Posts Tagged ‘Over’
Know what you have.
Commercial real estate in some respects is not too different from residential real estate when speaking with owners of properties. In their hearts and minds their property is far better and far more valuable than that of their competition. Once you detach yourself from the emotional aspect, you can objectively look at the property.
You can list property types into two general groupings. Group A-standard commerical or general property types and Group B – Special purpose or use property types.
Standard or general use refers to any property that has a multi-use capability associated with it. The property can be used for nearly all commercial purposes and can easily accommodate a multitude of business types with little or no modifications. This type of property has a higher resale demand and has a shorter marketing time.
Special use refers to property types that have very limit use capability and have a very limited market to which reduces the demand and greatly increases the marketing time. Additionally, conversion costs can often times be greater than the value of the property in its current use.
Examples of each type:
Standard or General:
Warehouse
Office/Office Condo/Office – warehouse
Mixed use w/office or residential
Light manufacturing, Light Industrial
Medical and Dental offices
Retail/strip malls
Multi – Family (5+ units)
Mini-Mart
Single Tenant Properties
Special Use/Special Purpose:
Automotive Service/Repair
Assisted Living Facilities
Hospitals
Grocery/Markets
Single Tenant Properties
Mini-storage / Self-storage
Car Wash (Self -serve/Coin Op or Full Serve)
Funeral Homes
Restaurants
Hospitality (motel/hotel)
Bowling Alleys
Sport Arenas
Properties w/excess land
Churches
Educational Centers/Day Care
Board and Care Facilities
RV Parks
Mobil Home Parks
Heavy Industrial/Heavy Manufacturing
Golf Courses
Underwriting and risk pricing differences
The more common (general) the type of property and use, the better the financing and the more lenient the underwriting is to make these properties more attractive for investors and owners.
On the the other hand, the more off beat and further from the ‘bulls eye’ the tougher the underwriting and the more expensive the financing will be.
IMPROVING YOUR ODDS–KEY POINTS
Borrowers with strong credit and healthy balance sheets that include high net worth are easiest to close.–Helping yourself or your client to look better on paper is first and foremost (must be verifiable).
Having more than the minimum downpayment or equity postion in the property
Having liquid reserves equal to or greater than the loan amount
Strong long term tenants with long term leases
Having regionally or nationally credit rated tenants
If tenant is not credit rated, be ready to have tenant supply their financials to prove to lender tenant is financially healthy and can afford to rent your property.
If seeking cash out–keep amount reasonable and be prepared to identify in detail how the cash is going to be utilized and improve the borrower’s position
Seek financing within your means
At CFR Mortgage Group, Inc. we have extensive knowledge in dealing with getting loans closed on all property types. You can call us at 714-731-5282, email us at: cfrgroup@att.net or visit our web site: www.mycommerciallendingpro.com for more on lending programs and products.
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