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Our goal is to educate you on all the exciting facets of Commercial Finance. With over 25 years of experience we have a lot to teach you over the next couple of months. If you want to join our growing company we are always looking for new team members.

Sunday, May 11, 2008

Daily Observations - Commercial Words of Wisdom

No such thing as 100% financing ; If you have scores below 600, expect much higher rates

If you want a construction loan, you will need at least 30-35% of total project cost. If you don’t have that kind of equity you’re looking at too expensive of a project. High leverage construction loans are only available if you have high net worth, (whcih should now be liquid or easily covertible to cash) and are an experienced developer.

Lenders order the appraisal. The typical turnaround is 2-3 weeks.

Time to close on Purchase contracts cannot be quick. If they’re quick, you will want to request an extension and make sure everybody is on the same page. Deals blow up because sellers will not extend contracts, and buyers assume they will.

Commercial loans generally take 45-90 days.

When talking about LTV, just because guidelines say 80%, doesn’t mean the lender will lend 80%. Every deal is based on the cash flows (net income) of the property. so if the property cash flow cannot support an 80% loan you will not get an 80% loan, you will only get the maximum loan that can be supported by the cash flow to cover the debt service.

For more words of wisdom check out our Knowledgebase with over 50 pages of information.

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