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Sunday, October 1, 2017

What to Look Out for When Signing Commercial Real Estate Loans Texas

Signing commercial real estate loans Texas documents is an important step for your business. You need to be well prepared and be certain that you understand the document completely.

Borrowers are always told to read a document completely prior to signing it. But when signing documents for commercial real estate loans Texas, you might not have the time to read the entire document at the signing. And even if you had the time, you might not understand all of the technical and legal jargon. So you will want to be sure to request a copy of the document to review with your lawyer prior to the closing appointment to check out a few key pieces of information.

The first important information on the agreement is the loan payment agreement. This defines what is expected of you and includes provisions that protect both the lender and the borrower. This is where you will find the clauses about your payment schedule and if there is going to be a balloon payment due at the end of the loan term. These are basically all of the repayment terms that you are agreeing to for the money that you are borrowing.

Some commercial real estate loans Texas will also specify that you need to continue to provide the lender with financial information about the property and your business. This is to monitor the financial health of the borrower and ensure that payments will continue. There are also some commercial real estate loans Texas which will specify that you must maintain a certain debt to cash-flow ratio throughout the term of the loan. Additional covenants can stipulate asset sales, cash payouts and changes in the ownership of the business. These are all ways that the lender can ensure that the company remains solvent and that the business does not get too far in debt prior to paying off the loan.

Negotiate for Non- Recourse

One of the key stipulations in protecting your personal finances is negotiating a non-recourse covenant. This clause protects you in the event that your business fails and cannot repay the loan. If you have a non-recourse loan then the lender cannot force you to personally repay the loan. But if it is a recourse loan then you have personally guaranteed the loan and will need to find a way to repay it even if you close your business.

Check for Penalties

In the perfect world, your business will thrive and you will be able to accelerate your loan payments. This will allow you to pay the loan off early and save some of the interest that you would have paid the lender. But if your loan has an early pay off penalty, then you might be faced with paying extra fees. Some lenders will have a flat prepayment fee and others will charge a percentage of the interest that you would have paid. In most cases, you will still be saving some money, but you will want to be sure that you understand this potential penalty as well as all of the terms of the loan prior to attending the loan closing.

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 is Asset Based Commercial Lending Texas?

Asset based commercial lending Texas is growing in popularity. It is a newer alternative to the standard commercial real estate financing that has been in place for many decades.

The conventional commercial lending Texas process normally involves many steps. There is an analysis of the commercial property that must be completed to determine if it has the value to secure the loan. The borrowers must also provide a deposit to cover the loan processing and fees for discovery prior to being granting the loan. In addition, the borrower must submit a great deal of financial information to the lender to demonstrate their financial security and ability to repay the loan that they are requesting. And even though this does not look like a long list of tasks, the reality is that it can take six to twelve weeks for all of this to be completed. But asset based commercial lending Texas can offer a much shorter timeline.

Asset based commercial lending Texas can offer a shorter turnaround time because the lender is not looking as much at the value of the commercial property. In this case, the collateral is not the property being purchased but instead it is the company’s other assets such as accounts receivables, balance sheet assets such as inventory or equipment that is being used as the collateral. This eliminates a lot of the preparation time that a borrower devoted to preparing financial documents for a lender and also reduces the time that the lender must devote to evaluating the borrowers financial stability.

True Asset Based Lenders

In reality, a true asset based lender does not request any financial documentation from a borrower. And they are willing to accept any level of credit score or credit history that the borrower might have. What the lender does want to see is proof of ownership of the other assets that the borrower is using as collateral. In the case of inventory or equipment, the lender will want to be sure of the value of the items. This might require appraisals that the borrower will need to pay for. But the greatest benefit other than the lack of credit and financial information is the fast approval time. In many cases these loans can be processed in a fraction of the time that a conventional loan requires.

Who Are Asset Based Lenders

In many cases, an asset based lender is a private lender who is not restricted by federal lending regulations. This can work in the borrowers favor as the criteria to qualify can be much less strict. But it can also work against the borrower because the lender is not forced to comply with any interest guide lines. But if you need a commercial loan quickly or you have a questionable credit history, then asset based lenders are a great option. However, as with any loan from any lender, you will want to have the loan documents reviewed by your legal professional prior to signing them. This will ensure that you are in full agreement with all of the terms of the loan.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Reason to Get a Hard Money Commercial Mortgage Texas

You might be ready to give up on purchasing a commercial property if you have been turned down for a conventional loan. But the solution for many issues can be a hard money commercial mortgage Texas.

You could be feeling that you have no options left if you have been rejected for a conventional commercial mortgage Texas. But the truth is that there are a lot of good reason to look into a commercial hard money loan. It is true that you will be paying a higher interest rate than you would on a traditional commercial mortgage Texas, but it could be well worth it to solve a problem or avoid one altogether.

The most common reason that borrowers seek a hard money commercial mortgage Texas is because they have financial issues that won’t allow them to qualify for a traditional mortgage. You might not have enough income or assets to prove to a bank or lender that you will be able to make the payments. Or your business might be too new and not have a long enough credit history to qualify for a loan. If you already have commercial mortgages that are outstanding, then you could also be considered a high risk and a conventional lender will not offer a loan.

Or the property itself could be the issue. In the case of a more unique property it could be very hard to secure a loan which uses that property as collateral. The property could meet all of your needs but still might not convince a lender that it is a good risk as collateral. Another issue regarding the property could be that it has outstanding liens, judgements or other unpaid bills. If this is the case then most lenders are not going to want to carry that increased risk. If you are not able to pay the debt in cash then you will most likely not get a conventional mortgage for the property.

Avoiding a Huge Issue

If you already have a conventional commercial mortgage but are behind on the payments, then a hard money mortgage could be your only hope of avoiding foreclosure. If this is the case then paying a higher interest rate for the hard money loan to pay off the conventional loan is very wise. Not only will it help you to avoid losing the property but it will also help you to avoid ruining your credit. And even if the hard money loan is a short time frame, it allows you time to regroup and try to find a long term solution.

Know What You Are Getting Into

Not every problem has an easy solution. Paying a higher interest rate is never your first choice but it can be a way to avoid further issues and even the loss of your property and credit. Understanding the terms of a hard money loan and being willing to accept them can be a good idea. Just be sure that you have evaluated all of your options and that the hard money loan is the best short and long term solution that you have at your disposal.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

What You Need to Know About Commercial Loans Texas

If you are not familiar with commercial loans Texas then you might believe that they are similar to any personal loan that you applied for. But the short answer is that they are not.

The first and largest difference between commercial loans Texas and a residential mortgage loan is that it is not backed by a guarantor such as Fannie Mae. This means that commercial loans Texas represent a much greater risk for the lender. For that reason, commercial lenders are much more selective about who they are willing to lend money to. Interest rates are higher and down payments are also much larger and that is just the beginning of the differences.

Balloon payments used to be common in residential mortgages but they are not any more. However, they are quite common in commercial loans Texas. So you will make payments that would pay off a loan in 30 years but the term of the loan will only be 3, 5 or 10 years. The result is a large balloon payment that is due at the end of the term. Most businesses are not in a position to pay the balloon payment and must refinance the final amount and keep paying on the property. Another option is to select a higher interest rate in return for a longer payment term.

Down payments are also quite different in the commercial property world. Unlike the 10% required to secure a home loan, commercial mortgages often require 25% or more down. A big reason for the larger down payment is the greater risk involved in a commercial property loan. Values on commercial property tend to fluctuate more frequently than residential values. For that reason the lender want to be certain that there is instant equity in the commercial property which is the collateral for the loan.

Understand the Cost of Borrowing

Commercial lenders are in business to make money and they do that in many creative ways. You know that you will be paying interest on the loan amount but that is not all you will be paying. Some lenders will charge points to cover their administrative costs while others will break the fees down and charge you per line item. Some fees can include an application, fee which is normally nonrefundable even if you are not approved for the loan, a loan processing fee, appraisal fees and survey fees.

There can also be Penalties

As a borrower, we are trained to think in terms of saving money. This means that paying off a loan early is always a good thing. It is a way to save on the interest or finance costs of a loan. But commercial lenders are counting on a specific amount of interest, or earnings, from your loan. And they are not willing to let you avoid any of those costs. Many lenders will include a prepayment penalty in the terms of your loan. This can mean that you will pay a flat fee for the right to pay off the loan early or it could be a percentage of the interest that you avoided paying. In some cases the savings on the interest is greater than the fees but in other cases the fees will cost you more than the continued interest. Be sure that you understand all of the terms of any loan before you sign or you will be forced to adhere to them.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tips on Getting Commercial Loans Texas

Getting commercial loans Texas is not as simple as many business owners might think. There are many tips out there but the best all center on being prepared.

Commercial loans Texas are a necessary evil just as any debt is. Due to the overwhelming cost of a commercial property, it is unlikely that just about any business could afford to purchase property without some type of loan. It is a big step to take and one that you should carefully prepare for to ensure that you have the most success possible.

The biggest factor in your approval for commercial loans Texas is your creditworthiness. The lender is going to ask for many different documents to evaluate the financial health of your company and possibly even the personal financial condition of the owners. You will need to prepare a copy of your business plan, financial records including tax forms, bank statements and P & L statements as well as cash flow documentation. It is also important that all of the information be as current as possible. Having this packet of information prepared lets the lenders know that you have invested time and effort into the process and that you are serious about purchasing property.

You also need to be prepared from a financial standpoint. You will need to be in a position to pay certain fees associated with the loan and the down payment for the property. In most cases, a lender will only finance about 75% of the cost of the property so having that remaining balance available in cash is critical. You will also need to pay some fees such as a loan application fee, a loan processing fee or appraisal fees. You might also want to investigate getting your own independent appraisal done to have an unbiased estimate on the property value. Also be prepared to pay for environmental reports on the property. Most lenders now require these reports to ensure that the property is not contaminated.

Manage Your Time

A great deal on a commercial property usually means that the property will sell quickly. For that reason you will want to be sure to begin your application for commercial loans Texas as quickly as possible. It is well known that commercial lenders will greatly overestimate the speed at which they can process your application. They will quote you 45 days but in most cases it will drag out to over three months. Don’t let a great property get away while you are still completing application documents.

More Knowledge is Always Good

Understanding the process for applying and getting approved for a loan is critical to your success. Having a plan in place to meet the criteria and requests of the lender will make the process less stressful and can even decrease the time it takes to get approved. As with most things in the business world, you will get as much back as you invest in a project. So the time it takes to prepare documents, complete research and make a professional presentation is a good investment in your company’s future.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tips for Building a Relationship for Commercial Loans Texas

When you begin to think about applying for commercial loans Texas you should immediately begin to work on building some important relationships. Commercial lenders can provide you with more than just the loan that you are looking for.

There is a lot more to getting commercial loans Texas than simply completing the application for the loan. Commercial loans are much more complex and require more documentation and information than a residential mortgage. It is important to fully understand the process and the criteria for loan approval as well as having an understanding of your different options for lenders and their areas of expertise.

Start with some basic research of the banks in your area. The local and regional connection can often be a little bit of an advantage for commercial loans Texas as the lenders are more familiar with the area and have a vested interest in the local economy. Use the list of lenders that you have complied to make some brief phone calls to discuss what types of commercial loans Texas that the lender specializes in. You might also want to inquire about the industries that the lender works with on a regular basis and what special criteria that they require to qualify for a loan. All of this information will help you to know which lender will best meet your needs once you have selected a property and know the size of the loan that you will need.

As you begin to understand the process more and have refined your selections for a property, engage the lenders with questions. This is a good way to gauge who is interested in your business and will be eager and willing to work with you during the application process. You might find that only one or two lenders are willing to meet with you prior to being ready to submit your application. This is a good indication of who will be there to assist you during the application process and even before when you are working to make your property selection. The lender who wants to grow a relationship with you will offer advice and tips and become a very valuable free resource.

Be Honest From the Beginning

It is important that you are honest and tell the lenders that you are just in the planning stage. This will verify that they are really interested in a long term relationship and that they are willing to help you along the way. It also helps to prevent misunderstandings that could cause them to be less willing to work with you when you are ready to apply for the loan.

Commit to Full Disclosure

The more information that you are willing to provide to the lenders the more they can assist you. If you have had credit challenges then tell them so that they can offer helpful information and suggestions. Let them get to know you, your business and your industry so that they can provide you with the most accurate information available.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tips for Success in Commercial Real Estate Loans Texas

There is more to the gravity of commercial real estate loans Texas than just the dollar amount. Using a few tips can help you to be more prepared and more successful when submitting a loan application.

Preparation will have a huge impact on the success or failure of an application for commercial real estate loans Texas. There are a lot of important factors that you will need to prove to the lender to be approved. The first is that you have a well-documented and stable cash flow. This is going to assure the lender that you have and will continue to have the means to make the loan payments. In addition, you will need to provide documents showing your assets and liabilities, and previous tax information for several years. This is going to speak to the longevity of the business as well as its financial stability and ability to weather a variety of economic conditions.

Even if you have a great relationship with your current bank, you will want to broaden your search for lenders for commercial real estate loans Texas. Knowing a banker is always helpful but in the case of commercial real estate loans Texas, it could be more important to select a lender who is better suited to your commercial needs. If you are looking for a small to medium sized loan but you are currently using a large national bank, then they might not be the best choice for a commercial loan. And likewise, if you are banking with a local or regional bank but need a very substantial commercial loan then they might not be able to meet your needs for the loan. Matching the lender to your specific request can take some time but the effort will pay dividends in the speed of processing and the overall quality of the customer service experience.

Understand the Risk a Commercial Loan Represents

There are many reason that a commercial loan is more risky for the lender. Understanding those risks and how it will impact your loan terms is important. First, commercial property values can fluctuate more and more rapidly than residential property values. For that reason, the lender will insist that the buyer make a larger down payment. This creates instant equity and ensures that the property, the collateral on the loan, will always have a value greater than the loan balance. Second, businesses are more susceptible to economic trends than consumers so lenders want to know that commercial borrowers are fully vested in the property due to the large down payment. And because the loan is a greater risk, the lender is going to charge a commercial borrower a higher interest rate. So even with very good credit, you will pay higher interest on a commercial mortgage than you would on a residential mortgage.

Complete Your Due Diligence

Before you decide to purchase a commercial property it is important that you learn about the commercial lending process, the criteria for loan qualification and the terms specific to commercial mortgages. In addition you will need to research the commercial real estate in your area to learn about what is available and the current market trends. All of this information will help you to make a good financial decision.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Guide to a Commercial Mortgage Texas

When you are considering a commercial property purchase, you also need to consider your options for a commercial mortgage Texas. Knowing the requirements and the process can be a great help in selecting the best lender to work with.

As you begin to explore the world of the commercial mortgage Texas, you might be overwhelmed with the sheer volume of information and the options. You can do the research and educate yourself or seek the assistance of a broker. But even when relying on a professional, you need to have a basic grasp of the requirements to qualify and the process that you will need to follow.

Most lenders are going to require a lot of the same information when you apply for a commercial mortgage Texas. It is wise to begin early and have your information packet completed prior to starting the application process. You will need to provide audited accounts for the past two years, a profit and loss projection for the upcoming two years, a list of the owners of the business for credit verification purposes, asset and liability statements for the owners, a copy of the business plan, credit status for the business and growth projections for the company. Having this information current and in a presentation format will make the application process for a commercial mortgage Texas much less daunting.

The term of a commercial mortgage loan is normally shorter than a residential mortgage term. In most cases they will not extend beyond 20 years. In addition, the interest rates will be higher due to the increased risk to the lender. You can control the interest rate a bit by making a larger down payment to increase the instant equity in the property. This reduces the risk that the lender is facing in the event that you default on the loan. The property is much more likely to have a value in excess of the mortgage balance and the lender would be able to more easily sell the property to recover their invested funds.

Understanding the Fee Structure

It is critical that you understand the fee structure on any mortgage that you are considering. This is the most important information that you will use to compare the mortgages and select the one that best suits your needs. You can expect to pay between .5% and 1.5% in administrative fees for the loan. These can be called out as flat cost application fees, processing fees or simply added in as an administrative percentage. In addition there will be legal fees for document creation and review, insurance and surveys for the property. And finally there might be fees for early pay off on the mortgage. Commercial lenders are making money from the interest that they charge and are not willing to forego that money if the borrower pays the loan off early.

Complete Your Due Diligence

As with any large commitment, you need to invest your time in learning the process and learning about your options before commencing. This will include learning about lenders, brokers and the commercial real estate market in your area. With a strong foundation of knowledge you will be able to make wise financial decisions about purchasing a commercial property.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Facts to Know Before Applying for a Commercial Mortgage Texas

Purchasing a commercial property is a more lengthy process than making a residential property purchase. Understanding a few facts about a commercial mortgage Texas will help you to be more successful when submitting your applications.

When you are applying for a commercial mortgage Texas from a conventional bank, you will likely be working with the commercial branch of the lender. This means that you will be working with higher interest rates and more restrictive conditions and qualifications than the residential side offers. This is due to the increase risk that a commercial mortgage Texas represents for the lender. This risk is due in part to the volatility of commercial property values and also in part to the connection between economic conditions and a business’s potential for success.

You will also learn very quickly that a commercial mortgage Texas offers a lower loan to value ratio. This means that you are only able to borrow around 70% of the actual value of the property. So you will need to have the cash available to make the more substantial down payment. The reason for this large down payment circles back to the volatility of the commercial property values. Because the loan is secured by the property that you are purchasing, it is the collateral, the lender wants to be sure that there is instant equity in the property. This is the final safety net for the lender in the event that you default on the loan the lender is forced to sell the property to recover their money.

You will also discover that commercial loan terms are much shorter than residential mortgage loan terms. A typical home can be financed for 30 years but most commercial property loans are written for a term or 15 to 20 years. With these shorter terms it is very critical that your business be able to demonstrate steady cash flow and the continued ability to make the payments on the loan.

There Are Many Costs to Pay

As a residential borrower, you are familiar with the cost of the interest on the loan and the points that you might have paid at closing. But a commercial property mortgage can have a lot more fees. And some of those fees might be due upfront or hidden deep within the loan document. Be ready to pay a loan application fee, a loan processing fee, survey costs, appraisal fees and even environmental testing to ensure that the property is not contaminated. Because the process is much more intricate than a residential loan processing, there are many more administrative and legal fees that are involved. And as you might expect, the lender is going to pass all of those costs on to you, the borrower.

Knowledge is Critical

Undertaking your first commercial property loan application can be intimidating. But taking the time to learn the terminology, the process and the qualifications for a commercial loan will help you to understand why the long process is necessary. It can also help you to tailor your application to meet the specific interests and needs of each lender that you might choose to work with.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Featured Post

Sunday, October 1, 2017

Signing commercial real estate loans Texas documents is an important step for your business. You need to be well prepared and be certain that you understand the document completely.

Negotiate for Non- Recourse

Check for Penalties

Asset based commercial lending Texas is growing in popularity. It is a newer alternative to the standard commercial real estate financing that has been in place for many decades.

True Asset Based Lenders

Who Are Asset Based Lenders

You might be ready to give up on purchasing a commercial property if you have been turned down for a conventional loan. But the solution for many issues can be a hard money commercial mortgage Texas.

Avoiding a Huge Issue

Know What You Are Getting Into

If you are not familiar with commercial loans Texas then you might believe that they are similar to any personal loan that you applied for. But the short answer is that they are not.

Understand the Cost of Borrowing

There can also be Penalties

Getting commercial loans Texas is not as simple as many business owners might think. There are many tips out there but the best all center on being prepared.

Manage Your Time

More Knowledge is Always Good

When you begin to think about applying for commercial loans Texas you should immediately begin to work on building some important relationships. Commercial lenders can provide you with more than just the loan that you are looking for.

Be Honest From the Beginning

Commit to Full Disclosure

There is more to the gravity of commercial real estate loans Texas than just the dollar amount. Using a few tips can help you to be more prepared and more successful when submitting a loan application.

Understand the Risk a Commercial Loan Represents

Complete Your Due Diligence

When you are considering a commercial property purchase, you also need to consider your options for a commercial mortgage Texas. Knowing the requirements and the process can be a great help in selecting the best lender to work with.

Understanding the Fee Structure

Complete Your Due Diligence

Purchasing a commercial property is a more lengthy process than making a residential property purchase. Understanding a few facts about a commercial mortgage Texas will help you to be more successful when submitting your applications.

There Are Many Costs to Pay

Knowledge is Critical