Commercial Real Estate Loans – Interesting Developments
Â
With change comes opportunity. We are seeing many, very interesting developments with commercial real estate loans. One happens to be banks offering to reduce balances owed and waive any prepayment penalties in an effort to entice strong borrowers to refinance their debt.Â
And no, we are not referring to borrowers that are late, have negative trends, etc. We are talking about stable commercial real estate loans, that the existing bank needs out of, for their own internal issues. I.e. the bank needs liquidity to survive. They have their own capital problems and, apparently freeing up commercial loans is a potential solution.Â
Commercial Real Estate Loans
For example, a hotel client of ours called this week. They owe $3.5 million with a property value at approximately $5.2 million. Their occupancy is great at 84% year end and they have strong cash flow which easily services the existing debt. Their existing bank has offered to waive the existing 3% prepayment penalty and reduce their balance by $300,000 to get them to "go away". The bank called them out of the blue. Â
Fluke???
Another borrower called us this week as well that happens to own 14 Kentucky Fried Chickens. They owe their existing bank over $7 million and where offered a reduction of $3,000,000 dollars... Again the borrower is strong, cash flowing, etc. These, by the way are not the same banks.Â
Borrowers that are in good financial positions, may want to make a few phone calls to see if they can save a substantially amount of money. Borrowers should keep in mind that just because your existing bank maybe in trouble doesn't mean that you can't find a healthy bank, as we and some of our competition continue to grind out commercial real estate loans. Â
The old saying, "got lemons? make lemonade" comes to mind.  Â
Â
Watch the video related to Real Estate Loans
Quicken Loans TV takes you through a full home appraisal inspection in this informative video - part 3 (steps of the appraisal and the front room) of the Quicken Loans Appraisal series. A home appraisal is something youll need when getting a mortgage. For more information on appraisals go to www.quickenloans.com
Help answer the question about Real Estate Loans
About Author
Jeff Rauth is President of Commercial Finance Advisors, Inc. They close commercial mortgages nationwide. 248 885-8797. Commercial SBA Loans or commercial real estate loans or commercial bridge loans
Advertisement
Blogroll
- avon Kudos
- Business Blog
- Business Life
- California Real Estate
- emergency bankruptcy filings
- House for sale in London
- Laferni
- MY PLACIA
- qualitative study
- Real Estate Agent
- riverzone
- Sell House Fast
- stocks momentum
- USLBC
August 16th, 2009 - 17:29
Commercial loans can work several different ways……here is one way:
A developer wants to start a project, first they locate people that invest in their idea (if they can't handle the expense themselves which is where most of the money is). Then they complete the project on time and under budget. Then one of two things happens, they either run the business or they sell the project to people who knows the field of the project. They then sell space to leasers or renters. Presto, commercial lending.
August 16th, 2009 - 18:24
2-5 points
August 17th, 2009 - 08:56
Cash for the land. A construction laon for the building, but you are going to need to give the bank 25% in cash for the down payment on that.
August 17th, 2009 - 20:42
Problem #1, you didn't shop enough
Problem #2, you actually signed for the 11% loan.
Talk to your friends and family, coworkers, etc… Get referrals to people that they've done business with and would trust to do business with again.
Unfortunately, high FICO's don't directly correlate to high IQ's, so anyone can be taken advantage of, regardless of credit. Your loan officer was either incompetent, a scumbag, or both. My money is on both.
August 18th, 2009 - 01:28
Your mom or dad. Better yet, kill your parents and take their house.
August 18th, 2009 - 04:07
Cool…I never heard of these terms before and I've been involved with real estate for over 20 years in my career. Thanks for teaching me!
Apparently this has to do with 'Settlement', not really loans or mortgages. I found this:
"…You referenced a "wet settlement." This is a term of art, which means that when a person goes to settlement, the lender's funds must be on the table.
Compare this to a "dry settlement," where there is no money available at the closing. Usually, the settlement company or attorney will complete the paperwork, send the legal documents to the lender for review, and then the lender will fund the transaction…"
Found at this site: http://realtytimes.com/rtcpages/20060529_wetsettlement.htm
Looking forward to learning more,
Elise Altergott, Principal Broker
Associate Mortgage: http://www.web-mtg.com/?src=answers
Associate Consulting: http://www.ac-fl.com/?src=answers
August 18th, 2009 - 10:27
I know several agents that are mortgage brokers and real estate agents… it is not illegal.
They can NOT force you to use them for the mortgage, and if they give you "cash back" from their commission if you use them… their could be legal issues with that.
But offering you a mortgage as well as being your REA is perfectly fine.
August 18th, 2009 - 17:05
Most government grants are in blighted areas where they want to spur rehabilitation of neighborhood properties. As far as I know there are no federal grants avalable unless you are revitalizing a property which will end up on the national register of historic properties, but these would have little to no profit potential due to the high cost of rehab to get the property to standards. The local programs generally only give 5-20k for help in rehabbing homes, but unfortunately come with so many strings attached that you will be begging them to take their money back just so you can get them out of your hair. Once you invite them in, you many times lose the grandfather clauses on any number of code requirements that have been put in place since the particular home was built and you have to spend as much if not more than the grant money to get the place up to the government standards that they require in exchange for the grant.
In my honest opinion, better to just get your own loan and go it alone….
August 18th, 2009 - 20:03
It will try to buy a $100,000 loan for $30,000 and hopefully forclcose and sell home for $40,000.
August 19th, 2009 - 13:45
I owned a company that funded small businesses, micro-businesses, and mezzanine corporations. I searched for information on how you can start. Information is limited. I wonder why it is such a well kept secret. Possibly because there is lots of money to made financing business, but there also is a lot of risk. The only info is
http://www.businesslenders.com/why_history.htm
My advice is, unless you have unlimited financial resources, start small with micro-loans. They are easy to do and their is tremendous funding out there for companies and organizations to give consumers. Grants are available through the government for the micro-loans but only to organizations who give the loans. Banks also offer money as well as foundations.
If you have any questions contact me. I will assist you and if I do not have all the answers I will try to get them