Today more than ever there is no lender in the market place lending 100% of the purchase price. There are rumors in the economic arena that SBA will lend 100% for professional degreed individuals, such as doctors, lawyers for their practice.
This also is not true, the way some lenders get to the 100% is that they lend them money for their furniture fixtures and equipment plus the real estate and they theoretically get 100% of the Real Estate because they borrow 90% of the entire project which in many circumstance's is greater than 100% of the property value, but they still bring to the closing table 10% of the entire project. So if they think that is 100% financing so be it, we know better.
Today I had a potential client call and tell me they were buying a coffee house/restaurant after questioning them I found out they they had zero money to put down. Why would a Realtor not pre-qualify this client and not waste everyone time.
The only way that this deal could happen is with a gift letter. A gift letter is acceptable down=payment and is used where eh actual borrower does not have the money for the down payment but a family member is willing to give them the money. Other than seller carry back for the entire purchase price EVERYONE needs money fora down payment.
For further information on SBA Eligibility Requirements continue to read this blog every night.
Thursday, May 29, 2008
Daily Observation - Banks Love Us
A quick blog this evening to let you know that you are the banks best friend.
The reason is that you can solve their problems, Most bankers immediately say to their bank clients that they can finance their deal, they do not want to tell them otherwise or else they will pull their accounts. So the client then waits for the Loan Approval that the banker told would most likely occur, but instead the people in the ivory towers, ie Underwriters/Loan Committee don't have the relationship with the client and look at the merits of the deal not the relationship that may have been built over the past ten years.
Low and behold the Ivory Tower individuals turn down the loan...
What's the banker to do, tell his client that the deal was turned down or tell the client that he will personally find a way to help him. (Hint) Here's where we come in.
We save the client banking relationship for the banker and we now use our resources to not only go to one institution but to go to a myriad of them to get the deal closed.
Read this message over again, and you will see the logic and the nuances.
To see what we can provide your client find out What Makes Us Different.
The reason is that you can solve their problems, Most bankers immediately say to their bank clients that they can finance their deal, they do not want to tell them otherwise or else they will pull their accounts. So the client then waits for the Loan Approval that the banker told would most likely occur, but instead the people in the ivory towers, ie Underwriters/Loan Committee don't have the relationship with the client and look at the merits of the deal not the relationship that may have been built over the past ten years.
Low and behold the Ivory Tower individuals turn down the loan...
What's the banker to do, tell his client that the deal was turned down or tell the client that he will personally find a way to help him. (Hint) Here's where we come in.
We save the client banking relationship for the banker and we now use our resources to not only go to one institution but to go to a myriad of them to get the deal closed.
Read this message over again, and you will see the logic and the nuances.
To see what we can provide your client find out What Makes Us Different.
Tuesday, May 27, 2008
Daily Observations - Experience
As the market for lenders get slimmer and slimmer another deterrent has been thrown in our midst. Lenders for non-SBA are now also requiring ample experience in the project they are planning to develop or purchase.
Yesterday a good cash flowing project was enough, then they added outside collateral and today we here that the experience of the management team is not enough to suffice to get a loan approved but that the owners of the project have to have the direct experience.
The lenders are using every excuse they can find to not do a deal.
Saying that there are deals that are getting done they are the cream of the crop but they are closing. So wrap your arms around a good project with the right cash flow, lots of experience and collateral and the deal will get done.
But seriously speaking not all projects are this difficult to get financed, just be aware that the more positives that the project/owners have going for them the more likelihood that you will find a lender today that wants to fund the deal.
Remember lenders only make money when they lend.
Understanding the lenders Underwriting Requirement for different investment types is crucial in today's market.
Yesterday a good cash flowing project was enough, then they added outside collateral and today we here that the experience of the management team is not enough to suffice to get a loan approved but that the owners of the project have to have the direct experience.
The lenders are using every excuse they can find to not do a deal.
Saying that there are deals that are getting done they are the cream of the crop but they are closing. So wrap your arms around a good project with the right cash flow, lots of experience and collateral and the deal will get done.
But seriously speaking not all projects are this difficult to get financed, just be aware that the more positives that the project/owners have going for them the more likelihood that you will find a lender today that wants to fund the deal.
Remember lenders only make money when they lend.
Understanding the lenders Underwriting Requirement for different investment types is crucial in today's market.
Daily Observation - Cash Flow
Cash Flow is the watch word for the lenders these days, if a project is cash flowing and the property appraises then the lenders are getting the deals closed.
However when yo are determining cash flow for your prospective client speak to the lender first, find out what expenses the subtract from the gross income to determine Debt Service Coverage Ratio . Each lender will calculate this important ratio very differently based on their experience with the locale as well as the type of property loan being requested.
TILC as well as management fees are GOING to be higher than the current sellers cash flow that your client will be basing their Return on Investment on.
Oh by the way TILC is Tenant Improvement and Leasing Cost.
However when yo are determining cash flow for your prospective client speak to the lender first, find out what expenses the subtract from the gross income to determine Debt Service Coverage Ratio . Each lender will calculate this important ratio very differently based on their experience with the locale as well as the type of property loan being requested.
TILC as well as management fees are GOING to be higher than the current sellers cash flow that your client will be basing their Return on Investment on.
Oh by the way TILC is Tenant Improvement and Leasing Cost.
Thursday, May 22, 2008
Daily Observation - Understand Your Lenders Signing Limit
I want to share an observation that came to me today. As we are presenting more and more loans to banks and underwriting one of the questions I am now asking is "What is the lenders credit approval limit,
At first you may think that this question is obvious, but upon further investigation you will hopefully see why I think this is so important.
Every underwriter has a limit of what they can approve, each time you ask for more money you have to go to the next level of approval. For example a loan of 500K may only take a local signature while a loan of 1.5K may take three signatures, one of which is out of the area, and has no idea of the local conditions,
Let me be more specific. we have one loan that is about 1.2K, I found out that if I keep the loan under 1.2K we could have approval at the local level. The more we ask for the more people that have to approve the loan. So be aware of the signers limit, and try not to exceed it, when you have the opportunity to control the loan amount,
Visit us to see What Makes Us Different
Personally, I want to have everything going in my corner when I'm fighting for my client.
At first you may think that this question is obvious, but upon further investigation you will hopefully see why I think this is so important.
Every underwriter has a limit of what they can approve, each time you ask for more money you have to go to the next level of approval. For example a loan of 500K may only take a local signature while a loan of 1.5K may take three signatures, one of which is out of the area, and has no idea of the local conditions,
Let me be more specific. we have one loan that is about 1.2K, I found out that if I keep the loan under 1.2K we could have approval at the local level. The more we ask for the more people that have to approve the loan. So be aware of the signers limit, and try not to exceed it, when you have the opportunity to control the loan amount,
Visit us to see What Makes Us Different
Personally, I want to have everything going in my corner when I'm fighting for my client.
Wednesday, May 21, 2008
Daily Observations - Credit Scores
If there is anything that can help you or hurt you its your credit score. No matter what type of loan you are going after, your credit score will definitely be a determining factor as to whether you get the loan, and or how much its going to cost you.
Its sad but true the people that have the hardest time paying their credit card bills are the borrowers that get penalized the most when it comes to cost of new credit. Common sense would say the opposite. But who says banks apply common sense.
I guess its the old adage only get a loan when you don't need the loan, so that when you need the money its there.
Back to your score. It should be over 650 for an SBA loan, and at least a 625 for a commercial loan. Now just because your credit is higher does not mean that you are guaranteed a loan In commercial unlike residential it all comes down to the cash flow of the project,
So before you spend your hard earned dollars on any investment make sure it cash flows. For a FREE No Obligation Professional Loan Analysis
Its sad but true the people that have the hardest time paying their credit card bills are the borrowers that get penalized the most when it comes to cost of new credit. Common sense would say the opposite. But who says banks apply common sense.
I guess its the old adage only get a loan when you don't need the loan, so that when you need the money its there.
Back to your score. It should be over 650 for an SBA loan, and at least a 625 for a commercial loan. Now just because your credit is higher does not mean that you are guaranteed a loan In commercial unlike residential it all comes down to the cash flow of the project,
So before you spend your hard earned dollars on any investment make sure it cash flows. For a FREE No Obligation Professional Loan Analysis
Daily Observations - The Clients Bank
To successfully close transactions you must start to look for lenders that are cash flow oriented and not collateral oriented.
More and More of the lenders as I have reported for the last couple of weeks are looking only towards collateral, and they are passing on good deals. Deals that are amply cash flowing. Lenders are running scared, and do not want to be at risk at all, but the problem as I have mentioned before is that they wont' lend at all.
The only deals that are getting done are with lenders that have previous experience with a client. So if you run into a deal first find out who they are banking with, and try to work with that institution FIRST. The client will still work and pay for your servieces if you get the loan closed. They have the relationship with the bank, but its you that packages the deal, presents the deal ad moves the deal forward,
So today think about the deals that have stalled and approach their existing lender with a new twist.
For more information on the types of loans we secure visit our website at www.loanforbiz.com.
More and More of the lenders as I have reported for the last couple of weeks are looking only towards collateral, and they are passing on good deals. Deals that are amply cash flowing. Lenders are running scared, and do not want to be at risk at all, but the problem as I have mentioned before is that they wont' lend at all.
The only deals that are getting done are with lenders that have previous experience with a client. So if you run into a deal first find out who they are banking with, and try to work with that institution FIRST. The client will still work and pay for your servieces if you get the loan closed. They have the relationship with the bank, but its you that packages the deal, presents the deal ad moves the deal forward,
So today think about the deals that have stalled and approach their existing lender with a new twist.
For more information on the types of loans we secure visit our website at www.loanforbiz.com.
Tuesday, May 20, 2008
Daily Observations - Banks are Moving Cautiously
While talking to one of my favorite BDO's which stands for Business Development Officers she or he let me in one a secret today.
Shush! Banks are low on liquidity and reserves are now higher which mean that the bank has less of their own capital to lend, which ultimately means that the bank needs to borrow more from the FED. The difference in the borrowing rate of the FED and the cost to lend their money to borrowers is not enough of a spread for the banks to go to the FED to borrow.
Therefore many of the smaller community banks are being more and more restrictive of the loans they will book because they have to borrow the funds to raise capital to close the loans.
She/He did tell me that they felt as though this would be short lived and then banks will be freeing up their reserves within quarter or two.
In the meantime get the best and strongest deals you have to the local banks, they have to do something with their money and they are cherry picking, so why not let them cherry pick your deal. Borrowers need you now more than ever. The Financial Broker is critical in this day, You must become the CFO of every deal you work on.
You wear the Green Hat!
For more on the Role of the Financial Broker click here
Shush! Banks are low on liquidity and reserves are now higher which mean that the bank has less of their own capital to lend, which ultimately means that the bank needs to borrow more from the FED. The difference in the borrowing rate of the FED and the cost to lend their money to borrowers is not enough of a spread for the banks to go to the FED to borrow.
Therefore many of the smaller community banks are being more and more restrictive of the loans they will book because they have to borrow the funds to raise capital to close the loans.
She/He did tell me that they felt as though this would be short lived and then banks will be freeing up their reserves within quarter or two.
In the meantime get the best and strongest deals you have to the local banks, they have to do something with their money and they are cherry picking, so why not let them cherry pick your deal. Borrowers need you now more than ever. The Financial Broker is critical in this day, You must become the CFO of every deal you work on.
You wear the Green Hat!
For more on the Role of the Financial Broker click here
Sunday, May 18, 2008
Daily Observation - M-Team Website
M-Team moves ahead!
Adele and I spent the entire day yesterday planning a new M-Team Website for you.
Over the next several months, we will be offering MP3's Books that I've written, training manuals etc.
We expect to unveil the new website within a month. The working name is LearnBusinessLoans.com, what's your thoughts...
My first book which will be sold for $47.00 special price for M-Team members regularly $77.00 is called GET Your Loan Closed which I expect to have finished within the next two months. You will be receiving FREE white reports every three days after I have them completed.
I expect to have the White Reports on 10 Secrets your underwriter does not want you to know done within the next thirty days. 4/10 are written.
Get names of people that you believe would be interested in receiving the FREE White reports
I will be offering a commission back to you from anyone outside of the M-Team who purchases my first book.
So to save thirty dollars get them to join the M-Team!
Adele and I spent the entire day yesterday planning a new M-Team Website for you.
Over the next several months, we will be offering MP3's Books that I've written, training manuals etc.
We expect to unveil the new website within a month. The working name is LearnBusinessLoans.com, what's your thoughts...
My first book which will be sold for $47.00 special price for M-Team members regularly $77.00 is called GET Your Loan Closed which I expect to have finished within the next two months. You will be receiving FREE white reports every three days after I have them completed.
I expect to have the White Reports on 10 Secrets your underwriter does not want you to know done within the next thirty days. 4/10 are written.
Get names of people that you believe would be interested in receiving the FREE White reports
I will be offering a commission back to you from anyone outside of the M-Team who purchases my first book.
So to save thirty dollars get them to join the M-Team!
Saturday, May 17, 2008
RSS Feed Right Ttime of the Day
Blog Feed comes out once a day only between 11:00 AM and 1:00 PM PST!
Friday, May 16, 2008
Daily Observations - Residential Appraisals
Before you recommend any client get an appraiser find out if the deal will really get done.
We don't talk about residential loans at all, but yesterday I happened to have lunch with a friend of the family who has been a residential appraiser for many years.
He said to me the saddest thing he is doing day in and day out for the last couple of months is appraising residential homes and he knows that their loan will not close. People are grasping at any possibility and they are paying for that glimmer of hope.
Sad but true the lenders and I am talking residential now are giving false hope to the clients. Loans are now the only way out of bad residential scenarios, and most of them are not closing.
So before a residential mortgage broker recommends a client to pay for an appraiser please find out if their loan has a REAL possibility to close.
There will not be any links tonight for continued stories as we only talked about residential and as you are aware we are not residential lenders.
We don't talk about residential loans at all, but yesterday I happened to have lunch with a friend of the family who has been a residential appraiser for many years.
He said to me the saddest thing he is doing day in and day out for the last couple of months is appraising residential homes and he knows that their loan will not close. People are grasping at any possibility and they are paying for that glimmer of hope.
Sad but true the lenders and I am talking residential now are giving false hope to the clients. Loans are now the only way out of bad residential scenarios, and most of them are not closing.
So before a residential mortgage broker recommends a client to pay for an appraiser please find out if their loan has a REAL possibility to close.
There will not be any links tonight for continued stories as we only talked about residential and as you are aware we are not residential lenders.
Thursday, May 15, 2008
Daily Observation - Lenders are REALLY Tightening Up
Be prepared to buckle down and find the cream of the crop for deals to be approved. No more 75% secured collateral, every lender I speak to wants 90% or better secured.
Don't let this scare you, but also don't waste your time on deals that will never close.
There is still a plethora of deals that can and will close. We will have three closings by the end of this month.
Because collateral is so important to the deals going forward today I am sharing a spreadsheet that looks at what collateral is worth in the eyes of the bank, not in the eyes of the client. After reviewing this you will see why I recommend to go after manufacturing as a GREAT source of business.
Liquidation
Collateral Type Factor
Borrower Occupied Residential 80%
Rental Residential/Apartments 80%
Conforming Commercial (Multi-use) 80%
Non-conforming Commercial (Multi-use) 80%
Non-conforming Commercial (Single-use) 80%
Vacation Home 80%
Undeveloped Land 50%
New Equipment Up to 50%
Used Equipment, A/R, Inventory, etc. Up to 20%
For more on Business loans and their requirements visit Business Loans
Don't let this scare you, but also don't waste your time on deals that will never close.
There is still a plethora of deals that can and will close. We will have three closings by the end of this month.
Because collateral is so important to the deals going forward today I am sharing a spreadsheet that looks at what collateral is worth in the eyes of the bank, not in the eyes of the client. After reviewing this you will see why I recommend to go after manufacturing as a GREAT source of business.
Liquidation
Collateral Type Factor
Borrower Occupied Residential 80%
Rental Residential/Apartments 80%
Conforming Commercial (Multi-use) 80%
Non-conforming Commercial (Multi-use) 80%
Non-conforming Commercial (Single-use) 80%
Vacation Home 80%
Undeveloped Land 50%
New Equipment Up to 50%
Used Equipment, A/R, Inventory, etc. Up to 20%
For more on Business loans and their requirements visit Business Loans
Wednesday, May 14, 2008
Daily Observation - Seller Financing
During my coaching call today with one of the M-Team members we discussed the importance of Seller Carrybacks in Small Business Loans. I stressed that every deal going forward should have some component of a Seller Carry Back for the following reasons.
1. It helps the borrower with his down payment cash requirements.
2. It gives the bank a comfort level knowing that the seller is still involved in the business.
3. It gives the buyer/borrower a comfort level knowing that the seller still has a financial stake in the sold business which benefits the buyer, note payer, that the seller will offer additional training, coaching, etc.
Seller Financing is a win win, and should always be encouraged.
For more details on Seller Carrybacks click here Seller Carry Back Notes
1. It helps the borrower with his down payment cash requirements.
2. It gives the bank a comfort level knowing that the seller is still involved in the business.
3. It gives the buyer/borrower a comfort level knowing that the seller still has a financial stake in the sold business which benefits the buyer, note payer, that the seller will offer additional training, coaching, etc.
Seller Financing is a win win, and should always be encouraged.
For more details on Seller Carrybacks click here Seller Carry Back Notes
Tuesday, May 13, 2008
Daily Observations - SBA the "BEST" Loan
Why such a sweeping statement?
The answer is with Prime as the Index, and Prime Dropping consistently for the last year, and prime dropping so quickly Borrowers with SBA Loans have benefit ted by the substantial savings over conventional loans which have not moved nearly as quickly.
Secondly, where else can you borrow 90% and get a loan today, with no other collateral needed other than the subject property (providing it appraises at the purchase contract price).
Thirdly, where else can you get a long term rate other than a very expensive Commercial loan that will require at least 25 to 30% down.
Fore more essential fact and eligibility visit SBA Eligibility Requirements
The answer is with Prime as the Index, and Prime Dropping consistently for the last year, and prime dropping so quickly Borrowers with SBA Loans have benefit ted by the substantial savings over conventional loans which have not moved nearly as quickly.
Secondly, where else can you borrow 90% and get a loan today, with no other collateral needed other than the subject property (providing it appraises at the purchase contract price).
Thirdly, where else can you get a long term rate other than a very expensive Commercial loan that will require at least 25 to 30% down.
Fore more essential fact and eligibility visit SBA Eligibility Requirements
Monday, May 12, 2008
SBA FAQ's
Continuing with the theme from today's conference call I am posting the beginning of the article that I recently wrote that is continued on the website, Its all about using SBA Financing for the purchase of a business.
Recently, a prospective client asked about financing an upcoming business acquisition. I immediately asked whether the business opportunity also came with real estate or if it was the purchase of a business consisting only of furniture, fixtures and equipment, a work-in-progress and the client list. He said that it was a business acquisition with two five-year lease options.
The scene was set for a typical U.S. Small Business Administration (SBA) 7(a) loan. "Typical" is probably not the best word, however, because each 7(a) loan is different. The only similarities between the range of 7(a) products are that they are SBA-guaranteed and that they are required to be collateralized as much as possible.
Most businesses that are sold for less than $2 million are situated in a leased facility and sold without the real estate. The 7(a) is the only SBA program that allows for the purchase of a business without the accompanying real estate. The SBA does require that the business have a lease agreement in place for the length of the loan term, however, or at the very least, additional option periods to cover the term.
To read the entire article click here Common SBA 7a Questions
Recently, a prospective client asked about financing an upcoming business acquisition. I immediately asked whether the business opportunity also came with real estate or if it was the purchase of a business consisting only of furniture, fixtures and equipment, a work-in-progress and the client list. He said that it was a business acquisition with two five-year lease options.
The scene was set for a typical U.S. Small Business Administration (SBA) 7(a) loan. "Typical" is probably not the best word, however, because each 7(a) loan is different. The only similarities between the range of 7(a) products are that they are SBA-guaranteed and that they are required to be collateralized as much as possible.
Most businesses that are sold for less than $2 million are situated in a leased facility and sold without the real estate. The 7(a) is the only SBA program that allows for the purchase of a business without the accompanying real estate. The SBA does require that the business have a lease agreement in place for the length of the loan term, however, or at the very least, additional option periods to cover the term.
To read the entire article click here Common SBA 7a Questions
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.
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.
Thursday, May 8, 2008
Daily Observations - Scams?
It seems as though all the mortgage brokers that rode the wave of the 2000's are now leaving or have left the industry. They are now experts in Reverse Mortgages, Credit Repair, Debt consolidation or professing a new alternative to bank financing.
Let me start off and say that not all of the brokers who are professing their expertise are experts in their new chosen profession. However, I do know many a broker who has left the industry and has been extremely trained for their new calling and this blog is not about them, its about the inscrutable personage we keep running into.
Everyone now has a new alternative to bank financing whether its through the use of bonds, standby Letters of Credit, Leveraging of stock portfolios, trade programs, or even network marketing of loan proceeds. They all sound like they are the answer to every one's wish for credit in the commercial markets. Oh I forgot offshore accounts as well and 100% equity partnerships.
I'm here to tell you don't lose sight of commonsense, if the deal seems too good to be true it is most likely not real. And the sad thing is that many brokers, honest brokers are being wooed to turn over their book of clients to these "Deal Makers". So before you leap into anything that seems way to good, do your due diligence, Protect your clients at all costs.
If you are not a reader of Flash of Lightning our monthly Newsletter Opt In here.
Let me start off and say that not all of the brokers who are professing their expertise are experts in their new chosen profession. However, I do know many a broker who has left the industry and has been extremely trained for their new calling and this blog is not about them, its about the inscrutable personage we keep running into.
Everyone now has a new alternative to bank financing whether its through the use of bonds, standby Letters of Credit, Leveraging of stock portfolios, trade programs, or even network marketing of loan proceeds. They all sound like they are the answer to every one's wish for credit in the commercial markets. Oh I forgot offshore accounts as well and 100% equity partnerships.
I'm here to tell you don't lose sight of commonsense, if the deal seems too good to be true it is most likely not real. And the sad thing is that many brokers, honest brokers are being wooed to turn over their book of clients to these "Deal Makers". So before you leap into anything that seems way to good, do your due diligence, Protect your clients at all costs.
If you are not a reader of Flash of Lightning our monthly Newsletter Opt In here.
Wednesday, May 7, 2008
Multi-Family Loans, A General Overview
MULTI-FAMILY LOANS WILL CONSIST OF LOANS FOR THE FOLLOWING TYPES OF PROPERTIES
Different Categories of Multi-Family Units
Low-Rise Garden Apartments
Mid-Rise Apartments
Military Housing
Townhouse Style
Co-opStudent
Other Apartments
The following are general underwriting requirements, for specific information on multi-family loans and for your Complimentary No Obligation Profesional Loan Analysis. click now!
Apartments and Apartment-Type
Maximum Loan To Value - 80%
Maximum Amortization – 25 to 30 years
Minimum DCR - 1.20x to 1.25x
Min. Vacancy Reserve – the greater of actual or market vacancy; typically 3% to 10%
Minimum Replacement Reserves - the greater of actual or $225 to $350 per unit
Minimum Occupancy requirement – typically 85%Cap Rate – use market-driven capitalization rate; typically 7.5% to 10%
To continue reading about Multi Family Loans follow the link.
Different Categories of Multi-Family Units
Low-Rise Garden Apartments
Mid-Rise Apartments
Military Housing
Townhouse Style
Co-opStudent
Other Apartments
The following are general underwriting requirements, for specific information on multi-family loans and for your Complimentary No Obligation Profesional Loan Analysis. click now!
Apartments and Apartment-Type
Maximum Loan To Value - 80%
Maximum Amortization – 25 to 30 years
Minimum DCR - 1.20x to 1.25x
Min. Vacancy Reserve – the greater of actual or market vacancy; typically 3% to 10%
Minimum Replacement Reserves - the greater of actual or $225 to $350 per unit
Minimum Occupancy requirement – typically 85%Cap Rate – use market-driven capitalization rate; typically 7.5% to 10%
To continue reading about Multi Family Loans follow the link.
Tuesday, May 6, 2008
Today's Observation - Business Financing
I trust you have all read the post by Dr. Larry Lerner. Lary and I have been working together to help finance business acquisition throughout San Diego, Riverside and Los Angeles. I cannot stress enough for our M-Team members and other readers of our blog to strike up a relationship with one or two Business Brokers that you can really trust.
You will learn so much from them as I have from Larry.
A Business Broker or Business Intermediary as Dr. Lerner likes to refer to himself are invaluable in any and all business transactions. The liability for a client to go it alone is opening up a can of worms that should not be opened at all. By work ling closely you and the business broker can make the deal a reality. With you wearing the green hat "money" and the business broker wearing the "white hat", deals will close.
For more about the services Empire and Dr, Lerner provide visit his website at www.empiresandiego.com. For more about how SBA Loans the right choice when financing business acquisition visit Loanforbiz.com.
You will learn so much from them as I have from Larry.
A Business Broker or Business Intermediary as Dr. Lerner likes to refer to himself are invaluable in any and all business transactions. The liability for a client to go it alone is opening up a can of worms that should not be opened at all. By work ling closely you and the business broker can make the deal a reality. With you wearing the green hat "money" and the business broker wearing the "white hat", deals will close.
For more about the services Empire and Dr, Lerner provide visit his website at www.empiresandiego.com. For more about how SBA Loans the right choice when financing business acquisition visit Loanforbiz.com.
Getting a Deal Done
Getting financing for a business sale has always been difficult. However, in today's market, business acquisition financing has become harder then ever. As a business intermediary, I cannot stress how important it is to have an experienced loan broker working as part of the transaction team. Having worked with Harlan for several years, I know that his expertise is what helps get my deals done. For more information about selling a business, visit my blog at http://buyingandsellingabusiness.blogspot.com/ or my website at www.empiresandiego.com
Monday, May 5, 2008
Today's Observation - Why We're Different
What a GREAT Call! So many of you were on our initial call. Its exciting to know that we are all going to be working together and developing the M-Team to be extremely profitable and lucrative for each and everyone of you.
After we got off the call one of our members posed a question that I want to answer her in out blog. The question is, What makes us different?
The answer in plain words is that WE THINK OUTSIDE OF THE BOX.
Because Lightning Commercial Funding is individually owned , ie. no bureaucracy we can make quick decisions and finance what WE BELIEVE IN. If I believe in the client and his or her project we will make it happen.
Our size is to our benefit. Our banking relationships are to our benefit, Our knowledge of our clients and what they really need. Our ability to listen and ask appropriate questions, and lastly if not most important Our ability to solve problems and never give up.
Everyone of our clients will tell you the same thing over and over. We never gave up, we were always thinking outside of the box, we always had THEIR best interest at hand, not ours!
If you can think of anything else that might help Rick please respond to this post.
If you are not a member of the M-Team and you are looking to be mentored please e-mail me at admin@loanforbiz.com.
After we got off the call one of our members posed a question that I want to answer her in out blog. The question is, What makes us different?
The answer in plain words is that WE THINK OUTSIDE OF THE BOX.
Because Lightning Commercial Funding is individually owned , ie. no bureaucracy we can make quick decisions and finance what WE BELIEVE IN. If I believe in the client and his or her project we will make it happen.
Our size is to our benefit. Our banking relationships are to our benefit, Our knowledge of our clients and what they really need. Our ability to listen and ask appropriate questions, and lastly if not most important Our ability to solve problems and never give up.
Everyone of our clients will tell you the same thing over and over. We never gave up, we were always thinking outside of the box, we always had THEIR best interest at hand, not ours!
If you can think of anything else that might help Rick please respond to this post.
If you are not a member of the M-Team and you are looking to be mentored please e-mail me at admin@loanforbiz.com.
Sunday, May 4, 2008
Today's Observation - Why WE Do This
I cannot tell you how excited I was to read in our local newspaper the opening of a Swim School Floaties. Why you might ask would I be so excited about that one article that appeared today.
The answer is that I financed that deal, I made Mike's and Karen's dream a realty, I was there for them when they needed the support. And today, I get to rejoice knowing that we made it happen. We got them the "impossible" loan. We made the impossible; possible.
That is why we are in this business. Its not just the money, It the ability to help other people, Its the ability to make someone else's dream a realty. That's why!
So when you suffer the inevitable setbacks we all suffer in this business, remember your successes. WE all have them, focus on what you have done to make someones dream come true and then you will be able to go forward when life presents those minor setbacks.
For a professional non-obligation professional loan analysis to see if we can help you the way we helped Mike and Karen visit our website at http://www.loanforbiz.com.
The answer is that I financed that deal, I made Mike's and Karen's dream a realty, I was there for them when they needed the support. And today, I get to rejoice knowing that we made it happen. We got them the "impossible" loan. We made the impossible; possible.
That is why we are in this business. Its not just the money, It the ability to help other people, Its the ability to make someone else's dream a realty. That's why!
So when you suffer the inevitable setbacks we all suffer in this business, remember your successes. WE all have them, focus on what you have done to make someones dream come true and then you will be able to go forward when life presents those minor setbacks.
For a professional non-obligation professional loan analysis to see if we can help you the way we helped Mike and Karen visit our website at http://www.loanforbiz.com.
Friday, May 2, 2008
Today's Observation - Quotting of Rates
For all those brokers out in the world wide web, and M-Team members I am using this forum to share my personal views. You don't have to agree with them or even follow them, they work for me, and if they feel at all uncomfortable do what you are comfortable to do.
But as my business coach has said to me "We must leave our comfort zone to move to the next level" so just keep that in mind.
Do you know how you can tell an experienced Commercial Loan Broker from a Residential Loan broker who wants to do commercial transactions? The answer is they quote rates, they are so used to having to quote a rate that they instinctually go to a rate sheet anytime they get a commercial lead.
Second Questions Do you know what clients you don't want to work with? Again its the Rate Quotter. You know the call, you get it all the time on the residential side, "What's your rate?"
If someone calls me as a Commercial Loan Broker and asks for a rate, I always respond it Depends. If they only want a rate then I am not the best source for them. The reason is that all of your knowledge, education, negotiating skills, deal coordination, etc. all mean nothing to the client. There is no perceived value that you are bringing to the table. If you are not bringing value why would they pay your commission, or give you referrals.
I personally do not work with rate shoppers. If you choose to work with a rate shopper just keep the above in mind especially when at the end of the transaction they want to negotiate your commission.
For more information on commercial loans visit our website at http://www.loanforbiz.com or to sign up for our monthly newsletter "Flash of Lightning" leave us your contact information by clicking http://www.loanforbiz.com/contactus.html
But as my business coach has said to me "We must leave our comfort zone to move to the next level" so just keep that in mind.
Do you know how you can tell an experienced Commercial Loan Broker from a Residential Loan broker who wants to do commercial transactions? The answer is they quote rates, they are so used to having to quote a rate that they instinctually go to a rate sheet anytime they get a commercial lead.
Second Questions Do you know what clients you don't want to work with? Again its the Rate Quotter. You know the call, you get it all the time on the residential side, "What's your rate?"
If someone calls me as a Commercial Loan Broker and asks for a rate, I always respond it Depends. If they only want a rate then I am not the best source for them. The reason is that all of your knowledge, education, negotiating skills, deal coordination, etc. all mean nothing to the client. There is no perceived value that you are bringing to the table. If you are not bringing value why would they pay your commission, or give you referrals.
I personally do not work with rate shoppers. If you choose to work with a rate shopper just keep the above in mind especially when at the end of the transaction they want to negotiate your commission.
For more information on commercial loans visit our website at http://www.loanforbiz.com or to sign up for our monthly newsletter "Flash of Lightning" leave us your contact information by clicking http://www.loanforbiz.com/contactus.html
Thursday, May 1, 2008
Today's Observation - Loan Collateral
One of the reasons that I created this blog was to share experiences in the finance area that we can all learn from. Today I want to share with you a fact of our economic environment as it is effecting SBA and other collateralized loan programs.
The banks are now requiring not requesting for almost 90% coverage of collateral for an unsecured (meaning no real estate) loan. Usually this would not be an issue as most clients would have equity in their primary residence or other properties. But what is happening today due to the amount of foreclosures, and short sales,perceived equity is not being accounted for by the bank appraisers. Instead they are using the foreclosure and the short sale as comps which is hurting the deals that are approved subject to the appraisals.
Usually when we think of the appraisals that the bank are doing we think of the subject property, not the collateral. Now we have to think about both, the collateral property and the property they are buying.
Now I'm not saying that all deals for real estate are requesting more collateral, but when you add a bit of debt refinance and the request of working capital the loan request is greater then the value of the subject piece of real estate.
So in conclusion make sure that your clients really understand the role of collateral, and that they really must have an extraordinary amount of equity to pledge.
For further information on commercial loans and SBA visit our website at http://www.loanforbiz.com.
The banks are now requiring not requesting for almost 90% coverage of collateral for an unsecured (meaning no real estate) loan. Usually this would not be an issue as most clients would have equity in their primary residence or other properties. But what is happening today due to the amount of foreclosures, and short sales,perceived equity is not being accounted for by the bank appraisers. Instead they are using the foreclosure and the short sale as comps which is hurting the deals that are approved subject to the appraisals.
Usually when we think of the appraisals that the bank are doing we think of the subject property, not the collateral. Now we have to think about both, the collateral property and the property they are buying.
Now I'm not saying that all deals for real estate are requesting more collateral, but when you add a bit of debt refinance and the request of working capital the loan request is greater then the value of the subject piece of real estate.
So in conclusion make sure that your clients really understand the role of collateral, and that they really must have an extraordinary amount of equity to pledge.
For further information on commercial loans and SBA visit our website at http://www.loanforbiz.com.
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