Setabay Private Hard Money Lender: September 2017

Thursday, September 28, 2017

What do you do if your client has a bad credit score and wants to buy a home?

As a Real Estate Agent, the obvious answer is to very politely 'fire your client' and put them on your Christmas Card List.

Hopefully they will solve their credit issues and you can show them homes in the future.

Don't waste your time on this want-to-be buyer; they are never going to qualify for a loan. But wait; there is good news.

Recently there are a large amount of lenders who are now willing to take a risk on borrowers with bad credit.

When lenders consider a borrower's loan application, the lender looks at:

ü Down Payment,

ü Ability to Pay and

ü Credit Score.

There are a lot of potential clients/borrowers who have a good down payment, and great income stream, but for some unknown reason their life is a mess and their credit is in the dumpster. (Bad credit is typically someone with a FICO score less than 580.)

Today there are Arizona Lenders who will lend to an Arizona borrower with bad credit if they have a substantial down payment and can make the payments.

Rates are going to be high, and the lender is going to be picky about the type of property and use of property.
Also there are some dead stop issues, such as outstanding judgments, tax liens or pending litigation. (In most cases judgments and tax liens are paid in escrow/closing.)

So if you have a client with bad credit, check to see if they have a large down payment, typically 30% and are free of any judgments and tax liens.

If they are, and can qualify for the payment, they can get the home they are dreaming about, and you can close the deal and we can get them the loan.

If not, 'fire them, move one' and don't forget to say say Merry Christmas.

Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444

Technorati Tags: bad credit,home loan with bad credit

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters and 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Wednesday, September 20, 2017

Interest and Fees You Will Pay for Commercial Real Estate Loans Texas

Considering the long and arduous application process, you might be happy to simply get approved for any commercial real estate loans Texas, but you need to evaluate the cost of each loan. Selecting the loan with the lowest interest and fees will save you a great deal of money.

Whenever you are shopping for a loan, the first item that you look at is the interest rate and that is also important on commercial real estate loans Texas. The rate that you will be offered is going to depend on the type of business that you are in, the financial condition of your business and also you creditworthiness. In some cases your business will not have enough credit history to secure the loan and you will need to provide your personal credit and financial information to secure a loan as a guarantor on the loan.

The interest rate on commercial real estate loans Texas tend to be a bit higher than on a residential mortgage because of the increased risk that it represents to the lender. Because the value of commercial property is more volatile, lenders want to get a little bit better return on their investment. It is not uncommon to find rates ranging from 3.5% to around 6% depending on the type of lender that you are working with. The loan to value rate of the property can also influence the interest rate. The more money that you put down the lower the percentage of the price of the property you are financing. This means that the lender is willing to give you a slightly better rate. The primary reason is that they are concerned with the property holding enough value to cover the outstanding balance on your loan should you default. So the larger down payment means that you have instant equality and the lender is more confident that they will always be able to recover their investment in you.

Understand the Fee Structure and Payment Timeframe

In addition to paying interest you will pay fees to get commercial real estate loans Texas. You will be required to pay for the property appraisal, legal costs, the loan application fee, the loan origination fee and also the survey fee. Some lenders want these fees to be paid prior to the loan approval and others will simply apply the fees annually. If you are not sure that you will qualify for a loan then you will want to be careful to select lenders who will waive the payment of fees until after the loan is approved. Also, you will need to pay the appraisal and survey fees to all lenders as they are legally bound to complete those tasks themselves and cannot “share” the appraisal or survey documents.

Know the Total Cost of Borrowing Money

There are many terms and costs that are unique to commercial real estate loans. Knowing what all of these terms mean and how they will impact your ability to make payments is important. But the most important factor is knowing the total cost of the loan that you are requesting. Adding all of the fees to the interest will allow you to better compare your options and select the loan that is truly the best deal to meet your needs.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Important Criteria When Getting a Commercial Mortgage Texas

When you are applying for a commercial mortgage Texas, it is important that you know what lenders are looking for. Knowing this information will help you to get the best possible rates.

As you have learned more about the commercial mortgage Texas process, you learned that your creditworthiness is an important part of the equation. Having a credit score over 680 and having no foreclosures or bankruptcies is a basic must to qualify. In addition, your business needs to be three or more years old to demonstrate stability. But you have also learned that a lender is going to be looking at more than just your business to determine if your request is a good risk. The lender will be evaluating the property that you are purchasing to make sure that it meets certain criteria.

The location of the property can play a big part in getting approved for a commercial mortgage Texas. Lenders know that most business owners will be leasing a portion of the property to tenants to assist in paying the mortgage. Having the property in a large metro area will make it a more desirable location for tenants. Building in remote areas, rural areas or places with poor access are harder to lease. This increases the likelihood of the borrower defaulting on the loan at some point.

Leasing History is Critical

Another factor that the lender will want to investigate is the lease term that could be in place. If there are tenants in the building currently, how long does their lease extend? Having a tenant in place from the previous owner is great but having them locked into a long lease is even better. This is simply another sign that the borrower will have extended income from the property and is likely to have less difficulty in making the monthly payments. In addition to any current leasing information, the lender will take into account any past lease history of the property. Have there been any long term tenants in recent years? Has there been a lot of tenant turnover in the past? Again, the lender is trying to gauge the desirability of the property from a tenant’s perspective. Having a strong lease history is a key factor in securing a commercial mortgage Texas at a great rate. It helps to prove that the property will have a positive cash flow in the future and that the borrower will continue to be able to make the payments on the loan.

Property Condition Counts As Well

Another important factor in how desirable the property is to tenants in the overall condition of the building and the grounds. If the property is in disrepair then it will be hard to sign tenants to a long term lease and even harder to keep them in place. In addition, a property that needs a lot of work can quickly turn positive cash flow into negative cash flow. Repairs and renovations can quickly eat up cash and make it difficult to make the mortgage payments. Knowing what a lenders looks for in a commercial property can help you to select a property which will meet your businesses needs and also appeal to a lender as a solid investment.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Steps for a Successful Commercial Mortgage Texas

Having a plan to follow makes any process easier and that is certainly true for getting a commercial mortgage Texas. These steps will help you to determine a time line and know what to expect as you complete the process.

The first step in securing a commercial mortgage Texas is finding the best lender to meet your needs. You will want to speak to several lenders and gather information before you make your selection. If you have a strong relationship with your bank then this can be a good place to start. You might also want to research online which lenders provide the most loans in the price range that you are planning to spend. Selecting a lender who is accustomed to financiering loans of a certain dollar amount is wise. This means that every step of the process should be well documented and from application to approval the process should run smoothly. You can also speak to a broker for a recommendation.

Once you have selected a lender, then you are ready to begin the application process for a commercial mortgage Texas. There may or may not be a fee for the application process and that will depend on the lender that you have selected. Most lenders will require that you submit financial statements including business and personal records from the last three years. Some specific documents would include operating statements, tax returns, bank statements and net worth statements. When you speak to the lender they should be able to provide you with a detailed list of the documents that they will require.

Once you have submitted your documentation, the lender begins the evaluation portion of your commercial mortgage Texas. Using the financial information that you provided they calculate the likelihood of you being able to make the payments on the loan on a regular basis. While this process is underway, another group will be conducting a background check and credit check.

Property Evaluation is the Final Step

The lender will set up a property appraisal, which you will be paying for, to determine the current value and condition of the property. They will also research the title of the property to be sure that it is clear and able to be transferred. You will also need to pay for an environmental inspection of the property. This is to make sure that the soil is not contaminated and that there is no health risk or danger. Once all of the inspections are completed, all of the findings will be evaluated as a whole to determine if you will be given the loan.

Completing the Loan Agreement

If you are approved for the loan then you have one more round of paperwork to face. It is best that you involve a lawyer who specializes in commercial loan documents. They can review the document for you and be sure that the terms are correct and that you understand the contract prior to signing it. If you have any questions about terms that you do not agree with, then your lawyer can return the contract and request that changes be made. Once both you and the lender agree on terms, you sign the contracts at the closing and also make the down payment. Funding will typically be available within a few days of the closing.

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Mistakes to Avoid When Applying for Commercial Real Estate Loans Texas

Understanding the process for securing a commercial real estate loan Texas will help you to avoid wasting time and being declined. The process requires more than most business owners grasp or are prepared for.

Businesses can seek a loan for many uses but one of the largest loans that you might be seeking is also the most complex. Seeking a commercial real estate loan Texas is a process that needs to fully research and understood to ensure that you are successful in getting your loan and also that you get the best loan to suit your needs. Avoiding a few of the most common pitfalls along this journey can insure that you enjoy a successful application process and can purchase the property that your business needs. The first step in the process can be one of the most critical. You need to shop for the right lender who is offering terms that fit into your budget. This also means that you will need to be familiar with the terminology of commercial real estate loans to be able to accurately compare the terms being offered. It is also important to remember that even though you have an existing relationship with a bank, you will want to explore other options to seek what is currently available.

Your next selection can be equally as important as the lender that you select. As with any legal document, you will want to be certain to have a lawyer review the agreement prior to signing it. Selecting a lawyer with experience working in commercial real estate loans Texas is critical. This will insure that the loan paperwork is in order, that you are getting the deal that you asked for and that the terms are fair and legal.

Know What You Can Afford

You have obviously reviewed your business finances to be certain that you are ready to take on a commercial real estate loans Texas, but you need to have a strong plan in place. Your business plan is a good starting point as that was drafted as a guideline for the growth and progress of the business. But now you need to include how you are planning to pay off the debt of your new building. This might include reducing other costs and expenses, increasing your product line or offering products to a larger market. Not only will this help you to be certain that you can repay the loan but it will also help to give your lender confidence in your ability to make the payments.

Be Prepared On All Fronts

As a business owner, you are familiar with the stresses brought on by the ever changing business landscape. For this reason, you need to be very well prepared both financially and professionally. Having cash on hand for unexpected expenses or to cover the cost of the fees of your loan is important. This planning also demonstrates your financial responsibility to your lender. In addition, you need to have all of your financial documentation in order. This includes all of the profit and loss statements, bank statements and balance sheets current and available for the lender to review. It is also important that you have your personal finances in equally good order. These could be important if your business has little credit history or is only a few years old. Avoiding these common issues will make your application process much less stressful and will increase your chances for a loan with great terms.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

The Process for Commercial Real Estate Loans Texas

As the name implies commercial real estate loans Texas is the means that you will use to borrow money to purchase a business property. But what you might not know is how the process works and how you need to prepare.

When you begin to look at commercial real estate to purchase for your business, you will find that the prices are quite high. The only reasonable approach to purchasing a property is to get commercial real estate loans Texas. But don’t fool yourself into believing that this is just like getting your home mortgage loan only a little bit larger. The process is much more complex and will require careful and detailed planning on your part to be successful.

The first important fact to know is that commercial real estate loans Texas are secured by a lien on the property that you are buying. This is a document that gives the lender the legal right to seize the property if the borrower does not make the payments or fulfill any of the other terms of the loan agreement. In some cases there are very detailed clauses in the lenders agreement about the types of other loans that the borrower can enter into or the types of business partnerships or agreements that they can enter into during the time frame of the loan. This is just one reason that you would want to have any loan document reviewed by your legal professional prior to signing it. If you fail to meet any of the terms, even those that are not associated with making the payments, you could be in violation of the agreement and face a foreclosure.

In addition to the security of holding a lien on the property, the lender is going to require that you build instant equity in the property by making a down payment of 20% to 30% of the cost of the property. This is because the value of commercial real estate is more volatile than residential property. The economy can cause the price to fluctuate more quickly and drastically and the lender wants to be certain that the value of the property is always in excess of the loan amount. This insures that if the lender is forced to seize the property, then they can sell it to recover their full investment.

Learn the Terminology

In order to fully understand your commitment to the lender, you will want to take some time to learn the terminology that is common in commercial real estate loans Texas documents. This is how you will learn about the time period that you have to repay the loan and also how you will determine the total cost of the loan, the interest and the fees.

Have Your Documents in Order

It is also important that you have all of your businesses financial documents in order prior to applying for a commercial loan. You will need current and historical bank statements, rental agreements, balance sheets and tax records. If the business has no credit history, is only a few years old or has no previous loans then you will also need to be prepared to submit your personal financial information to the lender. This could be used to determine your creditworthiness to personally guarantee the loan for the lender. Knowing this information can help to make the process less stressful and more successful for your business.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Understanding the Repayment Terms of Commercial Real Estate Loans Texas

It is important to understand that the repayment terms of commercial real estate loans Texas are not like a personal mortgage for your home. Not only is the dollar amount larger but the terms are often much shorter.

Many business owners have some very unrealistic expectations when they start to look at commercial real estate loans Texas. They are expecting the same type of terms that they would get on a residential mortgage and are alarmed when they learn that is not the case. Where a residential real estate loan is typically 30 years, commercial real estate loans are broken into two main categories regarding their length of repayment term. The shorter of the two types is an intermediate term loan and it is three years or less and the longer term loans range from five years to twenty years. So the shorter term can make it much more difficult to repay the large loan amount needed for a commercial property purchase.

Another difference is that only some commercial real estate loans Texas are amortized. An amortized loan is one in which the loan gets repaid in fixed installments until you have paid back the entire amount. It is the same type of payment that most consumers have on their home mortgage. You make payments each month, at a fixed amount, which covers both principle and interest. But many commercial real estate loans Texas are not amortized so at the end of the term you are facing a balloon payment. The balloon payment is usually quite large but the reason many business owners elect to use this type of loan is that the monthly payments are lower. During the course of the loan, the borrower is paying only the interest on the loan amount so the balloon payment ends up being almost the entire amount of the principle. When this occurs, most businesses are forced to refinance the balloon amount to a new loan.

Beware of Prepayment Terms

As a homeowner, you are looking forward to any opportunity to pay a little extra on your mortgage to save some money on interest. But that is not normally the case when you are talking about a commercial real estate loan. There are several clauses that are added to the contract to protect the lender from the loss associated with an early payoff. A prepayment penalty is a fee or penalty that is calculated by multiplying the current outstanding balance by a specified prepayment penalty. An interest guarantee is a specific amount of interest that the lender is entitled to even if the loan is paid off early. And a lockout states a specific time period in which the borrower cannot pay off the loan. It could be a stated as a 5 year lock out and the borrower would need to wait longer than 5 years to pay off the loan.

Understand What You are Agreeing to Prior to Signing on the Dotted Line

There are many differences between a commercial real estate loan and a residential real estate loan. The biggest difference is the dollar amount but the differences in the terms are what you need to be aware of. Knowing the different repayment terms and clauses will help you plan how and when you will repay your loan.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Beware of These 4 Mistakes When Seeking Commercial Loans Texas

There is a lot of information that you need to gather before beginning to process commercial loans Texas. Knowing these common mistakes can help you avoid pitfalls and get your application approved quickly.

When you are ready to investigate purchasing commercial property it is important to gather as much information as you can about commercial loans Texas. All too often, buyers wait to begin researching commercial loans Texas until they have found a property that meets their needs. As a result, they are in a hurry to find a lender and do not complete their due diligence. It is critical that you review many lenders loan terms and qualifications prior to applying for a loan. In some cases you might not meet the stringent criteria of a commercial lender or you might not know that there are many upfront fees that you will need to pay even before you know that you have been approved. Failing to complete the research can result in wasting money on application fees, lost time resubmitting documentation and even the loss of the property that you hoped to purchase as another buyer who already has funding has purchased it.

Another common error is not hiring an attorney who specializes in commercial loans Texas. This is a big transaction and one that will be legally binding once you sign the contract. Knowing the terms and clauses that you are agreeing to is critical. The only way to be sure that the contract is fair to you is to hire an experienced professional to review the document for you and work on your behalf during the negotiation process.

Having a Plan Is Critical

If you have borrowed money in the past then you are certain to have created a business plan. But if you have never needed a plan and have been simply growing as you needed to increase your services, then it is time to create a full business plan. This is the document that sets your goals for the future and defines how you are going to reach those goals. It is an important document to guide the business and to show potential lenders and investors the path that you will maneuver to grow your business. Applying early is important, but you need to be able to show the lender your plans for the money you are requesting. You need to demonstrate that you have a purpose for the purchase, that you have a specific size and location in mind and that you have the means to repay the loan. You can begin the plan with an excerpt from your business plan and then go into more detail about the property that you are seeking and how it will help to grow your business.

Avoid the Common Issues

Purchasing commercial property is a big commitment and one that you should plan very carefully for. The size of the investment and the risk that it represents to your businesses financial security is rather large. So planning for the loan, carefully selecting the lender and having all of your financial and business documents in order will help to make the process less stressful, less time consuming and much more rapid.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Commercial Mortgages in Texas are Also Expected to See a Steep Impact from Hurricane Harvey

Bloomberg is estimating that around $8.9 billion dollars in commercial mortgages in Texas were hit hard by the devastating storms brought on from Hurricane Harvey. This is on top of businesses already suffering well before the storm made landfall, with issues in the real estate market and oil industry.

The commercial vacancy rate was the highest the Houston area has seen since 1994, nearing a mind-blowing 19 percent. On top of that, the area was also facing an oil slump and now they are stuck with damages caused by the record-breaking storm. Since Texas has a very relaxed approach to building codes, many of the buildings were not strong enough to withstand all of the rainfall and flooding that hit southeastern Texas.

Commercial mortgages in Texas may see a large loss from the storm, but nothing like residential mortgages. That is because most residential homes do not have insurance that covers flood damage. In fact, it is estimated that around 80 percent of the residential areas that were impacted by Hurricane Harvey does not have insurance coverage for flooding. There many also be a spike in loans to help people recover from these damages.

Hurricane Harvey is expected to only worsen the financial crisis that the Houston area was experiencing before they saw record rainfall from the category 4 storm that brought on massive flooding and causing quite a bit of damage to the area. The single storm that produced a national record of rainfall, could also rock the oil industry even more, causing commercial mortgages in Texas to suffer and require more time to rebuild.

Some lenders are optimistic when it comes to the recovery of commercial mortgages in Texas

Many are trying to forecast just how bad commercial mortgages in Texas were impacted by Hurricane Harvey. It can take some time to get the exact answer, but some are forecasting that the commercial market will be able to recover and maybe even faster than areas that were hit hard by previous hurricanes. This is very optimistic since the vacancy rate grew an outstanding 14 percent in just 3 years in the Houston area.

Commercial Mortgages in Texas will receive helping hand as they recover

Some good news for the area when it comes to commercial mortgages in Texas is the assistance they will be received from local banks and lenders. With the Houston area, already on the radar for many because of the slump they have seen in the real estate market, many banks and lenders are willing to work with those impacted by Hurricane Harvey. From allowing waived fees for late payments or even restructuring plans, many businesses will hopefully be able to recover with their help.

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage,commercial lenders

Hard Money Commercial Loans Texas

If you have located the perfect commercial property for your business but have not researched commercial loans Texas yet, then you will need a fast alternative to get funding. A hard money loan could be just what you need until you can secure conventional funding.

A hard money loan is simply a loan that is short term and the lender is an individual or private investor instead of a bank or other main stream lender. The loan is secured with the property that you are buying so that the lender has a means of recovering their investment if you default on the payment. The term of the loan is normally twelve months but it can be as long as 2 to 5 years. The borrower makes monthly payments on the loan which are normally all interest or interest and only a small amount of principal. At the end of the loan term there is a balloon payment that the lender must pay.

There are many reasons that hard money commercial loans Texas are popular with borrowers. The first is the fact that the biggest qualification for the loan is the value of the property. The lender is not looking at the borrower’s credit history, the financial condition of the business or even the industry that the company is involved in. The main criteria for getting the loan is that the property being used as collateral is worth more than the amount of the loan. In addition, the lender is not going to deny a loan due to a recent bankruptcy or other financial issue.

Another advantage of a hard money loan is the time that it takes to process. In many cases standard commercial loans Texas can take 60 to 90 days to complete the application process. But you can make a request from a hard money lender and normally have an answer in a few hours or a few days. This fast turnaround time can be very helpful if you have found a great deal on a property and need to act fast to make the deal. You will then have a year or more to complete your research and prepare to begin the application process for commercial loans Texas.

What Hard Money Can Be Used For

In general, hard money loans are much more flexible than conventional loans. The only caveat is that the property have a value greater than the loan amount that you are asking for. The lender is making a better interest rate on the hard money loan but they do want to be sure that the collateral property will hold its value. In many cases, you will need to make a decent down payment to create instant equity. This assures the lender that the property will always be worth more than you owe and foreclosing would allow them to recover their investment.

What a Hard Money Loan Will Cost You

You are going to be paying a slightly higher interest rate and you will also be paying points. But the exact rates will be determined by the lenders. If you are in an area of the country which has a large number of investors offering hard money loans then the rates should be very competitive. But in areas with few investors the rates could be higher. As with any potential loan, you will want to ask for a full fee schedule and list of any other charges that you might need to pay before you sign the loan agreement.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tips to Help Manage Your Expectations When Seeking Commercial Real Estate Loans Texas

Getting commercial real estate loans Texas is more complex than you might expect. Knowing these few tips will help you to understand what to expect and how to succeed when submitting your application.

The greatest frustration for most borrowers who are new to commercial real estate loans Texas is the time frame that it takes to complete the application process. Most lenders will paint a rosy picture about getting you a response in just a few days and that the money could be in your hands in just about a month. That is pretty much just salesmanship to get you to complete the application with them. In most cases the lead time to get funding is around three months. Some lenders will say that is only if the borrower does not follow the application process to the letter, but there are many forms and documents required.

You also need to expect the fees that you will be charged for the loan application, the loan origination and also survey and appraisal fees. All of these are part of the cost of getting commercial real estate loans Texas. But what you also need to know is that you don’t need to pay all of the fees before you are approved for the loan or at least have a good chance of getting the loan. A lender will issue a term sheet which is a good faith estimate of the fees and terms that would be included in your loan documentation. This is a good sign that you are on your way to getting the loan you requested. Once you see that document, then you can feel a little more secure in paying for the appraisal fee and the loan doc fees.

When it comes to the appraisal fee, you might be tempted to have the appraisal done yourself to try to save a few bucks. This could make a lot of sense if you are applying to a few banks and want to pay for only a single service. But commercial lenders are required by law to request their own appraisal. So don’t get talked into paying an extra appraisal fee thinking it could save you time or money.

Beware of Individual Lenders

When you are reviewing your options for commercial real estate loans Texas, be sure that you know who you are doing business with. There are many dishonest people who will claim to be an investor only to get you to pay high fees to apply for a loan. They might promise that the fees are all rolled back into the loan or that they offer a much lower interest rate than a bank but it is all a scam.

Pick the Right Size Lender

Matching the size of your loan request to the size of the lender will make the process go much more smoothly for you. Taking a small request to a national bank who lends billions each year is only going to frustrate you. You will be thrown into a process that is very detail oriented and you might not even speak to the person who is you loan officer. Likewise, taking a huge request to a small local bank is likely to get you very little help or a loan. They will be overwhelmed with the large request and not have the processes in place to work at the scale that you need. Making a good decision about a lender is the first step in a successful loan request.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

5 Sources for Commercial Lending Texas

When you are researching commercial lending Texas you will learn that there are five main lenders that you can select for your loan. Knowing about all of your options will help you to make the best selection to meet your current and future needs.

As you begin your research on commercial lending Texas you will find that you have several options. The one option that business owners are most interested in is a loan through the Small Business Administration. The SBA is not the actual lender but they do work with a group of lenders to offer some exceptional benefits and terms for an SBA loan. The biggest benefit is that the down payments required on an SBA loan are normally much smaller than on a conventional loan. In addition, the interest rate is always fixed and also the funds can be used for building improvements. The down side is that there are loan origination fees, prepayment penalties and the owner must often provide a personal guarantee on the loan.

Conventional financing from a bank or savings and loan office is by far the most common source of commercial lending Texas. This is the process of going to your bank, completing the application process and hopefully getting approved for the loan. In most cases you can expect a conventional lender to be willing to write a loan for about 75% of the cost of the commercial property. This offers the lender added security in knowing that the property, which is the collateral for the loan, will always have a value greater than the balance of the loan. This is critical in the event that you default on the loan and the lender needs to recover its investment.

A less common known resource for commercial lending Texas is seller financing. This method was more popular when the conventional rates were in excess of 5% but there are still some buyers who use this financing option. One of the key benefits is that the seller avoids paying for the appraisal fees and the loan origination costs. In addition, there are times when the buyer is unable to get approved for a conventional loan but the seller is still willing to provide financing.

A Less Common Funding Resources

In some cases, you will be able to get a loan from a third party. This could be a hard money lender or even a family friend or relative. This is an opportunity for you to get the money that you need without paying all of the fees associated with a conventional loan. In addition, it can provide a nice return on investment for the lender. You will still need to pay some legal fees to have a good contract drawn up but the fees and the time to process the transaction will be much less than any other type of loan that you might get. Finally, if your business has been particularly successful then you might be in a position to pay cash for your property. If you have the cash reserve, you still might want to take the opportunity to finance a part of the purchase cost to establish or increase your business credit history. Knowing your options for lending resources will allow you to make the best financial decision for your short and long term goals.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Getting Approved for Commercial Loans Texas

Using commercial loans Texas is the most common means of purchasing a commercial property. But getting approved for the loan is not as simple as you might think.

When you are interested in buying a commercial property your first search on the internet should be commercial loans Texas. You will want to completely understand the requirements for getting approved as well as the amount of information that you will need to provide for the lender. Knowing this information can save you a lot of time and frustration as you enter into the world of commercial loans Texas.

One of the biggest factors in the amount of money you will be able to borrow is the actual value of the property that you want to purchase. An appraisal is needed to determine the value of the building and land that you will purchase. This is critical information for the lender as they need to be sure that the property value is greater than the amount of money that you are borrowing. And unlike a residential property, a commercial property value depends on the location, accessibility and size in addition to the condition of the property.

Another big factor in your approval for commercial loans Texas is your credit record. Due to the size of most commercial property loans, the financial requirements are more stringent than those for a residential loan. In addition to a strong payment history and good credit overall, lenders will want to see that you have a steady stream of revenue which will allow you to make the needed payments. Your profit and loss documents as well as your account receivable will be important to show that you can afford the loan that you are requesting.

Be Ready For a Big Down Payment

Along those same lines, you will need to be able to make a significant down payment on the property. There are a few reasons why a larger down payment is required. First, a commercial loan is much larger than a residential loan and that means it represents more risk to the lender. In addition, commercial property values tend to fluctuate more frequently than residential properties. The lender needs to be certain that the value of the property never drops below the remaining balance on your loan. Making a large down payment gives you instant equity in the property and provides the lender with added security as well.

Know Your Lenders Requirements

All of these factors are fairly common requirements across most commercial lenders. But you will want to speak to each potential lender to get a list of their criteria for granting a loan. In some cases your business might be too new or not have a substantial enough credit history to qualify for a loan. In that case, you will need to provide personal financial documentation and then a personal guarantee for the loan to be processed. Knowing what the lenders require will allow you to select the lenders who offer you the best potential outcome as well as the best terms to meet all of your financial needs.

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