under the name of merchant cash advance companies.

Private Hard Money Loans

Keep these facts in mind when considering obtaining a commercial loan from a private hard money lender.

· Know what you are using as collateral and what it is valued at.

· Have a solid business plan.

· Know the lenders loan-to-value ratio and obtain the needed funds. Many private hard money lenders come in at around 70 percent LTV.

Private hard money lenders value the collateral more than your credit score.

At Level 4 Funding, we work with several private hard money investors who are interested in lending to small businesses. Call us for a no-obligation quote and to see if we have the investor that you’ve been looking for.

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

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

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Commercial Lending in This Economy

Commercial lending practices change with the economy, markets, and rising or falling risk factors. The end of 2017 is seeing historical challenges from regulations as well as emerging risks.

Interest rates have been at historically low numbers for some time even with the Federal Government raising the rates twice in 2017. Moderate job gains and economic activity were noted as the reasons that the interest rates will undoubtedly continue to their third forecasted hike for 2017. This hike in the central bank’s federal funds rate is expected to raise the interest rates of home equity lines of credit as well as credit cards. According to The Risk Management Association, “Rising interest rates on floating rate loans may negatively impact borrower cash flow and result in lower debt service coverages.” This will encourage commercial lending institutions to take a close look at invested equity in order to secure their loans.

Retail issues have been at the forefront of commercial lending concerns for the last two years as more brick and mortar retail stores are shutting their doors in the wake of e-commerce’s takeover. Multi-use projects are taking over the “shopping mall” segment as newer generations place a strong demand on living, working and playing “under one roof.” These multi-use projects have entertainment venues, restaurants, shops, office space, residential units, grocery stores, gyms and even storage spaces. Atlanta developers recently took on a multi-use project next to the Braves new ballpark. It consists of 41-acres with three luxury apartment buildings, entertainment venues, retail and offices and, including the ballpark, came in at $700 million to complete. Of course, it’s still not complete, but is expected to undergo the finishing touches by the beginning of winter.

Regulatory concerns have been raised regarding commercial lending institutions with high commercial real estate loan concentrations. Because of this, underwriting standards have been scrutinized and will reveal this in tightening of their lending belt. Surprisingly, one of the worst performing commercial real estate sectors is construction loans, which has led to a reduction in this sector in bank’s loan portfolios. Multi-family is starting to see some saturation in larger markets while single-family homes are proving to be in high demand, particularly those in the mid-price range. Banks will eventually adjust their lending strategies to reveal these market changes.

Alternative Lenders

With traditional lenders tightening their underwriting standards for various segments of commercial real estate, alternative lenders have become increasingly important to those in these sectors. Contractors, developers and business owners are reaching out to non-traditional lenders with one of these being private hard money lenders. A private hard money lender is not bound by the same FDIC and government regulations and can lend according to their specialized investment portfolios. Because they are asset-based, they do not require impeccable credit scores.

At Level 4 Funding we provide private hard money loans for all sectors of commercial lending including construction, office, retail, small business, industrial, multifamily and multi-use.

Because we work with private hard money lenders, we can approve loans in as little as 24 hours and fund in less than a week. We may very well be able to fund your project when other institutions have rejected your request.

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

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

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Alternative Commercial Lenders

Small businesses, contractors and developers just entering the commercial real estate segment, and those in the retail arena may find obtaining a loan from traditional commercial lenders near impossible. Fortunately, there are alternative lenders that may just say yes when banks and other lenders have said no.

Traditional commercial lenders are often constrained by government regulations and concerns regarding the health of their lending portfolio, leaving some developers and entrepreneurs in certain sectors in commercial real estate unable to obtain the capital they need either due to a total rejection or a partial loan that does not cover the required capital. Many in this predicament are turning to alternative lenders. One such lender offers merchant cash advances. These types of loans are usually taken on by businesses to get them through their non-peak season or to allow them to purchase needed equipment or inventory. Unfortunately, these can come at a high price. These types of loans are set up so that the commercial lenders take a percentage of the daily sales until they have recouped the loan amount and interest which can often be as high as 50 percent.

Other alternative commercial lenders include online lenders that use peer-to-peer lending. These types of loans are usually short-term, right around three years, and the interest rates range from approximately 10 to 25 percent. These types of alternative lenders usually provide smaller loan amounts. Larger amounts in the $250,000 range may have shorter terms and higher interest rates that range from 20 to 40 percent.

Crowdfunding for commercial real estate projects is another avenue that developers are looking into. In 2014, over $1 billion was provided to borrowers in commercial real estate. In 2015, that number doubled to $2.1 billion with up to a 100 percent growth rate expected. These platforms allow individual investors to group together in order to invest in projects that they would normally not have enough capital to participate in. This is good for both investors who wish to expand their portfolio and borrowers who find the increasing competition leading to better terms and rates.

Private Hard Money Commercial Lenders

Private hard money lenders are individuals or groups that provide commercial loans based predominantly on the hard-asset or collateral. Because they are not subject to traditional credit guidelines, they can fund in record-time and place more emphasis on the asset and less on a borrower’s creditworthiness. Most investors have at least one private hard money lender that they turn to when immediate capital is required.

At Level 4 Funding, we offer approval in as little as 24 hours and funding in less than a week.

We are a trusted source of funding that real estate investors turn to for multiple projects. We work with hundreds or private hard money lenders, giving us the advantage when finding capital for a particular project at the best rate and terms. We have a high loan-to-value up to 90 percent, offer interest-only payments, and can offer flexible terms from 3 months to 5 years. Call us for a no-obligation quote.

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

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

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Commercial Building Loan

If you’ve decided to make your mark in commercial real estate development, you’ll find one of the main hurdles is finding funding for your project. To get you prepared, let’s go over the steps you’ll be required to go through to get your construction or commercial building loan.

A large percentage of loans in this category are obtained from local community or regional banks. Other lenders include life insurance companies, private investors and, more recently, crowdfunding. Because commercial building loans are not backed by a governmental agency such as Fannie Mae, you’ll find that you’ll be facing higher interest rates due to the increased risk that these lenders are taking on. Because of this increased risk, you’ll also find that these types of loans are more difficult to obtain.

This is, in general, what you should expect when trying to obtain a construction commercial building loan for a real estate development project from a bank. If you’re planning on holding onto the building, there are two loans that you will most likely procure. One is a short-term loan that finances the construction phase. The second one is long-term financing which occurs once the project is developed, leased and bringing in income. Your first step is to submit a request. If your project is considered, terms will be reviewed and negotiated before the lender undergoes the underwriting and approval process.

The underwriting process for a construction commercial building loan is extensive and often takes anywhere from 30 to 45 days. The lender will want to see your construction budget, tax returns, financial statements, credit report and creditworthiness, building plans and permits. They will take a look at the market and the property that will be used as collateral. They will also want to know your history as a general contractor or your development team if you are not a contractor. Once you’ve been approved, your loan will enter the closing process which is usually completed by both lender’s and borrower’s attorneys. These types of loans are usually dispersed as monthly draws which you will request based on costs.

Private Hard Money Lenders

As you can see, obtaining a construction loan from a bank can be an extensive ordeal. Contractors that require immediate capital or those that cannot pass the stringent requirements of a bank often turn to private hard money lenders. These individuals and groups usually specialize in various types of commercial real estate projects, some of which will be new ground-up construction. These types of loans are asset-based, though the asset does not necessarily have to be the particular property you’re developing. Because of this, they are not as risk-adverse and many do not rely on credit scores or creditworthiness.

At Level 4 Funding we offer private hard money construction loans with 2-year terms.

Our construction loans offer monthly draws and, because we work with private investors, we are not bound by the same stringent FDIC and government mandated lending requirements of a traditional bank. In fact, loans are fairly easy to qualify for. We will need a copy of your budget, plans and permits and can fund up to $50 million. Call us today for a no-obligation quote.

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

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

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Business Loan

Traditional banks reject approximately 80 percent of those small business owners who apply for a business loan. Fortunately, there are alternatives for businesses in need of an influx of capital and one of those is a private hard money lender.

Since the Great Recession, getting a small business loan from a traditional bank has been akin to winning the lottery. Well, maybe not quite that remote of a possibility, but for those just entering business, it can definitely feel hard at best and near impossible in some instances. In addition to requiring adequate collateral, you also need a great credit score often above 700, a good cash flow and adequate capital to pay off the loan. Many potential borrowers wonder to themselves, If I had all that, I wouldn’t need a loan! But such is the constraints of our time.

Approximately 20 percent of new businesses survive their first year in business. After five years, the rate of both failure and success stands equal at 50 percent. The number one reason businesses fail is due to lack of initial funding and under-capitalization. This is due to either underestimating costs, overestimating the amount of initial sales with their product or service, or deciding to take the plunge regardless of the available capital, or lack thereof. Because of the inherent risk to lenders, many banks have very stringent underwriting rules when lending to small businesses in order to protect themselves. The irony, of course, is that if these small businesses had more capital, they would have a better chance at succeeding.

For those of you who have been in the small business demise group, its best to remember that every failure improves your next chance at success. Michael Jordan, NBA basketball MVP said it well. “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life and that is why I succeed.”

So Where Does One Obtain a Small Business Loan?

If you have adequate collateral in your business or even in your home, a hard money lender may be the right option for you. These short term business loans can get you up and running, provide the capital you need for expansion, or get you through the low-period of a seasonal business until the customers start rolling in again. These short-term loans are based on your hard-asset so those that may have had some credit issues in the past still have a good chance of qualifying. And the time to funding is much shorter than traditional bank loans, getting you the capital you need in less than a week.

At Level 4 Funding, we work with hundreds of private hard money lenders many of which prefer to invest in small businesses. We offer terms from 3 to 60 months. Call us today for a no-obligation quote.

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

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

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Bridge Loan

From contractors to developers to small business and home owners, many individuals and companies turn to bridge loans when they are looking for immediate capital. These types of loans are extremely useful in the right circumstance such as when you require a “bridge” from one asset to another and a short-term loan is your best option.

A typical bridge loan is short-term in nature, usually anywhere from 3 to 12 months, though this can be extended in some instances. It can be used for both commercial and residential properties as well as businesses. These asset-based loans give individuals and companies time to secure traditional funding for their projects while allowing them to meet current obligations. If they are bridging from one property to the next, it gives them time to sell the first investment while going ahead with a build-out or renovation. Sometimes, real estate developers and investors will need to take quick action on a property in order to beat out competitors—the perfect opportunity can be realized by obtaining quick capital with this type of loan. In other instances, a developer needs to update a property and prepare it to meet required standards before a traditional lender will consider a long-term loan.

For entrepreneurs, it can bridge the gap that can occur in seasonal businesses. For home owners, it can allow them to purchase and move into their new dream home before their old home has sold. This is important in the hot real estate markets that are occurring today when offers based on a contingent sale can be easily passed over. These types of loans can also be perfect for those in the fix and flip industry who require quick funds in order to get in, renovate and sell.

Hot to Get a Bridge Loan

A private hard money lender often offers this type of loan. They fit well into their portfolio as they are asset-based and short-term. Private investors are, however, not always easy to find. Working with a hard money loan mortgage broker can ensure that you get the best rate from a qualified lender. The requirements to be a licensed mortgage broker are stringent, requiring continuing education to ensure their knowledge base stays relevant. Private investors turn to these businesses and individuals in order to be paired with borrowers that fit into their investment strategy, knowing they can trust them when choosing borrowers. Many businesses, developers and contractors work with a hard money loan mortgage broker that they have come to respect and trust for much of their capital needs. Be sure to check references and work with one that has been in the business for years—it takes time to build up a portfolio of private investors.

We work with hundreds of private investors that look past credit issues and are more concerned with the collateral and the project. We provide quick funding, sometimes in as little as 24 hours, without the mounds of paperwork and endless submissions. Call us today for a no-obligation quote.

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

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

Technorati Tags: commercial loans,commercial lending,commercial mortgage