Commercial mortgage backed securities add uncertainty in 2018

The wave of commercial mortgage backed securities in need of refinancing will linger in 2018. These mortgage bonds issued prior to the great recession will continue to mature at a steady pace over the coming year.

Approximately 41.7 billion in CMBS securities needed to be refinanced last year. 2017 was marked by dire predictions about these loans, but it appears such predictions were seemingly unfounded as a vast majority of these loans were successfully refinanced. The CMBS market remains stable and the predicted wave of defaults did not occur.

Even though the dire predictions of last year did not materialize, a large amount of pre-recession debt will need to be refinanced in the coming year. Uncertainty lingers over the CMBS market. Analysts expect approximately a hundred billion securitized commercial mortgages will need to be refinanced in 2018. The pace of CMBS maturities is expected slow, but the same difficulties remain for the holders of this debt when it comes to refinancing. Market conditions might make refinancing even more difficult than it was last year. “Against the backdrop of slowly rising interest rates and a narrowing yield curve, however, refinancing may prove more expensive than it has in the past, suggesting a potential headwind for commercial REITs,” said resource portfolio manager for Real Estate Diversified Income Fund, John Snowden.

Rising interest rates and tighter lending standards could make refinancing more difficult for the holders of these commercial mortgage-backed securities.

Refinancing this CMBS debt will likely be a more expensive proposition in 2018, as a result of rising interest rates. Higher interest rates make loans more expensive and have lingering effects on commercial property values. Higher interest rates reduce the amount of income commercial property can achieve lower the value of that property as a result. In addition some property owners might not be able to refinance to the total value of their mortgage as a result of higher lending standards. Prior to the recession an owner may have qualified for $3.6 million mortgage on a $4 million property. Under current lending standards that same owner will likely only qualify for a $3.2 million mortgage. That owner will therefore have to take on $400,000 out-of-pocket in order to fully refinance their loan.

The holders of some of these commercial mortgage-backed securities might be tempted to sell their mortgaged property, but this presents its own difficulties.

Some property owners can avoid the difficulty of refinancing to a higher interest rate with less favorable terms by simply selling their mortgaged property. These property owners face new uncertainties should they choose to sell their leveraged commercial property. The overheated real estate market prior to the recession was marked by inflated property values. some property owners might not be able to achieve a sale price that pays for their mortgage, as commercial property values has since come back down to earth. In addition the sale of any piece of real estate takes time, some owners may not be able to sell their mortgaged assets before their loan matures and a wave of defaults could follow.

The future remains uncertain for the holders of the $100 billion in mortgage debt that needs to be refinanced in the coming year.

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 loans,commercial lending,commercial mortgage

Wall of Commercial Mortgage Backed Securities comes due

Lax underwriting standards prior to the recession led to an unprecedented number of commercial mortgage backed securities being issued. This year many of these property owners will need to refinance, but this presents unique challenges as the lending environment has changed over the last ten years.

An unprecedented number of CMBS securities were minted prior to the recession. In 2007 alone 230 billion in CMBS mortgages were originated. According to Trepp, 41.7 billion of these mortgages will need to close or refinance by November of this year. These mortgages were issued at extremely high loan to value ratios, with terms which would be impossible to secure today. Unfortunately for borrowers who took on these loans, many will need to refinance this year and will likely incur large out of pocket expenses as a result. Today’s strict underwriting standards mean that refinancing may be very difficult or very expensive for some of these commercial property owners.

The owners of these properties, who took out mortgages in the run up to the recession, will likely need to refinance by the end of the year. In the best case scenario a borrower could get a new mortgage at 80 percent of their properties current market value. Their initial mortgage might have been made at up to 96 percent of their properties value. With stricter underwriting standards, some borrowers could find refinancing a very expensive proposition. For example, a borrower might have gotten a 3.6 million dollar CMBS loan on their 4 million dollar property in 2007. With today’s underwriting standards, in the best case the owner would only get a mortgage for 3.2 million. Meaning in order to refinance the owner would have to pay 400,000 dollars out of pocket.

Commercial mortgage borrowers could avoid the expense of refinancing by selling their property, but this result in its own challenges.

With so many pre crisis CMBS loans currently maturing, borrowers may need to sell off their properties quickly. Simply put the sale must go through before the loan fully matures. This is difficult in consideration of just long it can take to sell a property. Selling any property can take at least 6 months and the sale of real estate usually involves a great deal of negotiation between buyers and sellers. The longer it takes to sell the property, the greater the chance of default. If a sale can’t be secured before a loan matures, the borrower will need an extension or their loan may become delinquent. The holders of these pre crisis CMBS loans also need to ensure that the value of their property is sufficient to pay off their outstanding mortgage.

Even in the face of these many challenges borrowers holding these commercial mortgages have been defaulting at a lower rate.

Since March of 2016 and June of this year, as many analysts expected delinquencies on pre-crisis CMBS loans climbed to new heights. These numbers rose at least 13 times over this period. The height delinquencies came in July of 2012, when 10.34 percent of outstanding CMBS loans were in default. In September the number of CMBS mortgages in default was still 62 basis points higher than at the same time last year. However these numbers show some improvement according to analysts and have declined by some 4 basis points since August. “After more than two years, the ‘wave of maturities’ has been reduced to a mere ripple,” according to Manus Clancy, Senior Managing Director at Trepp. “The volume of maturing debt coming due every month has already begun to wane, meaning the rate of delinquent loans should hold steady or recede in the coming months.” The data indicates borrowers have resolved some of the challenges of refinancing or selling their properties. How this situation will play out for the rest of the year remains uncertain.

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

Finding the Right Help from Banks When it comes to Commercial Mortgages

In the wake of the Great Recession, traditional banks have raised borrower standards. This is especially true when it comes to commercial mortgages. But traditional banks still offer the least expensive loans with the longest terms. How can you maximize your chances of qualifying for a conventional mortgage from a traditional bank?

A good first step is to work with a bank where you are already a customer. Banks are willing to offer the best terms to those they are already in business with. Therefore it is a good idea to have a large savings account at any bank you seek a loan from. If you don't have substantial savings on hand, one strategy is to refinance your home and deposit the money at the bank where you want to apply for your loan. Small banks in particular are always eager to compete for new depositors and banks prefer borrowers with a lot of cash on hand. Having money on hand will make any bank more eager to offer good terms on a mortgage, as they will want to compete for your business.

It is also a good idea to find a bank close to the property you want to finance. Banks generally prefer to issue commercial loans in their immediate area. Above all match the size of your loan to the size of the bank where you apply. Big banks do not consider small loans profitable and small banks obviously cannot finance multi-million dollar mortgages.

Be prepared to submit your loan application many times over and keep your initial proposal short and no longer than four pages. Your proposal should consist of an executive summary, a pro forma operating statement and a title for the project you want to finance. Your proposal may also include graphics and pictures related to the project and the subject property. Be sure your proposal can be easily submitted to as many banks as possible. Convert your proposal into a digital format such as a PDF. The conventional mortgage process is long and arduous. By taking the first step at as many lending groups as possible, you can help ensure your mortgage will be approved in the shortest amount time.

Even if you qualify for a conventional commercial mortgage, the loan amount offered by the bank might still not be enough to purchase the property.

Even the best borrowers may struggle to obtain mortgages higher than 80 percent of their properties total value (loan to value ratio or LTV). In these cases you might want to consider a government sponsored lending program such as an SBA loan. With SBA loans 90 percent of the loan amount is guaranteed by the government. With an SBA loan banks can therefore issue a loan up to 90 percent of the total property value. However SBA loans are not useful for investment purposes as they require 51 percent of the subject property to be occupied by the borrowers business. A potential alternative to the SBA program is the USDA’s Business and Industries Loan Program. These loans have a similar structure to an SBA loan, but are only offered for properties located in rural areas. However a USDA B/I loan doesn't require the owner to occupy the majority of the property, so these loans can be used for investment in commercial real estate.

Considering the difficulty why would you even go to a traditional bank for a commercial mortgage?

Conventional banks still offer the cheapest loans with the longest terms. Go to your local bank, have a well thought out proposal that can be submitted many times over and consider government sponsored lending programs. These steps will help you qualify for a conventional mortgage with the best terms. Still in some cases your investment idea may be considered too risky for a conventional bank. If this is the case you may want to consider a hard money lender, or other alternative financing.

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

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

Commercial Mortgage

Understanding how a commercial mortgage operates in the commercial real estate development is essential for knowing how to use one for the most effectiveness. Even though they might seem similar, they are distinctly different from residential mortgages in important ways.

While there are a number of similarities between a residential and a commercial mortgage, there are also a number of differences. Perhaps the most obvious is with whom the loan is made. For a residential mortgage, the principal party is an individual (or in some cases a married couple). The rates and terms, or even their eligibility, is determined based on credit worthiness. For many individuals this can be a cause of great deals of stress.

A commercial mortgage is granted to a business, rather than an individual. This is slightly different because many business entities cannot really be assessed based on their credit worthiness. There are two different ways to determine whether a borrower is eligible for such a loan. The first is by the business entity putting up assets to secure the mortgage. This guarantees to the lender that if something goes wrong, that they will be able to recuperate some, if not all, of their investment. The other method that is used for an individual within the business entity to be the principal for guaranteeing the loan. This then provides the lender with a specific person to help determine credit worthiness.

Another distinct difference between a residential and a commercial mortgage is the terms of repayment. For a residential loan, a term, say of 30 years is set. The loan is then amortized over that time period so that each payment includes both principal and interest. While it is possible, in many cases, to pay the mortgage off early, it is not expected. However, the terms of a commercial real estate loan are quite different. They can range anywhere up to 20 years (usually not longer), but the amortization is figured differently. For many mortgages, the amortization period extends past the expected end date of the loan. The reason for this is simple. The lender expects the borrower to pay off the remainder of the loan in a single, large payment after the term is up. For most commercial investors, this is not a problem, because they will have easily made back the amount of the loan through sales or through rentals.

Will I be able to pay off my commercial mortgage early?

It is entirely possible that you will be able to do this. However, it is not always an option with certain lenders, and if it is, there are often penalties and fees associated with prepayment. One such method is an interest guarantee, where the lender is contractually obligated to receive a certain amount of interest, no matter how early the borrower pays off the loan. Another stipulation that might be placed on a borrower is a lockout period, during which the borrower is not allowed to pay off the balance of the loan. If you plan on trying to pay your commercial mortgage off early, make sure you know what your lender will be expecting.

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

How to Avoid Common Commercial Mortgages Issues

When a borrower is prepared for the worst, there is more of a chance of avoiding commercial mortgages pitfalls. A successful plan for when things could go wrong, can be beneficial to many borrowers.

It is important to know that not all lenders and brokers are fully prepared for all of the different financial issues that you and your business could face. This is why it is crucial for borrowers to be aware and prepared for any potential financial issues that they could be faced with then it comes to commercial mortgages. It is best to rely on yourself than your lender or broker.

Sourcing is one of the most common commercial mortgages mishaps that should be avoided at all costs. This happens when a documentation of the down payment source for the purchase is required by the lender. They can also require the verification of the funds for the payment. This is called seasoning, which could take a long time, up to a whole year.

Recall terms are another problem that borrowers could face with commercial mortgages. These recall terms could allow the lender to collect payment from the borrower before the due date. Usually, these recall terms must be present in the loan agreement for this to happen.

There are some differences to recall terms when it comes to commercial mortgages and business loan agreements

Commercial lenders often times will include recall terms in the business loan agreement. However, if terms are not specifically notes in the agreement, there is a chance that you could be forced to repay the payment sooner than expected and on short notice. This is another reason it is important to work with a trusting lender that communicates with you effectively and outlines the terms clearly.

Keep in mind that not all lenders utilize recall terms when it comes to commercial mortgages

To avoid having to deal with recall terms at all, you can find lenders who do not use them. It is beneficial for both parties to try to come up with a plan and refinance with a borrower before having to mess with recall terms. But since agreeing on refinancing terms is not always a luxury that you may have, try to find a lender that doesn’t deal with recall terms or be prepared so that you do not have to worry about this issue.

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 loans,commercial lending,commercial mortgage

Beware of Potentially Fraudulent Commercial Lenders

The process of obtaining a commercial mortgage is not as simple as one might think. Knowing a few bits of insider information will help you to manage your expectations and have more success when applying for a loan.

Beginning your search for the perfect commercial mortgage can be a bit of a disheartening experience. You quickly learn that the process is long and tedious at best and frustrating and disappointing at its worst. But having realistic expectations and a little bit of honest information about the process can be very helpful in relieving your anxiety and getting you the loan that you need. So listen to the promises of potential lenders and then temper their time estimates and other information with some well-known facts from industry professionals.

Time can be a critical factor when you are seeking a commercial mortgage. After all, you either have a need for a property or have found a property to fit your needs and you are ready to make the purchase. So the last thing that you want to learn is that another company or investor has bought the property out from under you. In an effort to be expedient and efficient you are polling lenders to see who can work within your tight time line. And the canned response will be around a month, tops. This statement is made with a smile and possible chuckle that almost certainly is revealing a bit of fabrication. The cold, hard truth is that processing a commercial loan can easily take over 45 days and many reach almost three months. Understand that the process is slow and you will not be able to change that fact.

Knowing that it can take up to a few months to complete the process, also understand that it can take weeks before you even get the nod that you are approved. The flip side of that is that you wait weeks to learn disappointing news and then you are forced to begin the process again with yet another lender. So when time is of the essence, you are wise to start the process with a few lenders and see who meets your timeline and who is actually willing to offer you a loan.

Saving Time and Money

Knowing that you are applying to several lenders for a single loan, it can be tempting to look for ways to save on costs and possibly speed up the process. Many borrowers want to pay out of pocket to have the property appraised and then submit that document to each lender. The idea is reasonable but in the end it is not cost efficient. By law, each lender must order an appraisal themselves so your appraisal and the fees are wasted.

Do Your Due Diligence

Begin the process of seeking a commercial mortgage with as much information as you can possibly gather. The time that you invest in learning the process and the technical jargon of the commercial loan industry will be rewarded with a great return on your investment. You will have realistic goals and timelines throughout the process as well as less stress.

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 loans,commercial lending,commercial mortgage

What Should I Look For In A Commercial Broker To Help With My Commercial Mortgage In Texas?

You don’t have the time or energy to pursue a commercial mortgage on your own. You know that you need the expertise and assistance of a professional commercial broker, but you don’t know where to start. Here is what you should be looking for in a professional broker.

Finding a commercial broker is easy. Finding a commercial broker that will be a good fit for you is not nearly as easy. In Texas, there are many firms and independent brokers that would happily take your contract and not do nearly as much work as you would like them to do finding an excellent commercial mortgage.

Many mortgage brokers are a part of larger firms. This not only allows them to reach more lenders, but also to give them access to greater resources. Finding the right firm and the right broker within that firm can feel daunting, however, you can make this process easier if you follow some simple steps to ensure that you find the right broker.

First is to examine the qualifications of the broker. This might seem like a no brainer, but many brokers have qualifications in areas that are not in the specific area that you might need. If you need a commercial mortgage for a multifamily housing unit, it really doesn’t matter if a broker is highly qualified in retail space. That is not what you need. So, do not be impressed by a list of qualifications, but instead be selective about a broker who has qualifications that will fit your specific needs.

In addition to qualifications, a broker’s area of expertise is important. This does not mean that a broker who has no specialization will not work for you. But it is important to know what type of deals a broker does the most of. This will give you a good indication of where they are the most successful. If you can find a broker that has both qualifications and the experience of success with a commercial mortgage in your real estate emphasis, that is an excellent start.

You will also want to make sure that your broker stays on top of the ever-changing financial world of mortgages and real estate development. A quick way to assess this is to ask what they do themselves, or what their firm provides, for continuing education. A broker that does not continually improve is a broker that is falling behind on current trends in the market.

What is the best way to find a qualified, hardworking commercial mortgage broker in Texas?

Even if you make sure that you are careful in looking for a broker, take your time and ask lots of questions, there is no guarantee. The best way to find a high-quality mortgage broker is through a referral from a friend or business associate who has worked with one before. In fact, this is the way that most decent mortgage brokers grow their business: through referrals. They know that if they work hard, meet the needs of their clients and are able to put together a list of satisfactory commercial mortgage options that they will receive excellent word of mouth. If you encounter a mortgage broker that does not worry about what his clients say, this is most likely a person that you are not going to want to deal with.

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 loans,commercial lending,commercial mortgage

Securing A Commercial Mortgage in Texas – Preparing For Your Mortgage – Step 3 – Hard Money Mortgage Application

Perhaps a traditional mortgage is not what you are looking for with your commercial investment, or maybe through the pre-qualification process, your lender has helped you determine that your needs are better served by a hard money loan. In either case, the process for a commercial mortgage in Texas is slightly different with this type of loan.

Typically, a hard money loan is a very short-term loan that will enable to borrower to quickly turn a profit and pay back the loan. If you are developing a property or are looking for a long-term building extension or business development of a commercial area, then this is not the type of loan that you are looking for. Many real estate developers use this type of commercial mortgage to quickly turn around a property and immediately put it back up for sale to turn a quick profit on the improvements made.

This is often referred to as a “fix and flip” loan and has been made famous by shows like “Property Brothers” and “Flip This House.” Often times, from a commercial standpoint, these properties are in depressed areas and often include multi-family housing units. With the recent devastation of Hurricane Harvey, this is actually going to be a growing area of need in Texas markets.

The tricky part of a hard money commercial loan is that it is based on the property appraisal that will be realized after the completion of the project. This is commonly termed as the After Repair Value or ARV.

Because of this unique factor, the application process of a commercial mortgage of this type begins with the assessment of what the property will be worth after the repairs are implemented. This means that the borrower will have to do a good deal of leg work before even knowing if the loan will be approved. Detailed specifications and an excellent business plan are necessary components for a hard money loan, as the entire value of the loan is going to be based on what the borrower intends to do with the property.

Once the plan has been approved and the ARV has been provided to a potential lender, the application process truly begins. Another element that a borrower can expect to encounter in this process is having to provide a detailed budget of how the repairs are going to be completed and their associated costs. This can usually be done by getting quotes from contractors who have worked on such projects before. In any case, this is critical step to help outline exactly how the loan is going to be used and to ensure that it is for the proper amount.

With the recent crisis in Texas, how can I use a commercial mortgage to my advantage?

Multi-family housing units in depressed and affected areas, especially in Houston, are going to be in high demand and investors are going to be needed to quickly turn those properties into buildings that are livable. Having the access to quick funds and experience developing properties with hard money will most certainly help you to make a commercial mortgage work in your favor.

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 loans,commercial lending,commercial mortgage

Securing A Commercial Mortgage in Texas – Preparing For Your Mortgage – Step 2 – Traditional Mortgage Application

With pre-qualification out of the way and a lender working with you to secure a commercial mortgage for income generating property in Texas, you are well on your way to making your dreams come true. However, the hard work is just beginning.

If your pre-qualification process was rigorous, then you are well on your way to completing the actual application for your loan. While it might have been frustrating at the time, you will no doubt be grateful for it as the process goes along. However, if you did not have to provide much documentation for your pre-qualification, then you are definitely going to have your work cut out for you. The application process for a commercial mortgage in Texas can be quite long and can confuse even the smartest of business people, so do not hesitate to ask plenty of questions of your loan officer.

If you did not have to provide documentation for your pre-qualification, you will have to gather financial documents to show not only your ability to pay back the mortgage, but also your history of how you have handled debt. This usually includes proof of income, tax documentation, other assets and business information. It also might include balance sheets, income statements and business plans, especially if the property is going to be used to house other businesses as rentals. Lenders are looking for security when they grant commercial mortgages and all of these things become factors not only in their decision to grant the loan, but also in the rate and terms that they are willing to offer.

With a traditional mortgage, there are a couple of things that need to be taken care of before the underwriting of the loan can actually begin. Before any movement can be made toward obtaining a loan, the title of the property and the title company that will be representing it must be chosen. It is up to the borrower to select the company that will be closing the loan (once it is underwritten) and will be providing title insurance. This helps to secure the commercial mortgage against title fraud and is absolutely necessary for lenders to be able to approve a loan. At this time, it is also decided whether the borrower will be covering title and insurance costs separately or as part of the mortgage, all rolled into one. Unless you have a very good reason to divide them, it is most likely in your best interest to lump them together.

What happens with a commercial mortgage in Texas after all of the paperwork has been processed and the underwriting process begins?

Once the underwriting process has begun (this could take up to 2 months), there will be a lot of waiting. But there are still things that will need to be done in order for the transaction to go smoothly. One such thing is for the borrower to get the property appraised by a third-party appraiser. This process is also very time consuming and can take up to 3 weeks to complete so it is best to start this early. In addition to this, you must be prepared to provide additional documentation, as needed, to the lender. It is very possible that they will need nothing else to secure your commercial mortgage, but if they do, it would be best to provide it quickly to not interrupt the process.

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 loans,commercial lending,commercial mortgage