Getting Commercial Real Estate Loans
Non-traditional lending companies provide investors with loans for small to mid-sized investment endeavors. The loan amounts to $500,000 - $5,000,000 and are 1%-3% lower compared to the interest rates of traditional lenders. As far as alternative loan solutions go, there are a number of loan packages for investors with various business and loan needs.
The Security Imposed on Loans
Business loans are taken out to buy business premises, widen business boundaries, develop property, and to invest in commercial or residential lots. Borrowers can negotiate for the type of collateral to get maximum loan satisfaction.
Private lenders offer fast and dependable service to those who want to apply for a small or a big loan because they do away with the red tape and unnecessary documentations that prolongs the loan application procedure.
There is a standard loan application procedure for refinancing and getting a mortgage from banks and other traditional lending agencies. On the contrary, in commercial loans, lenders are very particular with the worth of the collateral rather than your credit standing.
A commercial real estate property is needed in applying for a commercial loan. Be Certain that your asset is in good condition, otherwise, lenders will require a considerable amount of money as downpayment and disqualify you from an apartment loan.
The Buyer-Seller Transaction
The sellers and the buyers are the two entities involved in commercial real estate loans. Buyers should provide themselves with a number of alternatives first prior to selecting an investment property. On the contrary, the sellers must ensure that the property for sale is in good condition and that all its paperworks are available for future reference.
Buyers evaluate the properties for location and condition. When considering location, buyers are after ease-of-access because they do not like to spend extensive travel expenses just to follow up on the property's repairs or to manage it themselves. In addition, since they recognize that the flow of customers will srely affect business, buyers don?t like a place that is located in a congested area. Also, they don?t want a property that requires major repairs every now and then simply because of the applicable expenses.
The LTV Ratio and Commercial Real Estate Loans
The lenders evaluate the loan amount on a loan-to-value (LTV) ratio. This calculation gives the amount of the initial mortgage lien as a fraction of the total value of the real property after appraisal. A borrower can get $150,000 for a property quoted at $180,000.
The LTV ratio is indirectly proportional to the risk of the borrower. This implies that higher LTV ratios are provided to low risk borrowers who have clean credit history. A bigger ratio shields lenders from the possibilities of foreclosures. Some may also be granted with a full ratio, but this a very rare case.
Generally, factors like the borrower?s credit standing, stability and type of the business you are managing and nature of the estate about to be acquired are assessed by the lenders before approving a commercial loan. The good thing is, the NCF has a better method of processing loans as compared to those of the traditional lenders.
Watch the video related to Real Estate Loans
This may seem like a boring podcast, but so many people have e-mailed Paul Dizmang of "(417) Dwellings!" for his opinion on loan types for purchasing investment real estate. Visit his blog at www.getpaul.com to get the whole scoop.
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Need to expand business? Try one of those commercial real estate loans, multifamily apartment loans, or mobile home park loans that are sure to earn you revenues. Let NationalCommercialFunding.com help you get the loan you need.
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June 12th, 2009 - 16:54
2-5 points
June 12th, 2009 - 17:35
A local "Chicago Bank" that does this type of financing is Park National Bank. The main Chicago Branch is at the intersection of Chicago and Clark.
June 14th, 2009 - 01:09
Have you talked to a banker? Banks lend for Commerical property as well. Any large bank should do.
June 14th, 2009 - 03:23
Why not banks,I've been in business 30 yrs.
My bank has done EVERYTHING I've ever asked for.
June 15th, 2009 - 08:59
You need an investment loan. You will need 20-25% for a down payment, but other then that they are like any other loan. The qualifications are the same, there is no such thing as a sub-prime. You also have to have funds to make the payments in the case of no occupancy. You can not use rent from this apartment to secure your loan.
June 15th, 2009 - 11:50
There are many different avenues in Commercial Real Estate. I am a commercial appraiser and it's a great job. It is difficult to get your foot in the door but once you are in; you can write your own ticket. Due to your bacground in finance I would ask appraisers that you have dealt with to help you out. I'm sure you could be a commercial loan officer if you find the right place due to your residential experience. Becoming a commercial broker is good but you need alot of contacts to become successful.
June 15th, 2009 - 16:18
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.
June 15th, 2009 - 20:54
I do home loans so I can shed some light, (although I don't go ballistic)- it is a lot of work to give someone a pre-approval- we have to run credit (which we pay for) & figure the debt to income & loan to value etc. Enter all fees etc into a good faith estimate which can mean checking tax rates for your property, getting insurance quotes etc. Its quite a bit of free work for someone who is not "really sure" that they are even ready to buy. We are so busy with the really serious buyers that when you get someone who you see 4 or 5 inquiries from other mortgage companies we know they are just taking up time that we don't have to spare. Really don't mind someone shopping- its just a lot of work for nothing. (Just being honest!). I usually tell those people to get me their good faiths & I will see if I can do better.
June 15th, 2009 - 22:19
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
June 16th, 2009 - 03:35
I agree; your only option would be to refi it and it cannot be done. I would check the loan terms and see if a payoff could be done involving another piece of property. You shouldn't have a problem since it looks like it's not upside down and you're doing well.
And it's against the law since if you do something and not of record, that will come up later as a cloud on the title, which could easily make it a concern in resale. That's too big of a risk I would want to take. I've seen it all with +25 yrs Title OfficerReal Estate.
The last thing you want to do is anything questionable where a lender can find out through the title search.