Setabay Private Hard Money Lender

Wednesday, September 20, 2017

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.

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

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.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Setabay Private Hard Money Lender

Wednesday, September 20, 2017

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.

Beware of Prepayment Terms

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

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.

Having a Plan Is Critical

Avoid the Common Issues

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

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

Commercial Mortgages in Texas will receive helping hand as they recover

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.

What Hard Money Can Be Used For

What a Hard Money Loan Will Cost You

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.

Beware of Individual Lenders

Pick the Right Size Lender

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.

A Less Common Funding Resources

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.

Be Ready For a Big Down Payment

Know Your Lenders Requirements

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