Fishing for Commercial Borrowers

Fishing for Commercial Borrowers

I recently watched a TV commercial for a local bank. At first I thought the ad was for a travel website, because they showed families enjoying their vacation. Then I realized they were selling their ATM access. Nothing was said about loan programs or commercial lending. The fact is, they don’t want borrowers to contact them because the answer is most likely going to be NO.

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Please Send the Package

When borrowers and brokers send us a request for commercial real estate funding, we always respond with questions.Commercial Loan Package Every loan request that comes to us is in raw form and needs to be prepared for lender review. Many times these loans are prepared by a third party and when asking for additional information the client points to an extensive business plan, which may have been written for a different audience.

Commercial Loan Packaging 

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Sent from my SmartPhone

Thank you for taking time to read this blog. You certainly could be doing other things and you most likely appreciate reading a message that is well articulated, with proper use of grammar and correct spelling and punctuation. I spent time thinking about the points I wanted to highlight and proofread my draft before publishing it on the website. I hope you find this article thought provoking and entertaining.

Smartphone Use in Law Enforcement

If I wrote this using my smartphone, I would leave out some important points. It would have numerous spelling errors, lots of abbreviations, and would be all lower-case. You probably would not bother to read all of the text because you would get annoyed with translating SMS language to English.

Email is Legally Binding

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Apartment Construction Market Shows Signs of Improvement

Commercial Lending Report

Apartment Demand UApartment Absorbtion vs. Employment Graphp, Despite Unemployment


Even with uncertain economic indicators and slow hiring, rental housing demands are increasing.  Conditions remain favorable for multifamily markets across the nation. The demographic trends indicate high levels of immigration, the surge in echo boomers forming their own households, a further shift away from homeownership, and the growing diversity in household composition support continued demand for rental housing.

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CRE Private Lending Opportunities Increase

It’s an exciting time for the Private Commercial Lending industryTOP 10 Funding LLC. 2012 trends are showing growth for commercial investments and many regional and local banks have started lending again for commercial projects. The demand for private money is still very high as the banks and mortgage companies are still avoiding construction and land development. Also the recent years’ lack of funding for notes coming due and distressed properties has left the door open for Hard Money Lenders and Equity Lenders.

Equity Investors

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The Waiting is the Hardest Part

You are probably wondering what the title of this article has to do with the business of Private Lending for Commercial Real Estate. I was listening to the Tom Petty song and thought about the important attributes of commercial real estate brokers. In our business, success comes from being patient and understanding the timing of the process.

Patience

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Broker Chains

Broker Chains

If you are looking for a business loan, commercial real estate loan, or looking to raise equity for a commercial project, you are likely going to work with a commercial loan broker to raise the capital.  This article addresses the quandary known as the broker chain.  If a broker chain is formed to find a source for funding a project, the process is likely to be impeded by weak links in the chain.

Broker Chain

What is a Broker Chain

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TOP 10 Deal Killers

Commercial lending, for the most part is based on the value and performance of the commercial assets used as collateral. Commercial Loan RIPBecause of the focus on the asset performance, many borrowers expect commercial loans to be non-recourse.

Most borrowers are optimistic investors leaving much to chance. Most private lenders are bullish and use mathematical models to provide risk assessment. Loan originators are jammed up in the middle.

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And the Answer is…

Have you applied for a commercial loan lately? Most banks are not doing commercial loans and others just wait forever to give you an answer. They don’t want to lose you as a customer and they really don’t want to fund your project.Gameshow

Commercial loan brokers are aware of the painfully long process of closing a loan for commercial real estate. The process will take several months to complete. It can be even longer for construction loans or business loans that are not tied to commercial assets. For example, HUD loans can take 18 months to fund. Recently, a borrower in Honolulu came to me to refinance an operating assisted living facility. He has been working with a local bank to refinance for 6 months and still does not have an answer.

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The Lure of Hard Money

One of my favorite movies is Easy Money with Rodney Dangerfield and Joe Pesci.

 Rodney’s character made a deal to give up all of his vices to inherit his mother-in-law’s fortune. It turned out to be harder than he imagined.

There is nothing “easy” about obtaining a Hard Money loan from a private lender. It is a proposition based on risk. The lender assumes the risk of repayment of a highly leveraged loan, the borrower assumes risk of paying up-front fees to someone who will not perform, and the brokers assume the risk of getting squeezed out of the deal. Hard money fees can be as high as 10 points with interest rates above 12% and upwards of 20%.

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