So you’re all set to apply for multiple commercial real estate loans, but are you really? In other words, do you know everything you need to apply?

As a savvy business person, you’ve probably done everything you could possibly think of to get ready for the world of commercial lenders, brokers and more. So, first off, give yourself a hand. Most people simply do not take the time to do the necessary research when it comes to non-residential or commercial real estate loans. Of course, it can be difficult to want to research such a topic if you are not in a true need of a non-residential loan. The truth is unless you are a business owner, the phrase commercial real estate loans just isn’t a point of interest and that’s perfectly okay.

However, as we have already established you aren’t most people. You want to be fully apprised of all things real estate and you are dying to find out if you missed any important key facts in your research. Thus, let’s get down to business. If this is your first time at the commercial real estate rodeo, there are essentially three important facts to know about non-residential real estate loans.

For starters, it cannot be stress enough that securing a commercial loans means much more than stellar credit history or strong personal financials. Good credit and matching personal financials are great. But, when dealing with a commercial real estate lender, they want to talk business i.e. what’s the current condition of the property (this includes photos, current mortgage, etc.), what are the projected day-to-day operations along with a whole host of other business-related matters such as up-to-date rent roll documentation, proof of additional incomes, new capital improvement and more. Do some of these things sound unfamiliar to you? If so, there’s no need to panic. The potentially good news is that there different sources or rather different commercial real estate lenders, besides banks. Thus, you may need the above-mentioned items plus more or you may need other required documentation that is applicable to your specific property type or lender.

The Differences between Lenders

As briefly suggested, another important fact about non-residential real estate loans is that their lenders come in all shapes and sizes. In other words, you can choose the traditional route of portfolio lenders such as banks, credit unions commercial lending corporations. If you are not the traditional commercial borrowing kind, you can also choose from government agencies such as Fannie Mae and Freddie Mac or you can choose others lenders including CMBS Lenders (transferred trust), SBA Loan (property and equipment), Private Money Lenders (for non-conventional qualifiers) or insurance companies (tailor made loan packages). The point is you’ve got a lot of options, so don’t be afraid to explore.

Recourse and Non-Recourse Advice

The third must-know for non-residential real estate loans is the difference between recourse and non-recourse loans. In short, a recourse loan means you, the borrower, are responsible in the event of default—collateral and all. A non-recourse means if things go south, the lender can typically only go after the collateral i.e. the property.

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.









          

By now you are probably aware how lucrative commercial real estate loans can be when you play your cards right. But, if you have bad credit or an unfavorable business credit score, you may have always assumed you couldn’t qualify—well think again!

Bad credit can stop most people from doing a lot of things in life and in business. But, the truth is that there are always ways around bad credit or an unfavorable business credit score. Of course, this is not to say that your credit or business credit do not matter, but rather, at least when it comes to commercial real estate loans, if you present your loan request the right way more often than not you will be pleasantly surprised with the outcome.

So, how does one go about presenting their loan request in the right way? Well, for starters, you want to present a complete and well-thought-out picture for exactly why you need a commercial loan. The best way to do that is via a business. If you do not have a business plan, now is the time to create one. Moreover, this plan should clearly lay out the reasoning behind the need for funding, a detailed description of your current or future business, your marketing strategy, pertinent financial information as well as both your long-term and short-term company goals—just to name a few key areas to cover in your business plan. Ideally, the more in-depth you can go with your business plan the better.

As you can see your vision matters and it can help commercial lenders reconsider their loan decision. But, it is important to still address the elephant in the room i.e. your bad credit or unfavorable business credit score with your potential lenders as well as with your creditors. Remember, if you show that you aren’t afraid to tackle your bad credit not will you able to secure commercial real estate loan you will also be to able obtain better loan packages.

Reaching out to Your Creditors

As briefly mentioned, it is your best interest to reach out to your creditors, if you haven’t done so already. By reaching out to them, you can set up manageable repayment plans or receive a possible extension and stop your creditors from taking further unfavorable action towards your business. Moreover, you will able to demonstrate to your potential lenders that you want to do everything in your power to make good on your debts.

Don’t Let Rotten Credit Slow You Down

If you have taken the above-mentioned steps (creating a stellar business plan and attempting to settle your business debts) to heart and you are still having trouble obtaining a loan through a particular commercial lender, remember it is perfectly okay to lender shop. In other words, you should exercise all your options whether that means speaking with traditional lenders such as banks or reaching out to commercial mortgage companies, local credit unions, and private money lenders. Lastly, you should always be open to the idea of investors or partners if your credit is pretty bad.

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.









          

Commercial Real Estate Loans require a few key things to make everything happen seamlessly. Ultimately this means having available funds to put down and having a clear business plan.

In the wonderful world of real estate, commercial real estate loans don’t always come easy. In fact, the better prepared you are for your lender the better the chances are that you will qualify for your commercial loans. Obviously, this is not groundbreaking advice –being prepared. But, it is can be very easy to forget that the devil is always in the details, especially when it comes to qualifying for commercial real estate loan.

For instance, money down or rather a down payment can open many doors in the commercial real estate world. But, of course, you can’t just bring any sum of money to the table. In fact, you actually need to hammer out a few details before you can even come up with the right figure amount for your down payment such as property type, your LTV (Loan to Value) ratio, your income-generating capacity, available collateral as well as personal guarantee, fees, terms, repayment schedule, loan type i.e. small business loan or non-small business loan and so on. The point is it takes time, extensive planning as well as a good calculator to know how much money down is right for you and your business venture.

If you are suddenly feeling a little fearful of math, it’s perfectly naturally to feel a little overwhelmed when trying to figure your future down payment. The good news is that there is help. So, put your calculator down and take a deep breath—your real estate loan is only a day away, well actually a few business days away, but nevertheless.

Money Down is your Helping Hand

Let’s go over a few key things, your LTV ratio ultimately looks at the amount of your loan in light of the appraised value of your property. Your specific lender can quickly tell you what they typically require here, but generally, most banks or lenders look for an LTV around 70-80 percent or less. So if the LTV ratio is 75 percent then the loan will cover 75 percent of the purchase price and you need to come up with 25 percent down. If your property will be an income-generating one, make sure you factor that in as well. Other things such as available collateral or personal guarantee are typically not an issue for business to come up with; thus, you need not lose any sleep over them. Clearly, fees, costs, terms will be covered in detail by your lender and will ultimately give you an idea of what additional capital you may need.

A Successful Business Plan for a Commercial Real Estate Loan

Lastly, it almost goes without saying that one way to get your foot in the commercial real estate door is to have a clear business plan that ultimately details how you are going to turn a sizable profit. In doing so, things like your personal net worth, credit score, and even available collateral will become less of a priority for your commercial real estate lender.

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.