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commercial loans: Questions to Ask a Commercial Lender - 01/17/09 01:03 PM
Head over to Peter Pays Paul to read my newest post Nine Questions to Ask a Commercial Lender.
My post details what questions should be asked when trying to understand the lending programs that a commercial lender has.
Commercial mortgage brokers would do well to take 15 minutes to get acquainted with the lenders on their lender list. While a rate sheet and lending matrix can be helpful, nothing beats a phone or face-to-face interview.
Here are nine questions that will allow a commercial broker to focus their efforts and to target properties to the right lenders.
… (1 comments)
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commercial loans: Affect of Vacancy and Rental Rates on Commercial Real Estate Value - 11/18/08 05:40 PM
Imagine that little retail center near your house.You know the one.
It has your favorite coffee shop, the weird home decor shop, a woman’s clothing boutique, the nail shop, and the national auto parts store.
Over the years you’ve seen the stores change. Different shop owners have come and gone. The coffee shop has been there for a while. The woman’s clothing store is only a year old.
As you drive by you notice a “Going Out of Business” sale going on in the home decor shop. You’ve talked with the owner of the woman’s boutique and she is … (0 comments)
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commercial loans: Is it a Development Loan or a Construction Loan? - 07/09/08 07:17 PM
Part of my job is to take incoming cold calls. We advertise in a commercial lending industry magazine that generates a good deal of call traffic.
On a regular basis I get requests for “construction” loans. After asking some questions to determine the nature of the loan, I usually find out that the broker/borrower is actually searching for what I would call a “development” loan.
What’s the Difference, Who Cares? Why does it matter if you call it a construction loan rather than a development loan?
First, it reflects on the broker/borrower. If a lender has to educate the … (1 comments)
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commercial loans: When Hard Money Pays - 04/09/08 07:03 PM
It is not often that borrowers enjoy using a hard money lender to finance their projects. However situations do arise that demand the services of a commercial hard money lender. Let me illustrate this point with a story.
A few nights ago, one of the sinks in our house was plugged. Because I am a frugal person ("Cheap Smack" is the technical term) I decided to fix the problem myself. I called a relative to borrow their plumber's snake and clean out the plugged drain. Two hours later, I had unstopped the drain and had a functioning sink. However, had the sink … (0 comments)
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commercial loans: Story Lenders: What's your story? - 01/17/08 06:28 PM
As a commercial hard money lender I have to be good listener. The reason is that everyone has a story to tell about their need for money. Some stories are better than others.
What should you include in your story? Introduction A good literary story introduces you to the characters, the setting, and any history relevant to understand the narrative going forward. A good lending story will include some of the same attributes. Most of this information should be included in a easy to read executive summary.
Who are the main characters? This includes the loan sponsors, and any borrowing entity … (0 comments)
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commercial loans: Commercial Hard Money Construction Loans - 01/02/08 06:15 PM
I get at least one phone call a day requesting construction financing. (Owens Financial Group does fund commercial construction projects on a limited basis.) Underwriting a construction loan is handled differently than a typical commercial loan.
Lenders desire to know that a developer has enough money invested in the project to motivate the developer to overcome the headaches and hassles that are bound to arise during development. A developer with too little invested, is likely to cut their losses and run, if construction problems arise, permits are not obtained, or weather is not favorable. Many lenders will underwrite a construction loan … (0 comments)
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commercial loans: Hard Money Hints - 12/27/07 06:13 PM
Not many mortgage brokers live consistently in the world of hard money. It is a subject despised by some and feared by others. When I call on brokers for the first time, many of them report, “We don’t do that here.”
I believe commercial mortgage brokers, often times, don’t understand the role hard money lenders can play in serving their clients. Anything new can be intimidating. Especially, something that if not handled carefully can injure your business. Hard money is like a sword: wielded by an experienced broker it is a valuable tool. Wielded recklessly by an amateur, the user … (3 comments)
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commercial loans: Commercial Income Property Valuation - 10/30/07 02:57 PM
Commercial real estate is a great addition to the savvy real estate investor’s portfolio. One of my previous employers said that he would only invest in commercial real estate and not in residential. He reasoned that commercial real estate that housed a business would always be better maintained than a leased residential unit. “A business must keep up its workplace or their customer’s will stop patronizing the business.”
Commercial real estate is financed more stringently than residential real estate. Often more capital is required to invest in a commercial property than in a residential property. Most banks and institutions require a … (1 comments)
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commercial loans: Underwriting a Commercial Loan - 10/23/07 02:00 PM
How Commercial Mortgages are Underwritten Commercial mortgages are underwritten differently than residential loans, hence the loan package needs to be assembled in a different fashion. When dealing with improved commercial real estate the property's net income is the most important factor in underwriting the loan.
Debt Service Ratio The property's net income determines its ability to pay the monthly mortgage payment. This is commonly referred to as the debt service coverage ratio (DSCR) or the debt service ratio (DSR). For this reason a borrower's income is less important than the commercial property's net income. Some lenders will take into account … (3 comments)
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commercial loans: Commercial Hard Money Loans an Explanation - 10/19/07 06:36 PM
Most commercial real estate agents don't consider the need to have a source for hard money. Owners and investors in commercial real estate are often well capitalized and have a bank relationship that allows them to finance commercial property with ease. Because of this,commercial REALTORS® do not have a consistent need to provide there client with a referral. For experienced commercial agents this is rarely something they need.
Use of Commercial Hard Money Lenders Where do hard money lenders, like Owens Financial Group - California hard money lender, come into play?
Speed A commercial hard money lender is best used … (1 comments)
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Peter Maclennan - Investment Real Estate
Walnut Creek,
CA
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Maclennan Investment Group, Inc.
Address: PO Box 2564, Walnut Creek, CA, 94595
Office Phone: (925) 385-8798
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