When you decide its time to apply for commercial real estate loans, you need to be as prepared as possible to ensure successful approval. Here are some tips to ensure you are ready to apply.
Prior to seeking a loan, there is a lot of work that needs to be done to prepare yourself for success. There is a lot of research to be done, and organizational “homework” that is required of you before you even fill out an application. It’s also a good idea to do some general research about the types of commercial real estate loans available and the ones that might be best for your particular situation. There are many options, both traditional and non-traditional. There are also some things that are kind of “a must” when it comes to securing a loan.
Immaculate credit is one of the first things traditional lenders such as banks will look at. This gives lenders a good idea of your business history and your business ethics — both of which can be discovered by researching your credit history. They are also going to want as much information as possible about the reasoning for the loan. If you are looking to obtain a property, you will want to supply photos, the current mortgage payment, day-to-day operations of the company, capital improvements that may be needed and any other information you have about the property or company. A strong and persuasive business plan with statistics and analytics is important as well.
If you don’t have perfect credit, a totally solid business plan or extensive business history or experience, you may have a hard time obtaining a loan through a conventional lending institution. However, that is no cause for concern. There are many non-conventional or untraditional lenders that can provide hard money or short-term loans for your particular needs and situation.
You need to understand the different types of lenders that provide commercial real estate loans.
All lenders are different — and thus have different requirements for your loan application. So don’t fear if you have already been rejected by a conventional lender. They are often the strictest and challenging to get approval from whereas other types of lenders may be a little more lenient. There are many options including government agencies like Fannie May or Freddie Mac, CMBS (transferred trust) lenders, SBA lenders that specialize in property and equipment, private money lenders and lenders that specialize in hard money and short term loans. Seek out the lender that is right for your needs.
You should understand the difference between recourse and non-recourse loans.
When it comes to loans, recourse means that as the borrower, you are responsible for the amount in the event of a default – and that includes any collateral that was involved. Non-recourse loan terms mean that if you aren’t able to make payments on the commercial real estate loans, the lender can obtain the collateral (which usually means the property). Regardless of the type of loan you seek, make sure you are aware of all the terms for the loan and repayment.
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.
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