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If a property has
been owned for less than two years, we must use the
purchase price plus the cost of any improvements made
for determination of the property’s value. |
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A commercial loan involves real
estate, where as a business loan involves non-real estate
collateral. Always clarify. |
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One potential source for a
down payment on a commercial property is through a cash-out
refinance on a residential property. |
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Conventional Loans
This would be for properties such as: Apartment complexes,
office buildings, shopping malls, warehouses, mini-storage,
hotels and many other types of quality properties.
Borrowers of Grade “A” loans who wish to purchase a
property should have at least the standard 10%-30% down
payment in order to qualify for a 70-90% LTV loan. Additionally,
the property income should be fully verifiable through
our review of the SELLER’S tax returns for the previous
2 years. Additionally, the loan amount and payments
should fit a 1.15 to 1.50 debt service coverage ratio
depending on the property type.
Typical interest rates will then range between 6-10%
on an adjustable or fixed basis with amortization terms
between 20 and 30 years. On Grade “A” refinances, the
maximum LTV can be as high as 90% when the borrower
is just refinancing their existing mortgages, or 75%
if they are seeking a cash out mortgage. With this type
of loan we are typically competing directly with local
and national banks. Thus the profits are slim.
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SBA Loans (Small
Business Administration) and SBA Look-a-Like Loans
Financial Resources uses this lending program on many
loans. SBA loans are perfect for many borrowers and
their situations. SBA loans are only for commercial
real estate properties where the borrower will owner-occupy
at least 51% of square footage of the building. We
also have what is called an SBA Look-a-Like program
that has more aggressive parameters whereby the property
only needs to be 20% owner-occupied. The remaining
building square footage can be leased to tenants for
additional income.
Thus, an owner-occupied restaurant or owner-occupied
dry cleaners are properties that would qualify. Conversely
a multi-tenant strip mall or a multi-tenant office
building where the borrower is not occupying at least
20% of the space, would not qualify.
SBA loans can be used for property acquisitions, expansions,
or rate & term refinances. Typically, SBA rates
are adjustable and tied to the Prime rate. The most
common SBA interest rate is prime + 2.75% over a 20
to 25 year amortization with no balloon. The maximum
LTV on an SBA loan is 90% with a 10% down payment.
However, some property types or loan sizes will not
qualify for 90% LTV, in which case the borrower may
need a 20-30% down payment. One of the major strengths
of an SBA loan is that we can use the borrower’s future
income projections when we underwrite the loan. This
allows a borrower to buy a property that has a weaker
historical income and turn it around. Commercial loans
take 30-90 days. However, in some hard money circumstances
a loan can close in less than 30 days.
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HUD
Loans
FINANCIAL RESOURCES has special programs to allow you
to close Grade “A” apartment complexes, nursing homes,
assisted living facilities and mobile home parks at
some incredible terms. By giving us your leads on these
types of properties, when the loan amount is greater
than $1,000,000, we can turn them into closed files,
translating into more commissions for your company.
We can offer these special loans through a government
assisted HUD (Housing and Urban Development) loan program.
Although there is plenty of government red tape that
has to be dealt with, the end result of a closed loan
will be extremely beneficial to the borrower as well
as profitable to you.
Please note: Financial Resources
makes loans for as little as $200,000 and can do so
on apartment complexes, nursing homes, assisted living
facilities, and mobile home parks, as well as dozens
of other property types. However, the terms on loans
between $200,000 and $1,000,000 and other loans outside
of this government assisted program, although possibly
favorable, will be significantly different from what
are listed on this page.
The program provides capital to apartment complexes,
nursing homes, assisted living facilities, and mobile
home parks for new construction and rehabilitation as
well as purchasing and refinancing. All you have to
do is fax us a completed Apartment and Nursing Home
Loan Application and gather some documents and we will
do the rest.
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