Setabay Private Hard Money Lender

Wednesday, September 20, 2017

Getting the Best Terms on Your Commercial Mortgage Texas

When you are seeking a commercial mortgage Texas, it is important to understand the criteria that the lender is looking for to determine your creditworthiness. Meeting or exceeding these requirements can afford you much better terms from a convention lender.

Applying for a commercial mortgage Texas is a process that requires time, planning and also the payment of some nonrefundable fees. You will want to be sure that you understand the requirements to qualify for a loan before you submit your documents to avoid wasting time and money. A lender is going to require documentation to verify your credit rating, liquidity, net worth and the value of the property that you are going to purchase. All of these factors will help the lender determine if you are a good risk and if they are willing to loan you the money.

In general terms, to qualify for a commercial mortgage Texas, you should have a credit score of over 680 and have no foreclosures, bankruptcies or tax liens on your recent credit reports. Your business should also be three or more years old. If the business does not meet these criteria, then you should expect to be asked for your personal financial information. As long as you have good credit and are financially stable, then the lender would ask you to provide a personal guarantee on the loan. This means that if the business fails or you close the business for any reason, you would still be personally responsible for repaying the loan.

Aside from the financial health of your business, the next most important piece of information is the actual property that you want to purchase. This is the property that will be the collateral for the commercial loan. With that in mind, the lender wants to be certain that the property will retain its value for the entire life of the loan. This is the lenders safety net in case you default on the loan. The lender would then foreclose on the property and sell it to recover their money. Because commercial property values can fluctuate rapidly, the lender for a commercial mortgage Texas will want you to make a substantial down payment to ensure that you have instant equity and also to be certain that the property value remains greater than the balance of the loan.

Negotiate for Good Terms

When you begin to speak to lenders you will want to ask for a list of all fees that they charge to process a commercial loan application as well as all of the fees associated with processing an approved loan. You will also want to negotiate the best interest rate that you can. Making a larger down payment can often reduce your interest rate by as much as a full point. Having all of these numbers will allow you to calculate the total amount that the loan will cost you.

Select the Best Loan

Once you have determined the actual cost of each loan option, you will want to determine which lender best meets your needs. In most cases you are looking for the lowest cost but there can be other factors. You might be looking for a longer term and be willing to pay a little more interest over the course of the loan to have more time to make payments. The lower monthly payment could be more critical to you than the total cost of the loan. With your research complete you need to select the lender and the loan that best meets 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

Preparing for Commercial Loans Texas

Preparing to apply for commercial loans Texas can be a long process. But it is one that will provide a great return on your investment.

Applying for commercial loans Texas is more complicated than most business owners think it is. There are many qualifications that you will need to meet and many documents that you will need to provide to demonstrate your creditworthiness and professionalism to the lender. Investing some time to prepare your documentation and to understand the criteria for approval will save you time and money when you find the perfect property to purchase.

One document that your lender will scrutinize is your balance sheet. Not only do they want to know that you have a good credit history and that you have remained current on other loans but they will also want to see the money that you have coming in each month. Cash flow is what is going to give you the ability to repay your loan and the lender will want to see a consistent income over a long period of time to know that you are a good risk.

As you prepare to apply for commercial loans Texas you will also want to find an experienced legal professional to assist you. In most cases hiring an attorney who specializes in commercial loans Texas will ensure that you can negotiate the best terms and rates for your loan and also that the documents are completed correctly. The money that you spend on legal assistance will be only a small amount in comparison to the money that your attorney will save you on fees and interest during the life of the loan.

Find the Right Lender to Meet Your Needs

You might think that you only need to approach your current bank when you are seeking a commercial loan but the truth is that you need to broaden your search. In some cases, your familiar banker will be the best choice but you have no way of knowing that without speaking to several lenders. Borrowing from a lender who is the right size to best meet your needs can be critical to the long term success of the business relationship. A smaller lender is more likely to offer you a small loan and a larger lender is a better resource for a larger loan. It is simply a matter of finding a lender who specializes in what you are looking for. When you match their services to your loan then the processes will be simpler and smooth and your service will be of a much better quality. In addition, you are likely to get approval much more quickly when using a lender who is accustomed to processing many loans of the same approximate dollar amount.

Have Your Ducks in a Row

Knowing that you are entering into a long process, it is always wise to have your documents and information in good order. Submitting multiple packets can greatly slow down the approval process and can also cause your entire application to be rejected. Knowing some of the common pitfalls of the loan application process and avoiding them can make getting your loan must faster and easier.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Key Terms to Understand When Considering Commercial Real Estate Loans Texas

Commercial real estate is valued differently than residential real estate. Knowing some key terms will improve your understanding of commercial real estate loans Texas.

Residential property value is determined greatly by the location and the size of the property as well as the amenities and finishes. But commercial real estate is a very different entity. The greatest value in a commercial property is the usable square footage. The ability to make money through the use of the property is all that really hold value so the current condition and features are not really as important as they would be in a residential property. Knowing and understanding the key terms used when evaluating commercial real estate will help you to better understand commercial real estate loans Texas and why certain properties hold more value than others.

Net operating income is a critical factor in determining the potential value of a commercial property. NOI is determined by evaluating the property’s first year gross operating income and then subtracting the first year operating expenses. As you would expect, you want to have a positive NOI. When a property makes money in its first year it is a strong indicator that it will continue to turn a profit and that is what increases the value of a commercial property. When a property has a positive new operating income then that property is going to be great collateral for commercial real estate loans Texas.

Cap rate is a term that is also used to evaluate an income producing property. This is an important term if you are purchasing a property and will be using part of it for your business and renting out the remaining portion of the property. The cap rate is used to project the net present value of the future cash flow generated by the property. Again, a property that is demonstrating good income is always going to be favored in commercial real estate loans Texas over a property which is not providing as much income. Purchasing a property with a strong income history will increase your potential for a commercial loan at a good interest rate.

Know What Lenders Are Looking For

When you are seeking a loan on a commercial property, lenders are concerned with the financial stability of your business and also your creditworthiness. But they are equally concerned with the value of the property that you are purchasing. Not only are they looking at the current market value but they are also looking at the earning potential of the property.

Finding the Best Property for Your Needs and the Loan Criteria

When you are shopping for a commercial property the requirements are somewhat different than shopping for a residential property. The residential property must meet only your needs. But a commercial property is often more desirable if it meets your needs as well as the needs of your lender. That means that if the property can generate income to decrease the risk on your loan then it is a better choice. You might not have considered being a landlord but having tenants who are helping to pay your monthly mortgage can be a big advantage for you.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tips You Should Know Before Appling for Commercial Loans Texas

Purchasing a commercial property can offer many benefits. But you need to fully understand the process before you apply for commercial loans Texas.

Most consumers know that a commercial property loan is a little bit different than a residential loan but they are not really sure how the two differ. When you research commercial loans Texas you will learn that commercial mortgages charge higher interest rates and often there are more restrictions written into the loan agreement than in the case of a residential mortgage. But borrowers who are savvy know that using a broker who specializes in commercial loans Texas can offer some great benefits. Brokers have access to second tier lenders who are willing to offer more competitive interest rates and lowers fees. These commercial loans Texas can be almost as cost effective as a residential mortgage loan.

Most first time commercial loan borrowers also don’t realize that they are going to need to make a more substantial down payment that they would on a residential property purchase. In some cases you might be required to pay 30% to 40% down. This is because the value of commercial properties can fluctuate much more and even more rapidly than residential properties. Lenders want to be sure that there is always equity in the property as that assures them of a means to recover their money if you default on the loan.

Another surprise for many new borrowers is the term of a commercial loan. A residential mortgage is commonly 30 years but a commercial mortgage can be as short as five years. The longest commercial mortgage loans are 20 years but most lenders will only extend the loan to 15 years. This means that you should also be expecting a higher monthly payment due to the shorter time frame of the loan.

What to Know If You Plan to Lease Space

If you are planning to lease part of the space in your new commercial property then you will also want to learn about the most common commercial lease terms. These terms can be very beneficial to you as you are depending on the lease money to help repay your commercial mortgage. Unlike the standard one year lease on a residential property, commercial buildings often require a longer commitment from the tenant. The most common terms are 3 years and 5 years. In addition it is very common to offer a 3 or 5 year option to allow the tenant to extend their lease after the initial term has expired.

Know What to Expect in Fees

Commercial loans require property appraisals and environmental tests to make sure that the property is not contaminated. These fees are passed on to the buyer and so are many of the administrative fees. You can expect to pay an application processing fee which is due prior to processing. This fee and the appraisal fee are normally nonrefundable. If you are approved then you will be asked to pay a processing fee, legal fees and points in addition to the interest on the loan. Knowing what to expect and how the process works can help to eliminate some of the stress that you will experience the first time that you are applying for a commercial property loan.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Commercial Lending Texas: How Harvey impacted Local Banks

Harvey's impact may result in immediate losses to Texas commercial lenders. Insurance payouts and construction loans could prove to be a long term benefit.

Banking activity in the Houston area accounts for 2 percent of banking activity nationwide. The storm may have inflicted up to 190 billion dollars in property damage. Not all banks are equally exposed to this damage, but the impact the storms impact will certainly be felt commercial banks in the region. In particular by those organizations with a majority of their accounts in the Houston area.

Banks that are concentrated in the Houston area face greater exposure to Harvey's aftermath. Allegiance Bankshares faces the greatest risk. Virtually all of its deposits and accounts originate from the Houston area. Other notable banks, Prosperity Bancshares and Zions Bancorp, also face significant risk. 30 percent of Prosperities accounts and 19 percent of Zions are concentrated in Houston.

During the storm the brunt of the impact on banking activity manifested in closures to local banks. Prosperity, for example was forced to close 60 locations during the storm, or 25 percent of its total branches. However the greatest concern for investors probably remains the potential damage to properties mortgaged by these local banks. This uncertainty drove down share prices down, not just for these organizations, but for exchange trade funds (ETFs) invested in these regional banks. For example, the 3.2 billion dollar KRE fund has 1.31 percent of its shares with Prosperity and 2.46 percent of its shares with Zions. The share price of KRE fund and of these banks themselves, dipped in the immediate aftermath of the storm. However the price of these shares seems to be recovering as investors grow more confident in the long term stability of these local commercial banks.

At this point it remains difficult to assess just what the long term impact of Harvey will be on commercial lending in the Houston area. One way to assess the impact of the storm is to examine the impact Hurricane Katrina had on local Banks in New Orleans. Analysts predict in the short-term, loan activity will drop off and losses will pick up as damaged properties are written off of balance sheets. However many see a bright future for Houston's’ regional banks. Local banks saw deposits grow by 20 percent in the wake of Katrina. This may be the case in Houston as insurance companies issue pay-outs and federal aid comes into the area. Lending activity may also increase as those impacted by the storm seek financing to rebuild and repair damage. Prosperity CEO David Zalman claims “We’re used to this, in the long run, this will create a robust economy for the state. You will see deposits increase in Texas banks because of the insurance money.”

In the short-term Texas commercial lenders and regional banks will suffer as damage is assessed.

The scope of physical damage to bank facilities is still being assessed, as well as the damage to properties financed by these local banks. In the short term this uncertainty may spook some investors. This was evident in the immediate impact on share prices for the Houston based commercial banks mentioned before. Investors seem to have long term confidence however, as the share prices of these banks has since recovered.

Texas commercial lenders and regional commercial banks may see a long term benefit from Harvey.

No doubt as federal aid and insurance pay outs are distributed, locals will increase their deposits in these banks. Lending activity is also likely to rise in the long run as those impacted by the storm seek financing to reconstruct their damaged properties. However investors long term confidence in the regions banks may not recover, if another disaster of similar scale to Harvey, strikes Houston area in the near future.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Texas Commercial Mortgages: Billions at stake due to Hurricane Harvey

Hurricane Harvey puts many securitized commercial mortgages in Texas at risk.

Moody’s claims some 1,500 properties may have been impacted by Hurricane Harvey amounting to 19.4 billion in outstanding CMBS loans. The number of CMBS financed properties at risk varies with each analysis. Competing methods of analyzing the storms damage to investors’ portfolios have emerged. One method is to consider the wider area impacted by the storm, the other is to consider the areas that were more acutely impacted.

One method of analyzing the damage is to consider properties in the disaster area declared by Governor Gregg Abbott. The area includes 54 counties and reaches as far as San Antonio. An opposing approach is to consider the disaster area declared by FEMA, an area encompassing some 33 counties. The first approach gives a broader sense of the storms potential impact on CMBS properties, while the second offers a more clinical assessment.

In the state declared disaster area there are about 1,200 CMBS loans amounting to 15.1 billion dollars that could be impacted by the storm. These loans are not government sponsored, and therefore, pose a higher credit risk to investors. Retail properties have the highest exposure among these loans. Making up 32.9 percent of the total, or 5 billion dollars, of the outstanding CMBS loans.

Considering the areas impacted according to FEMA the number of CMBS loans at risk is smaller, but the overall impact remains the same. In the 33 counties declared “disaster-areas” by the agency there are 900 non-government sponsored CMBS loans, amounting to a balance of 12.2 billion dollars... Retail properties again face the greatest exposure, making up about 30.1 percent of the total.

It will be difficult to directly quantify the impact of Hurricane Harvey on the CMBS market and Texas commercial mortgages in the short term.

Whether analysts consider the broader area impacted by Hurricane Harvey or the areas more acutely impacted the extent of the damage to the CMBS market will be difficult to estimate in the short term. The damage to each individual property will have to be assessed.

What is clear from both overviews is that retail makes up the largest share of CMBS loans potentially impacted by the storm. The performance of these loans in the future will largely depend on how the local economy recovers and whether these retailers will be able to retain their customers.

In the long term securitized commercial mortgages in Texas will continue to face risk from natural disasters.

Simply put CMBS lenders don't underwrite the potential cost of natural disasters. Therefore the market will always face exposure when disasters like Hurricane Harvey take place. Flood insurance, FEMA assistance and the willingness of private insurers to underwrite risk encourages development in disaster prone areas, in Texas and throughout the nation. Insurance may repair the damage caused by these disasters on the surface, putting some investors at ease. But the damage Hurricane Harvey inflicted on the local economy remains unclear. With retail properties facing the greatest exposure, the greatest risk to CMBS loans is not superficial damage that can be repaired, but Harvey's long term damage to the local economy and whether retailers can secure customers in areas where the population is displaced.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Commercial Real Estate Texas: What Tenants need to know

If you lease commercial real-estate in Texas, your land lord is obligated to protect your health and safety. However if a land lord refuses to make reasonable repairs it is vital that you don't take preemptive steps.

There are two types of conventional commercial leases in Texas, the periodic lease and the term lease. The periodic lease gives the tenant having the option of terminating the lease at the end of each month. Under a periodic lease tenants are obligated to pay rent for a full month plus one day, before vacating the property. Term leases last for a period agreed upon between the land lord and the tenant. Under this type of lease generally no changes can be made until the lease is up for renewal. Under a term lease tenants may have to pay the cost of maintaining the property.

No matter what type of lease your business has the land lord is obligated to ensure your basic health and safety. The land lord must ensure basic fire protection and ensure that devices like smoke detectors are well maintained. The land lord must maintain basic security and keep locks and alarms are in working order. Apart from these basic conditions, the land lord’s responsibilities will largely be defined by the terms of your lease. If you believe poor conditions have a material impact on your health and safety, the land lord is obligated to make repairs. If your lord refuses to make repairs, it is vital that you avoid withholding rent or taking preemptive action.

If you lease commercial real-estate in Texas, take specific steps before taking any action against your land lord.

The Texas Attorney Generals website advises you to make any complaint directly to your land lord via a certified letter. Clearly outline the repairs needed to the property. Prior to taking this step, be sure your rent is current. Upon sending the letter, request documentation proving your land lord received it. The land lord must make repairs within a reasonable time frame. This is generally within seven days of receiving the letter. If the land lord doesn't take reasonable steps to make the repairs outlined in the letter, send the letter again and wait another seven days. If the land lord doesn't respond, you may be able to terminate the lease. You may also be able to make any necessary repairs yourself and deduct the cost from your rent. You may also sue your land lord in order to compel them to finance the repairs you believe are necessary.

With Texas commercial real-estate the land lord’s responsibilities are largely defined on a case by case basis

Generally the terms of your lease will outline the land lord’s responsibilities for maintaining the property. Although land lords are obligated to protect your health and safety, you may have to prove in court how conditions on the property negatively impact you and explain why you believe your land lord is responsible. Therefore don't violate the terms of your lease prior to sending a certified letter, to demonstrate that the land lord is aware of your complaint. Consult with legal experts if necessary.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Setabay Private Hard Money Lender

Wednesday, September 20, 2017

Getting the Best Terms on Your Commercial Mortgage Texas

When you are seeking a commercial mortgage Texas, it is important to understand the criteria that the lender is looking for to determine your creditworthiness. Meeting or exceeding these requirements can afford you much better terms from a convention lender.

Negotiate for Good Terms

Select the Best Loan

Preparing for Commercial Loans Texas

Preparing to apply for commercial loans Texas can be a long process. But it is one that will provide a great return on your investment.

Find the Right Lender to Meet Your Needs

Have Your Ducks in a Row

Key Terms to Understand When Considering Commercial Real Estate Loans Texas

Commercial real estate is valued differently than residential real estate. Knowing some key terms will improve your understanding of commercial real estate loans Texas.

Know What Lenders Are Looking For

Finding the Best Property for Your Needs and the Loan Criteria

Tips You Should Know Before Appling for Commercial Loans Texas

Purchasing a commercial property can offer many benefits. But you need to fully understand the process before you apply for commercial loans Texas.

What to Know If You Plan to Lease Space

Know What to Expect in Fees

Commercial Lending Texas: How Harvey impacted Local Banks

Harvey's impact may result in immediate losses to Texas commercial lenders. Insurance payouts and construction loans could prove to be a long term benefit.

In the short-term Texas commercial lenders and regional banks will suffer as damage is assessed.

Texas commercial lenders and regional commercial banks may see a long term benefit from Harvey.

Texas Commercial Mortgages: Billions at stake due to Hurricane Harvey

Hurricane Harvey puts many securitized commercial mortgages in Texas at risk.

It will be difficult to directly quantify the impact of Hurricane Harvey on the CMBS market and Texas commercial mortgages in the short term.

In the long term securitized commercial mortgages in Texas will continue to face risk from natural disasters.

Commercial Real Estate Texas: What Tenants need to know

If you lease commercial real-estate in Texas, your land lord is obligated to protect your health and safety. However if a land lord refuses to make reasonable repairs it is vital that you don't take preemptive steps.

If you lease commercial real-estate in Texas, take specific steps before taking any action against your land lord.

With Texas commercial real-estate the land lord’s responsibilities are largely defined on a case by case basis

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