Learn To Be A Fix & Flip Investor

Thursday, February 2, 2017

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

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

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

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

What A Small-Balance Commercial Lender Can Do For You

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

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

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

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

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

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

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

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

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

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

Technorati Tags: Commercial lenders,commercial lenders,commercial loans,commercial lending

Why Commercial Bridge Loans Can Be Dangerous To A Borrower

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

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

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

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

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

Pitfalls Of A Commercial Bridge Loan

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

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

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

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

A Commercial Bridge Loan May Not Be Right For You

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

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

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

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

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

Benefits of working with a Commercial Lender

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

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

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

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

A Helping Hand from Commercial Lenders

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

Advice for Getting the Most out of your Commerical Loan Deal

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

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

Atlantic City In Need Of A Good Commercial Bridge Loan

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Wednesday, February 1, 2017

Shopping Malls Could Certainly Use A Helping Hand With Their Commercial Loans

As online shopping becomes more and more prominent, shopping malls around the country are finding it harder to stay in business. With billions in commercial mortgage loans about to mature it would not be shocking to see the traditional shopping mall’s decline continue.

There was a very good reason why 1980s pop star Tiffany appeared in shopping malls early on in her career. Her album wasn’t selling so the 16-year old artist needed to do something to spark interest and boost sales. So she went to where her audience would be and performed—the local shopping mall.

Everyone likes a free concert, so people stopped, listened, and then went to the record store to buy her CD.

If a future pop star were to try the same strategy, they would likely not have the same success that Tiffany did. It would have nothing to do with talent. With the rising popularity of online shopping, the local malls are not filled with people most of the time (outside of the Holliday Season, that is).

The American shopping mall is dying. If that sad fact wasn’t enough to depress investors, billions in commercial mortgage are set to mature over the next 18 months. With occupancy declining, it will not be surprising if many have trouble paying them off.

Lenders Eager To Loan Approved About $47.5 Billion In Commercial Mortgage A Decade Ago

At the time, the lenders thought they were getting involved in something that was guaranteed to make money. Americans love to shop and loved to do so at their local shopping malls. So approving a commercial mortgage for a future shopping mall probably seemed like a safe bet.

But as online shopping became easier, more convenient, and affordable, people started going to shopping malls less and less. Why leave the comfort of home if you don’t have to?

Over the years, more people opted to shop from the comfort of home putting the future of the shopping mall in danger—and the loans that backed them.

Some Shopping Malls Already Defaulting On Commercial Mortgage

The Lakeside Mall in suburban Detroit is anchored by stores like Sears, Kay Jewelers, and Bath & Body Works, but when it came time for the property owners, General Growth Properties, to make their monthly payment they didn’t make it.

If there was ever a sign of potential trouble for the commercial mortgage industry it would be the second-largest mall owner in the country—General Growth Properties-- defaulting on a loan. Over the next year and a half, there are $47.5 billion in loans that are set to mature. Extensions may help some and refinancing may be possible for others, but with purse strings tightening there will be some that may have to face the cold, hard truth about their business.

Two large chains that can be commonly found in malls, Aeropostale Inc., and Sports Authority Inc., have filed for bankruptcy. It would not be shocking to see others follow suit in the near future.

Technorati Tags: commercial real estate loan,commercial lending,commercial loans

How to Evaluate Commercial Lenders

Learning how to evaluate commercial lenders is very much like evaluating any other kind of lender—you need to compare and contrast lenders that work for you and your needs. But, for many individuals, this process is easier said than done, so let us review some of the basics of conducting a lender search.

Commercial lenders, clearly, are their own niche but that does not mean you have done everything you need to in order to find your niche or market. Thus, the very thing you should when searching for commercial lenders is to tailor your search to your particular niche or market. In doing so, you will then be able to evaluate the different lenders and programs that they offer.

Similarly, just as you are coming up with a list of criteria for your perfect lender, the same is true for a pool of lenders. Thus, you should make it a point to find out what your top five lenders are expecting from you i.e. their criteria. Ultimately, this will help you determine what lender is best for you and what you are bringing to the table.

However, if finding a lender were as simple as knowing your niche and finding lender criteria that you can meet, there would be nothing left to say. Well, clearly that is not the case. The reality is your search and your evaluation process are really never complete. Nevertheless, at some point in your search, you have to feel comfortable with who you are choosing to work with for the foreseeable future. Of course, at this point, you may be wondering just how you are ever going to feel comfortable with one lender in particular? Well, the good news is that there are few more tips to discuss that will more than likely make all the difference.

How to get Comfortable with your Commercial Lender

After you have found a lender that meets your niche or particular commercial market and you have come to terms with their standard criteria, there is no need to pull the trigger just yet. Unsurprisingly, once you have your eyes set on a particular lender for commercial financing, the next thing you should is more research. This means looking for BBB ratings, speaking with business owners your potential lender has worked with in the past, evaluating their level of stability when it comes capital and much more. Lastly, you can learn about your potential lender’s repayment terms before moving forward with them. By learning as much as you can about your future lender, you will definitely feel more at ease when you do finally start the commercial lending process.

Suggestions and Advice from a Commercial Lenders

In the end, your lender search boils down to how prepared you are and how much research you are willing to do. Therefore, you should make it a point to set aside some time to get organized as well as some time to do extensive research. Remember, commercial financing is not just another route to take; it is a very diverse financing option that can affect your business for years to come.