Tag Archives: commercial lender

Things to consider before applying for a Commercial Loan in Texas

Before beginning the commercial loan application process it is important to ask yourself the right questions. Asking yourself these questions will help you evaluate which funding source is right for you.

4page_img1Whether you should apply for a Commercial Loan Texas depends on your situation. Are you a new business owner without a proven track record? Do you need financing quickly? Your answers to these and other questions will impact the type of loan you should apply for or whether you should apply for a loan in the first place.

What are your personal and business credit scores? If either of these scores are low, you may not qualify for an attractive loan with a low interest rate and you may want to consider non-traditional financing options. Of course if you are a new business, you probably don’t have a business credit score. In such cases it is important that you have a detailed business plan prepared prior to beginning the application process. That way your lender will at least have confidence in your businesses ability to pay back the loan in the long run. In either case, if your credit score is low you may want to raise it before beginning the loan application process.

How fast does your business need the money and what do you need it for? If you’re business needs financing urgently, then your options are limited to loans with higher interest rates. The application process for business loans usually takes some time and expediting the process means you as a borrower are considered “riskier.” It is important to anticipate what your business needs in the future, in order to avoid taking out expensive loans. Also have a detailed understanding of what you will be using the loan for and what return you can expect on your investment. If you’re uncertain of how much money you need, you should consult with a business advisor before beginning the application process. Lenders will expect you to have a detailed understanding of how you intend to use the loan and to provide supporting documentation.

How do these questions help?

If you are a new business owner without a proven track record or if you have a poor credit history, you may want to reconsider taking out a loan. There may be less expensive options to secure the funding you need, such as seeking out new investors or selling off some of your personal property. It is also important to plan ahead of time, to know how your business generates revenue to understand whether the expense of a loan is worth it in the long run. Don’t borrow money if the project you are financing doesn’t generate enough revenue to justify making interest payments.

Above all consider your situation and plan ahead of time before

getting a commercial loan in Texas and plan ahead

Consider your situation before seeking a commercial financing. If your credit score is low you may want to consider other options. Before beginning the process, ask yourself if you really need the money or if the burden of a loan is worth it in the long run. If your uncertain how your business will make money from the project you are financing you may need to reevaluate whether a loan is worth it.

Happy senior business man making his notes at workDennis 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.

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Evaluating your options when finding a Commercial Mortgage

Securing a Texas commercial mortgage can be a daunting process. It is important for you as a borrower to understand the basic characteristics of the institutions that provide these loans.

Getting a mortgage to purchase commercial space can be a long process. Before you begin, know where you are applying and how the organization operates . Commercial banks, credit unions, conduits (i.e. Hedge funds) life insurance companies and hard money lenders are the most common originators of these types of mortgages. This article details the basic characteristics of these organizations so you can know where to apply and find the loan that is right for you.

Local commercial banks are more likely to lend to smaller businesses. They have specialized knowledge in the local commercial real-estate markets and have a vested interest in financing projects in their immediate area. Credit Unions are similar, but have only just recently become common providers for commercial loans. In either case before approaching a credit union or a local bank you should be aware of the conditions in your local real-estate market and thereby have a better understanding of the amount of money you need to borrow.

Conduits (hedge funds) are another common source of commercial financing. They securitize mortgages and sell them onto secondary markets. Therefore these groups are less likely to have an immediate interest the conditions of your local area. They finance expensive projects and usually the loans they issue are a minimum five million dollars. A distinct feature of loans issued by conduits is that they come with pre-payment penalties, as the loans they issue need to continuously generate income from your interest payments. Life insurance companies are similar, issuing mortgages to bolster their portfolios, they offer perhaps the lowest interest rates on their loans. However life insurance companies are perhaps the least likely to approve a commercial loan.

Hard money lenders widely vary, but usually charge the most in interest. However securing a loan from a hard money lender is often easier than getting a loan elsewhere. However the higher interest payments reflect a higher assumed risk on the part of the lender. Consider these organizations as a final resort should your application be denied elsewhere.

What does all this mean?

It is important to consider the characteristics of your business and to find an organization aligned with those characteristics when searching for the right mortgage provider. If you are a smaller business or organization you might want to go to your local commercial bank. If you are seeking to finance a larger project you should probably go to a “conduit,” or potentially a life insurance company in order to secure more funding. Hard-money lenders, charging the most in interest while providing the fastest approval process are probably the best option if you need to secure funding quickly, or if you cant secure funding from other sources.

Consider the scope of the project you are financing and find an institution of a similar size.

This is crucial, if you are seeking a smaller commercial Texas mortgage you don’t want to get bogged down in the slow impersonal process common to larger banks. However if you are seeking to finance a larger project you may need to go to a larger bank. Either way knowing the character of the institution where you are applying for your mortgage will help you find the loan that is right for you.

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 mortgages,commercial loans,commercial lender,commercial hard money lenders texas,commercial mortgage Texas,commercial loan Texas,commercial mortgage Arizona,commercial loan Arizona

Differences Between Residential and Commercial Mortgages Texas

What are the key differences between a commercial and residential mortgages Texaxs and how can they impact you as a small business owner? Learning these differences can help you develop a strategy to secure the financing you need.

Understanding the nuances of the commercial versus residential real-estate markets can give you as a business owner a better strategy and help you manage your expectations about the lending process. Commercial properties are valued differently and every commercial property is different. Unlike a house, where the value is determined using comparable sale methods, commercial properties are valued based on how much investors in the area are willing to pay for the potential income generated by the property. Therefore commercial lenders are not lending based solely on the value of the property, but on your ability as a business owner to generate income. Lenders know each business carries different amounts of risk. These factors impact the amount you’ll need to borrow for your mortgage, the time it takes to qualify and the way your mortgage is repaid.

Consider the context of the commercial property you are attempting to finance. Is it located in an office block? A strip-mall? Is it a big box anchor store? Whatever the case, each type of commercial property differs in its potential to generate income. Lenders will consider this, perhaps even more than your credit score, so it is important to have a well-thought out business plan detailing how you intend to make money in your new business. Additionally, know your area. Commercial lenders tend to make loans to finance properties in local markets where they know how much investors are willing to pay for commercial properties. Have a sense for how much comparable properties are selling for in your area to get a sense of how much you may need to borrow.

Financing a commercial property is considered riskier and this greatly affects the terms of the loan and the time it takes to qualify. When financing commercial properties lenders realize that they are lending to businesses and not individuals. They assume paying your residential mortgage will be your first priority. Therefore these types of mortgages are considered riskier. The loan terms are usually shorter and the interest charged is often higher. The greater risk assumed by the lender with commercial mortgages Texas means that lenders generally prefer a higher down payment on these types of loans. Consider re-financing your house to get additional money before applying. These types of mortgages are also highly specialized and the time it to qualify will vary depending on the property. C-loans recommends allowing yourself four months before you can expect your loan to be approved.

What does all this mean?

Understand that commercial real-estate is valued differently than residential real-estate. Know the type of property you are seeking to finance and be sure you understand the local real-estate market. Assume the terms of the loan will be less favorable, expect to pay a higher down payment and expect to wait a long time before your mortgage is approved. Knowing these key differences between residential mortgages and commercial mortgages Texas will give you a better understanding about the process.

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.