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Many businesses at one time or another will need to access a commercial loan. This could range from a company just starting up but having a solid business plan backed up with some realistic sales projections, to a company needing money for plant & machinery, looking to expand overseas or requiring larger premises. For the former the lender would certainly expect proven experience in their chosen field, signs of a gap in the market the new company could exploit or a brand new idea or project that would appear to be a viable proposition. They would probably want a stable employment record allied to possible personal guarantees and, if possible, an initial injection of cash. Regarding the latter the decision is much more straightforward as they should have audited accounts, preferably over at least 2 years with a projection for the third year showing an increase in profits. For obvious reasons Lenders are very reluctant to lend when companies start showing a decline in profits.
So what’s the difference between a residential mortgage and borrowing for commercial reasons? Generally speaking a residential mortgage is secured against property so if the borrower defaults on the loan the lender has the right to repossess the property as they have control of the deeds. Commercial lending is a much more complicated process as it may not be secured against property. This is because many businesses will rent their property as they may not have the resources or desire to purchase the building or buildings they operate from. This of course leaves the lender vulnerable because if the borrower defaults there is no guarantee they will recover the loan.
To compensate for the extra risk involved the lender will certainly charge a higher rate of interest than if lending in the residential market. Over a period of time this of course means a greater profit for the lenders, especially if it’s a bank as there are other charges they will levy on the borrower. There will usually be an overdraft facility in place for which there will be monthly or quarterly charges. On top of this there is what is generally termed account charges so each time you pay by cheque, cash a cheque in or make a payment by transferring money to settle an invoice or purchase goods this will be charged to your account at the end of each month.
A typical charge for processing cheques is fifty five pence so if on average you cash 100 cheques per month the overall cost for that year is £660. To a successful business this is not the end of the world even though there are other charges and of course the payment of the interest charges on the loan at the end of each month to be taken in to account. However for a start up business the way they manage their account is crucial to building a successful company over a long period of time. Many firms fall by the wayside, not because of poor sales but because creditors pull the plug due to cash-flow problems so it is important to make sure you take out your commercial loan with a flexible and understanding company as you may regret it further down the line if you don’t.
Written by E-Commerce Manager of Armchair Mortgages, Chris Roche. For more information on income protection,
inflation.us Created this on the side while I was chasing down stuff for the homeless video, I am shocked at the amount of money that has been wasted in Southern California Real Estate Vote Up on Reddit www.reddit.com Digg It digg.com
Traditionally termed as the city of temples, Chennai is today a preferred location for real estate development due to growing commercial activities, upgraded infrastructure and sufficient availability of skilled manpower.
Easy access to other metro cities in south India and relatively low cost base makes it a desired destination for establishing small and big IT/BPO companies, resulting in greater demand for office buildings in Chennai.
Shortfall in availability of commercial office space in the Central Business District (CBD) in past few years, has registered significant real estate development in the suburban areas of Chennai.
Leading property developers like Pacifica have constructed outstanding IT parks and commercial buildings in Chennai with state-of-the-art infrastructure and latest amenities, ensuring close proximity to all basic necessities.
Ready to occupy, fully furnished office premises in Chennai are also easily available in prime locations with various facilities including high security, un-interrupted power, internet connectivity, cafeteria etc; suitable to set up an corporate office, back office or offshore office for your IT/ITES-BPO business.
Office space in Chennai can be readily obtained on outright purchase, lease or rent within the heart of the city at competitive rates. Offices are now built with special focus on maximum safety, optimum usability and environment conservation.
Builders have constructed high quality commercial property in Chennaiincorporating latest designs to take full advantage of natural resources. Salient features include using plenty of natural light to save power; heat reducing systems to ensure less air-conditioning, re-cycling water for gardening etc.
Presently, Chennai property market is experiencing tremendous growth, due to higher returns on investment, attracting both national as well as international investors to yield maximum profits from real estate projects.
Pacifica companies is a real estate property with the head office in Ahmedabad and company includes Residential Property, Hotels, Office Buildings.SEO services provided by Jigney Bhachech, CEO Opal Infotech, India.
www.lendinguniverse.com Commercial Lending Loans in Nebraska All industries need equity loan combine with commercial mortgage loans, loan company, together with commercial hard money, commercial real estate mortgage, hard lenders, business financing. Fix and flip loans www.youtube.com flip a house also known as flipping a home can be done with the help of how to flip housesCommercial property or Property under Construction . In case you need a fix and flip lenders Contact hard money for best results on how to flip houses. Hard money commercial loans www.lendinguniverse.com SEVEN ESSENTIAL ELELMENTS OF TRUST DEED INVESTMENTS Seven Essential Elements 1 Knowledge, experience, and integrity of the MLB through whom the trans¬action may be made or arranged. 2 Market value and equity in the Prop¬erty and the security for your loan. 3 Borrower’s financial standing and creditworthiness. 4 Escrow process involving the fund¬ing of the loan or the purchase of the promissory note. 5 Documents and instruments de¬scribing, evidencing, and securing the loan or purchase of the promis¬sory note. 6 Loan servicing provisions, authority and compensation. 7 Recovering your investment when the borrower fails to pay.
Can you simply go to one of those week-long real estate schools like residential real estate licensing? And what are the qualities that help a person succeed in commercial real estate sales? Is this a young person’s game? Can you start and succeed at middle age? Would like to bank 70k-100k? Is this reasonable?
Over the last few years, commercial real estate properties around the country have literally sky rocketed. Real estate in general has become increasingly more costly, and the commercial real estate in Houston is no exception. However, commercial properties can still be worth their weight in gold if you understand how to get your business to pay for the value of the real estate.
For new potential property buyers, commercial real estate can seem intimidating, property filled with the potential to fill the dreams of tomorrow for the knowledgeable and prepared. For those who are looking to expand their commercial property empire, a good deal is becoming harder and harder to find.
This of course begs the question, what is the value of commercial real estate in Houston? The value is naturally directly tied to the potential a savvy business person can see in the property. Finding the right space for the right price while adhering to the first basic principle of real estate, location, location, location, is not at quite the same level of finding that needle in the haystack.
The number one error potential commercial property owners make is jumping too soon. Whether the leap involves the final negotiation or the actual property itself, a good business person is going to be able to wait it out until the odds turn almost entirely in their favor.
Whether you are referring to commercial real estate Houston or any number of various business factors, good business decisions are rarely made on an immediate basis. However, those who sleep beyond the eleventh hour rarely can make effective business decisions. Knowing, recognizing, and acting upon commercial property is only a quasi-learned skill. There are timing issues that can only be judged via experience, past mistakes, and of course, the counsel of others who have been able to find their exact right commercial property for their business.
Commercial real estate is of course a business concept with much at stake. The likelihood of becoming a commercial real estate tycoon by being afraid to make mistakes and being afraid to take risks is slim. For the successful business person, commercial real estate for sale presents an opportunity, and if the opportunity is painted correctly, a business can thrive. This principle applies to large corporations as well as individuals moving their business out of their basement and out into the world.
The rules of commercial development apply to every type of business owner. Naturally, commercial real estate ranges from corner properties to vast areas of undeveloped land. The basic rules of wisdom, such as not jumping too eagerly and making sound business decisions based on realistic projected growth will apply to every potential commercial real estate situation.
On the upside, the value of commercial real estate Houston is continuously increasing. Those who delve into the right commercial property are going to find that their property value alone is worth the risk. While the ideal goal of course, is to find the right commercial property that will appreciate right along with the best commercial properties while savvy business decisions create a thriving business. Prime real estate, whether for development or for basic business dealing, is going to come at a cost, however the record of thriving businesses in Houston tends to speak for itself.
Learning when to walk away from a potential deal is equally as vital as knowing when the value of a commercial property is bound to pay off. Walking away from a piece of land that seems perfect for development or any other property can be one of those business decisions that deprive a person of their sleep.
Walking away because of potential problems, irresolvable property issues, or even an instinctual knowledge that something about the property is tremendously off can be very hard to do, especially when someone else steps in a appears to get a good deal. When a business person walks away from a piece of commercial real estate, they have to be able to be satisfied in their decision regardless of what happens to the property down the road. Second guessing decisions along the way is one of the fastest killers of good business thought.
Commercial property in Houston is bound to continue to increase in value over the next several years, as projections throughout the country speak of rising property values for both residential and commercial properties. This projection lines business people up for being able to, at the very least, walk away from their property with a profit even if their business resists explosive growth.
The Johnson Development Corp. is a Houston-based residential and commercial land development company that has over 40 years of experience in the real estate development business. For more information visit http://www.johnsondevelopment.com
The commercial real estate is a hot product in this moment. Many investors see the massive potential for the income related to this type of property. It is not always clear, however, which type of commercial real estate to invest inside or which part of the country to be chosen. With a little of research, you can find the place perfect to buy.
Columbus, Ohio is a great place for the commercial real estate. Columbus is the capital city of Ohio and also of one of the fastest growth. Everywhere Columbus, of new companies jump to the top and with them the need for commercial spaces. There are several notable commercial companies of real estate working in the area of Columbus to help with people the lucky find perfect space for them.
Another great sector is Greensboro, GOLD. It is a community growing with large historical roots. One has it in the past known as town of border for those looking at to go to the west. With the moderate climate and the friendly southernmost atmosphere of the it , Greensboro is a city which attracts people of all the sectors. There are also many large commercial companies of real estate, such as properties of Kotis, to help of the customers to find their place dreamer. And the cost attracting the life compared with many of other parts of the country, this sector will continue to open out.
Madera, California is also a good investment for those interested in the commercial real estate. Madera is a hot point for families and choices of investments. The increasing economy makes Madera a great place. This made in Madera a good investment commercially. There are many good banks and bankers in Madera. The COMMREX based by Madera east one of the higher commercial companies of real estate. There are also some principal national companies sat and around at Madera.
Los Angeles is one of the largest markets for the commercial investors of real estate. Although it is one of most expensive, the values of property are always increasing. There are significant advantages with the possession in. One of the great tax advantages is that if you sell your house, you can take an exemption of benefit as a long time as you live in your commercial property for at least two the five years following the sale of your property. This, with the potential for the income, is a large chart of drawing for the commercial real estate of.
The commercial real estate is a great investment. They significantly appreciate the year over the year, thus the resale is excellent. If you decide not to sell it or not to employ yourself, you can rent it and collect the continuous income. If you employ a company in the person or the surplus the Internet, is sure to make research about the sector initially. By buying the property, seek the place. It is really the key to find the investment of real estate commercial perfect.
Investing in Real Estate isn’t for the faint of heart. We’ll help make it as simple as possible. Check us out online and when you’re in our area, stop by Coldwell Banker Madera and we’ll help make buying real estate an easy process!
Are you unrealistic in your expectations? If you have been on a deserted island, just landed on this planet or been living in a cave somewhere for the last couple years, you may have some notions that anything goes and you get a commercial loan approved and funded. This is what is known as unrealistic expectations.
If you think that statement has some humor in it, I have to tell, that everyday I am dealing with brokers and borrowers who fit that description. Worse yet, they are failing to recognize the gravity of the economic situation and how that affects underwriting and credit risk assessment or credit risk management.
You want a commercial loan for your client or yourself, now what? The first and foremost idea that you need to get in your head is that you have no control over the process or terms. This is not a borrower’s market–it is a lender’s market. In simple terms, you don’t have much ability to negotiate terms and/or conditions with a lender because the lender can afford to be very choosy it what they will approve and fund.
What do you need to know about lending today?You may have read news articles or heard stories on the TV and radio news programs on how the residential real estate values have nose-dived across the nation. Being a homeowner myself is not the greatest news to be constantly reminded of. But how does this affect commercial lending? In a word: Directly. As house values drop so do commercial values. This means that lenders are going to consider that dropping values is going to be a continuing trend and lending maximums are going to be reduced to off-set the risk of devaluation of property.
Translated, this means that the maximum LTV (Loan-to-value. The ratio of value to equity to what you owe on the property) is going to be scaled back to anticipate dropping values. In addition to that adjustments, lenders will also reduce the maximum loan amount you can obtain. Finally, the lender will limit certain types of transactions to even more restrictions to protect against anticipated losses.
Note the word anticipated. In this type of economy, anticipated can be better associated with ‘fear of’ rather than anything positive
What are the SEVEN triggers lenders are looking at in approving your commercial loan?
1) CASH: They want to see that you have ‘skin’ in the game. The lenders are typically looking at you have at minimum of 25% equity position into the transaction. Exceptions to this would be under SBA, which has a minimum cash position of 10% into a transaction.
2) CREDIT: They want to see strong credit for all of the principals (those who own 20%+ of the company). This means no mortgage late payments of any type. No prior foreclosures, short sales, settled, collection, charge off or other negative items. They do not want to see the personal credit maxed out either or a lot inquires into credit over the past 12 months.
3) RESERVES: They want to see strong net worth with at least 10-20% of the proposed loan amount in liquid assets.
4) CASH FLOW: The property must cash-flow at above minimum DSCR requirements, especially if the mortgage applied for is a variable rate. If the DSCR required is 1.20, expect the credit officer to look at ability of the property to handle rate increases at least 2% above the start rate in relationship to the DSCR. If the DSCR at start rate is meeting the minimum, the credit officer will easily determine that if the rate goes up 2%, the property will no longer meet the minimum DSCR and therefore decline the loan.
5) STABILIZATION: Business must have stabilized or increasing income/profits. A transaction showing declining income or increasing vacancy will be a big trouble sign and will more likely than not lead to a decline–even if all of the the other components are stellar.
6) PROPERTY/BUSINESS TYPES: The more general the property type, the more likely it is it will be approved. Single tenants, single use or special use property types and properties/business types that suffer more dramatically in tough times are harder to close to impossible. Examples of difficult properties would be; auto dealerships, hotel/motel, restaurant/bar, land/lot loans, construction projects of any type, properties where owners/tenants are real estate/mortgage and or finance companies or rehabilitation projects.
7) CASH-OUT REFINANCE: Cash our mortgage are another sore subject for lenders today. In most cases cash out is going to a cause for decline, especially if the reason is for ‘working capital’ (again SBA 7(a) line of credit maybe the best option here). However, if the cash out is reasonable (10-20% of the total loan amount) and the reasons make sense (buying out partners, consolidation of business debt, acquisition of additional property), then cash out is still available.
What if you get a LOI or Conditional Approval and you don’t like it?I suggest you take the deal and don’t look a gift horse in the mouth. The financing you are taking today isn’t forever. You may have to take it (like it or not) because that may be the only offer you are going to get. I have seen too many people blow off an offer only to circle back around later to see if the offer is still available, only to find out it was a one-time deal.
Case study:We had issued a Conditional Approval on a deal where the borrower’s bank had refused to extend the balance of their loan to complete the renovations to their property. Our Conditional Approval allowed up to $725,000 in cash out to complete the work and up to 80% LTV with a rate of Prime plus 4.5% to be fixed for 5-yrs with a 5-yrs step down prepayment penalty. The borrower rejected the terms citing rate too high and terms to stringent. 45-days late the borrower requests that we re-instate the CA because they can not find financing and their current lender has called the loan due. We told the client that a new CA could be issued, however the rate would now go to Prime + 5.45% and the maximum LTV has been reduced to 70% LTV which meant that they would only be receiving $510,000 in cash proceeds to complete their project. Borrower rejected the second CA. The last we heard is that the borrower is now being foreclosed on by their current lender.
Although this case study may seem extreme and is unfortunate however, I am afraid that it will become a more common story line as this economic crisis continues.
Visit our web portal for more on the commercail financing that we currently offer. www.mycommerciallendingpro.com
Gregg Cochran is the SVP Wholesale Commercial Lending Unit of CFR Mortgage Group, Inc. in Southern California. CFR Lends in 44 states and has been in business since 1979. Mr. Cochran has been with the company since 1992. Mr. Cochran can be reached at 714-731-5282 or via email at cfrgroup@att.net