Learn To Be A Fix & Flip Investor: commercial real estate loan

Showing posts with label commercial real estate loan. Show all posts

Friday, November 3, 2017

Risky Business: How To Minimize Risk With Your Commercial Real Estate Loan In Texas

The benefits of a successful real estate investment are many and varied. However, when you venture into property management with a commercial real estate loan, you are invariably taking on a great deal of risk as well. Managing the risks involved, especially in volatile markets like Texas, can greatly enhance your chances for success.

Commercial real estate and the investment in a commercial real estate loan can be very lucrative and rewarding experiences. However, there is a certain level of risk that an investor While commercial property investing can be risky in ways that are unforeseen to the first-time investor, there are ways to minimize the risk. But be warned. There is ALWAYS risk and you should be very wary of anyone who tries to tell you otherwise.

One of the biggest risks to commercial real estate loans and commercial property is the market as a whole. There are so many factors that play in to the success of a real estate market that it is virtually impossible to predict them all, however, a smart investor is going to stay up to speed on a variety of things that will indicate local economic strength. The strength of local businesses and multi-family housing units are a very good indicator of local economic strength and can give excellent insight into the demographic movements of specific areas. This is especially true when it comes to professionals in the leading industries of the region. In Texas specifically, the market can easily be judged based on the movement of professionals hired to work in the energy sector. As that industry goes, so does the majority of the market.

Another massive risk of a commercial property are structural improvements and construction. This might not seem like a risk at first, as many properties require improvements and renovations before they are able to be viable income generating properties, as well as ongoing improvements. Where this becomes a risk, however, is when costs and time are underestimated. This is a very common occurrence and is not something that many investors are equipped to deal with, especially when involving a commercial real estate loan that requires payment. It is safe to assume, with commercial construction, that very little will go according to the proposed timeline and you will have to adjust both your end date and your expectations.

Knowing these risks to my commercial property and commercial real estate loan, what is the best way to prepare myself?

Many of the risks of commercial investments can only be minimized by being properly prepared and well educated about the flows of the market. Those risks that are the largest are completely outside of the control of the investor. While this might be daunting and stressful, it is also incredibly rewarding, as such risks have a tendency to turn away those who are faint of heart. This leaves plenty of opportunities for those who are willing to take on some risk (calculated risk) for plenty of reward. When it comes to commercial real estate loans, nothing is a sure thing, but by educating yourself and protecting your property, you can minimize the lasting impact of an economic downturn.

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

Thursday, November 2, 2017

The Dark Side Of Commercial Real Estate Loans In Texas – What are the Drawbacks Investing?

If investing in commercial real estate properties were easy and a sure thing, then everyone would be able to do it successfully. However, there is a tremendous amount of risk inherent in pursuing commercial real estate loans in Texas, considering the number of factors that are outside of the control of the investor.

There are most definitely opportunities present for anyone to get involved in commercial real estate. So why doesn’t everyone do it? Because for every reward, there is also a great deal of risk. Only those who are able to manage the risks, while capitalizing on the rewards are going to be successful in putting a commercial real estate loan to work for them with an investment property.

One of the biggest drawbacks of pursuing and following through with a commercial real estate loan and the property that will be acquired with it is the time that the owner is going to have to commit. With a commercial property, you are going to be dealing with many different leases of different time frames and terms, shared areas that are the responsibility of the owner, and an image to uphold. All of this takes a tremendous amount of time and energy. If a borrower has never owner commercial property before, the amount of time it takes for even the simplest of maintenance tasks is most likely to surprise.

Another hurdle that investors and owners will need to overcome with commercial property is the realization that it is impossible to do it all yourself. With the amount of maintenance, as well as their complexity, an owner is going to need commercially certified professionals. This often comes as a surprise to many owners who like to take care of things themselves. Not only does this establish a further layer of liability protection, but it will also save time. Just because you have the commercial real estate loan on the property does not mean that you should try to save on costs by lowering maintenance standards.

Commercial properties are also different than residential properties and this can be a drawback for investors that are not properly prepared for what that means as far as foot traffic is concerned. The reality is that the volume of people coming in and out of a commercial property is much greater than in a residential property. While this might seem like a no brainer, the implication is that the potential for damage to the property or to those who frequent it go up significantly. Everything from a minor accident in the parking lot to a significant injury to a patron has the potential to happen. This additional risk is often not realized by potential owners until it is too late.

Are there ways to mitigate the risks associated with my commercial real estate loan and commercial property in Texas?

Each state handles the issue of insurance differently, so it is critical to understand what the local laws are in regard to liability, maintenance fees and licensing. The last thing you want to have happen is to lose your livelihood and open yourself up to a lawsuit over something that you did not know was an issue. The best way to lower the risk and overcome these draw backs is to seek the advice and help of someone who has dealt in commercial real estate and commercial real estate loans before.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Sunday, October 15, 2017

What is Credit Risk and How it Can Affect Your Commercial Real Estate Financing

When it comes to securing commercial real estate financing for your business, banks and lenders will typically want to see your credit score and report. That’s because they must determine the credit risk — before deciding whether or not to approve your loan application.

Credit risk is the chance that a bank or lender will lose value when outstanding loans go unpaid. While financial institutions and lenders have many factors to weigh when it comes to ultimately determining whether your application will be approved, credit risk is an important one of those factors. Lenders can assess the risk associated with taking on your loans by determining your ability to repay the funds borrowed to you.

This capacity is based on the revenue that your company generates along with other factors such as the amount of collateral you have to put towards the loan. These are important aspects that lenders look at when it comes to deciding if your loan is “worth the risk.” In any instance, the lender takes on a certain amount of risk, however, they look to mitigate that risk whenever possible. They certainly don’t want to loan money to a business that shows no capacity to be able to repay the loan within agreed upon terms.

Another way lenders will assess this risk is by reviewing your past repayment history – via credit history or other loans. This can be either personal or business debt. Beyond just the amount you’ve borrowed and paid back, they look to see if your previous debts were repaid in a timely and appropriate manner. If you have delinquent marks based on late or missed payments, lenders may find themselves quickly tightening their purse strings when it comes to your commercial real estate financing.

Even if you are considered a credit risk, you still have the ability to be eligible for a loan.

You can minimize your credit risk by maximizing your loan to value ratio or increasing the amount of personal equity you can put towards the loan. Sometimes these things are enough to help you persuade a lender to loan you the commercial real estate financing you are in need of.

If you are rejected for a loan, don’t give up — you can still seek alternative lending options

While a traditional bank or other conventional lender may not be able to look past your credit risk, that doesn’t mean you will never obtain the loan you need. Seek other options, such as alternative lenders that are more likely to “take the gamble” on a higher-risk loan scenario that you might be in. Continue to search until you find the right lender — and the right loan — for you.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

How Commercial Real Estate Financing Can Be the Key to Managing Your Business Finances

If your business needs cash to help get out of a rough slump or to continue to grow to the next level, short term commercial real estate financing can often help. By having an extra cushion of cash business owners can more easily manage their budgets and take risks when it comes to growing their businesses, and with these tips, your company’s finances will allow you to grow while also being able to pay back your loan.

It’s no secret that as a business owner, you shoulder a great deal of financial responsibility — not only to the growth of the company, but to your employees, vendors and suppliers, and more. Keeping a tight hold on your budget and managing your finances responsibly from the onset will help you in the long run. However, just because you can run “a tight ship” doesn’t mean your company wouldn’t benefit from the extra cushion of hard money from commercial real estate financing.

Even with a loan, it’s crucial to keep your monies organized. You should always keep your business and personal finances separate — no matter how big or small your business is or gets. That means securing a bank account as well as a credit card in the company’s name, not your own. This can help you stay organized when budgeting but also when it comes to filing taxes and establishing separate business credit. Establishing business credit becomes very helpful if you need to secure a long-term loan in the future.

Experts can help you not only with your commercial real estate financing, but with managing your budget as well. Just because you know what your customers’ needs are, doesn’t mean you are an expert at finances. Everyone has an area of expertise and if yours isn’t dollars, it’s a good idea to get help organizing and managing your budget. Whether that means hiring an accountant to handle billing and payroll, or seeing the help of “DIY” programs such as Excel or Quickbooks, utilize the tools and experts that are available to help make managing your finances easier on you — so you can refocus your efforts back onto the success of your growing business.

Do you research before seeking out and applying for commercial real estate financing.

If you take a good hard look at your budget prior to research and applying for loans, you might be surprised that there are some areas in which you can cut back your spending to loosen up the tight times. Being realistic about where you can scale back can help you determine how much you should apply for when seeking a loan. When the loan amount is dialed in to exactly how much you need and not too much more, than you don’t have to worry about getting wrapped up in a repayment schedule and high interest rates that you don’t even really need.

When you decide you are ready, consult the professionals.

Upon determining your desired loan amount, find a lender who will negotiate terms that will work for you so you are happy with the payment amount and it fits into your budget.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tuesday, October 10, 2017

Commercial Real Estate Loans: Chinas regulations to curb new home purchases are fueling speculative demand

Efforts by the Chinese government to slow down commercial real-estate loans on multifamily properties are doing little to curb demand.

This year regulatory authorities in China issued a spate of new rules to slow down speculative home purchases. The new rules raise the minimum down payment required for mortgages and limit the number of apartments that each citizen or family can own.

However these new regulations are simply raising prices on multi-family apartments in many regions. Price increases that fuel speculation that home values will only continue to climb. This speculation has led to a wave of investment property purchases throughout China. Many speculate that the new restrictions will be lifted in the near future as the government attempts to spur economic growth. Should the multi-family market encounter any trouble there is a general consensus that the government will take drastic steps.“The government will spare no effort to make sure there are no big swings in the property market,” said Ni Pengfei of the Chinese Academy of Social Sciences.

The explosion in the multi family market stems from the Chinese governments increased reliance on household borrowing in order to fuel growth. As a percentage of GDP Corporate debt has reached an unsustainable 164 percent. Recently the government turned to household borrowing as a way to prop up growth. Early in 2016 the government relaxed its housing policies due to the economic slow down in China. President of the Peoples Bank of China Zhou Xiaochuan declared that residential mortgages were “relatively safe.” Mortgages for new apartments grew by 10 percent year over year immediately following his comments. Chinese households once carried relatively little debt, which once gave some assurance that the housing boom would not result in a wave of catastrophic defaults. But household debt has now peaked at 42 percent of GDP. Notably household debt in the US stood at 85 percent prior to the housing crisis and Chinas household debt may be rapidly approaching a similar number.

Commercial real estate loans and lending practices are fundamentally different in China easing some fears about an impending crisis.

Chinese Home buyers must still make a substantial 30 percent down payment on any mortgage they take out. In contrast the lending environment prior to the Great Recession was characterized by the issuance of mortgages with little to no money down. The incentive to expand lending to unqualified borrowers is lower too, as Chinese lenders have few ways to securitize and sell off large pools of loans. Many US households were over burdened by home equity loans prior to the recession. This type lending has not caught on in China.

Commercial real estate loans used to finance the construction new apartments are have become essential to fueling Chinas growth.

Activity related to the construction of new apartments now accounts for a third of Chinas economic activity. Any slow down in this sector could cause regulators to lift safeguards in order to boost the economy. Moodys states that 68.8 percent of Chinese household assets consist of real estate. A decline in home values would eat away at the assets of many Chinese citizens. There is the further danger that half of recent sales were for the purpose of investment, according to Ni Pengfei. Should these investments falter any related mortgages will likely default. If that happens the US will no doubt feel the effect as the economies of both nations depend so closely on one another.

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

Thursday, September 28, 2017

Commercial Real Estate Loan in Texas Used to Refinance One of the Most Well Known Buildings in the Heart of Houston

After experiencing the devastation of Hurricane Harvey, some good news comes to the area. The city of Houston is eager to see the changes that will be made to one of their most popular and well-known office buildings in downtown Houston thanks to Holliday Fenoglio Fowler approving a commercial real estate loan in Texas
Located in the heart of downtown’s Houston Theatre District, one of the most recognizable buildings in the Houston skyline and even across the globe is going to be getting a new look, all financed by a commercial real estate loan in Texas funded by Holliday Fenoglio Fowler. The architectural icon is at 700 Louisiana in Houston’s central business district.
The 1.2 million square-foot office is 56 stories and was designed by Phillip Johnson and John Burgee. The building currently homes many law and financial services firms that benefit the Houston community greatly. Luckily, Hurricane Harvey had little impact on the business operations of the building, with all of the businesses in the building is back to their daily activities.
The borrower of the commercial real estate loan in Texas, M-M Properties worked closely with Holliday Fenoglio Fowler in a very detailed process to get the refinancing rolling. The impact of refinancing the well-known building is going to give it a higher property value by sprucing up the lobby and more.
Privately held real estate investment firm gets help with commercial real estate loan in Texas
With M-M Property having their headquarters based in Houston, they know how hard the area was hit by Hurricane Harvey. The property management company is hoping that this is a positive event happening after such a devastating time. M-M Property is an experienced, privately held real estate firm that is located in the heart of Houston.
The commercial real estate loan in Texas lender is eager to see how the changes will improve the area’s value.
After Houston was hit hard by Hurricane Harvey, Holliday Fenoglio Fowler is excited to see the changes that will be made during the renovations to bring the area back to the way it was before the storm rocked the area, causing 18 counties in the state to be declared disaster areas. Holliday Fenoglio Fowlers has 24 offices across the country and is a leader in commercial real estate loans in Texas and throughout the United States along with offering many other financial and marketing services.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Sunday, September 24, 2017

Tips for Getting Commercial Real Estate Loans

Commercial real estate loans are not as easy to acquire as you might think. But using a few tips can insure that you get approved and get a great rate.
You would think that lenders would be eager to grant commercial real estate loans due to the large dollar amount and the potential to make a great deal on interest. But in most cases, it is tougher than you would expect to complete the application process and qualify for the loan. But using a few proven tips can help to eliminate much of the pain associated with the process.
The first step that you need to take even before you have found the property that you are buying is getting your application packet in order. You will want to have this task done before you really begin to shop for a property because the preparation can take some time and you don’t want to lose out on a great property while you are digging through paperwork. You will need current financials as well as a few years of historical financials, tax returns for the past 3-5 years, rental schedules, leases, copies of sales contracts and AR statements, bank statements and asset and liability statements. Having these documents in order will help to expedite the application process for any commercial real estate loans.
Once you have found the property that you want, be sure that you do the research and know what the actual market value of the property is. This could be different than the asking price but understand that the lender is only interested in the market value. That is the value that the property will hold as collateral on the loan that you are asking for and that is what the lender is really interested in. Also understand that you will be required to make a down payment of around 30% of the market value. If you are willing to pay more than market value for the property then you will also need to pay the seller the delta between the market value and the asking price.
Prepare a Structure Diagram and Asset and Liability Statement
Having a complete structure diagram will help to save valuable time when the lender is evaluating your business. It gives them a clear picture of your business, what you do and how you accomplish it. This can save many weeks of questions when they are trying to evaluate your creditworthiness and the overall stability of your business. The asset and liability statement will be the document which will explain your financial stability in a nut shell. These two documents can greatly simplify the lenders discovery process prior to approving your loan.
Hire a Professional
Most business owners have no idea how much documentation is required to apply for commercial real estate loans. And once they begin the process they quickly become overwhelmed. You hire a lawyer to handle legal matters and an IT professional to design your network so it only makes sense to hire a professional broker to assist you with purchasing a property. It will not only eliminate much of the stress but it can also eliminate a lot of time that would be wasted resubmitting your application packet if there are errors or missing documents.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Advice about Getting Commercial Real Estate Loans

Most business owners are not very familiar with the process of getting commercial real estate loans. But these pieces of advice can help you to manage your expectations and succeed when you are ready to apply for a loan.
When you find a great commercial property that you want to buy time becomes a huge factor in everything that you do. Your first question to most lenders is about how quickly they can get your application processed and get you the money that you are requesting. Tip number one is that the standard answer in the commercial real estate loans industry is 30-45 days to complete the process. But the truth is that in most cases it takes more like 60-90 days to get through the process. Some of that could be due to ill prepared borrowers who are missing documents and information on the application but part of it is also going to fall back on the lender and their processes. So be prepared to spend several months ironing out the processed of completing commercial real estate loans.
Rule number two is to keep your options open. You never want to rely on just a single resource for anything in your business and commercial real estate loans are no different. You need to have a backup plan for several reasons. In some cases the lender might have very strict qualifications that you might not meet. Another issue could be the time that it takes for a lender to process your application. And even after you have applied and been approved, you might find that you are not in favor of some of the terms that the lender has in their contract. Having several options allows you to carefully evaluate your options and make a selection that is best for you and not just for the lender.
Tip three is one that can save you some money. Don’t get talked into requesting an appraisal on a property yourself. If you think that it is going to save you time and money, you are wrong. You can’t submit an appraisal to multiple lenders and save money. By law the bank must request their own appraisal and they must also have an environmental study completed on the property.
Start Small but Don’t Be Afraid to Go Big
Starting with local banks and your local Small Business Administration office is smart. Local banks and smaller lenders are often willing to work very hard to beat out the competition for your business. But don’t forget to check out your options with some of the big lenders. Different lenders have different criteria for loan qualification as do lenders of different sizes.
Think Outside the Box
If your first application or two gets turned down, don’t give up. There are many different types of lenders out there. You might need to look into alternative lending options to start with and move to a more conventional lender in a few years. But take the knowledge and experience you have gained on the first few applications and keep looking for your perfect lender.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Basics of Commercial Real Estate Loans

Understanding commercial real estate loans is the first step in deciding if you are ready to own a commercial property. Learning about the process will ensure that you know what to expect and how to prepare yourself and your business.
Owning a successful business is a rewarding accomplishment and one that might be leading you to consider purchasing a commercial property for your business. But you need to know more about the process and the requirements before you begin to invest your valuable time in searching for a property. The application process is not as simple or fast as a personal mortgage process and the documentation required can be much more in depth. But once you understand the eligibility and requirements you will be better able to make your decision about purchasing a commercial property.
Commercial real estate loans are secured by liens on the property that you are purchasing. The lien gives the lender the right to take the property from you if you do not make the payments that are outlined in your loan documents. This protects the lenders investment in the event that your business fails, the economy disrupts your business or any other issue that could cause you to default on the loan. But because commercial property value can fluctuate more than residential property, the lender requires that you make a large down payment on the property. This is a way of creating instant equity which is good for both you and the lender. It reduces the amount that you are borrowing and therefore reduces the amount of interest that you are going to pay. And it also helps the lender to know that if you default on your loan, then they have a better chance of recovering all of their investment even if the property value has dropped since you purchased it.
Commercial real estate loan terms are also a bit different. They are normally in two terms. The first is intermediate and is for three years or less and the long term is from 5 years to 20 years. There is also a balloon loan that is an option. In this case the loan payments are mostly just covering the interest and at the end of the term you owe a final payment that covers the balance of the loan. In most cases the payment is very large and the borrower is forced to refinance the loan to cover the final payment.
Know Your Interest Rate
Because a business’s financial stability is more tied to the economy than that of an individual, lending money to a business is, in general, considered to be more of a risk. For that reason, commercial loans tend to have a higher interest rate and additional fees that must be paid. Be sure that you are carefully examining all of the fees and interest that you are agreeing to pay before you sign the loan agreement.
Research Your Options for Lenders
Knowing about the commercial real estate loans process is only half of the research that you need to complete. You will also want to learn about all of your options for lenders. Commercial banks, credit unions, mortgage lenders and the Small Business Administration are all good options to explore when you are ready to apply for a commercial real estate loan.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Featured Post

Friday, November 3, 2017

Knowing these risks to my commercial property and commercial real estate loan, what is the best way to prepare myself?

Thursday, November 2, 2017

Are there ways to mitigate the risks associated with my commercial real estate loan and commercial property in Texas?

Sunday, October 15, 2017

When it comes to securing commercial real estate financing for your business, banks and lenders will typically want to see your credit score and report. That’s because they must determine the credit risk — before deciding whether or not to approve your loan application.

Even if you are considered a credit risk, you still have the ability to be eligible for a loan.

If you are rejected for a loan, don’t give up — you can still seek alternative lending options

Do you research before seeking out and applying for commercial real estate financing.

When you decide you are ready, consult the professionals.

Tuesday, October 10, 2017

Efforts by the Chinese government to slow down commercial real-estate loans on multifamily properties are doing little to curb demand.

Commercial real estate loans and lending practices are fundamentally different in China easing some fears about an impending crisis.

Commercial real estate loans used to finance the construction new apartments are have become essential to fueling Chinas growth.

Thursday, September 28, 2017

Privately held real estate investment firm gets help with commercial real estate loan in Texas

The commercial real estate loan in Texas lender is eager to see how the changes will improve the area’s value.

Sunday, September 24, 2017

Commercial real estate loans are not as easy to acquire as you might think. But using a few tips can insure that you get approved and get a great rate.

Prepare a Structure Diagram and Asset and Liability Statement

Hire a Professional

Most business owners are not very familiar with the process of getting commercial real estate loans. But these pieces of advice can help you to manage your expectations and succeed when you are ready to apply for a loan.

Start Small but Don’t Be Afraid to Go Big

Think Outside the Box

Understanding commercial real estate loans is the first step in deciding if you are ready to own a commercial property. Learning about the process will ensure that you know what to expect and how to prepare yourself and your business.

Know Your Interest Rate

Research Your Options for Lenders