MAE Capital Mortgage Inc. (916) 672-6130
Traditional Commercial Real Estate Funding (Bank Financing)
If you’re new to commercial real estate financing, you’ll want to get a firm understanding of the differences between a residential and commercial mortgage loan. Residential real estate uses a debt-to-income formula for judging your ability to repay a loan while commercial real estate is based on the debt coverage service ratio formula to qualify. To qualify for a commercial loan, you’ll have to know what your projected return on investment (ROI) will be and current and projected cash flows should be.
The cash flow generated from your commercial real estate property will be one of the factors in determining both the value of the property as well as its future return. The type and amount of your commercial loan is also dependent on other factors, including your business and personal credit history, your net worth or financial strength, the type of property and its overall condition, its cash flow, the geographical location of the property, and the general economic outlook of the local market.
The first step to purchasing or refinancing your commercial property is to know exactly how you’ll use the property. What type of property will you acquire? How will the property be used to improve your cash flow and hit your financial goals? How long will you hold the property? Will you be an owner/tenant or just an investor? And do you have an exit strategy? These are all questions you’ll want to think about before applying for your commercial financing.
Documents you should have are:
1. Operating income statement for the building
2. Rent Rolls for all the tenants and vacancies
3. Be prepared to provide personal financial statements
If you can't provide these documents or they are not sufficient then maybe a private loan is the way to go for your funding needs.
Non-Traditional Commercial Funding Utilizing Private/Hard Money
This type of funding is becoming more the norm than traditional bank financing for those commercial projects that have no tenants or need improvements or just don't fit traditional financing guidelines. We are securing funding on those projects that have a good Loan to Value but for one reason or another does not fit what the banks are looking for in the form of Return on Investment or property type or condition.
A Borrower's income will not be scrutinized as hard with private funding, unlike traditional financing. Credit on the borrower is not going to be as important either with private funding. The Private investors in these notes are looking at the Loan to Value as their security in case they have to take the property back and those that put a large down payment on a property will less likely default and walk away from a large investment. Private money investors are looking for the return on their money with a property as security.
Private Money Loans will close faster than traditional bank financing which also makes it attractive to those that need quick money for purchase or refinancing. Additionally, a borrower is not scrutinized nearly as much as a Bank would issue funding. Property types are not that important either as we have arranged financing for properties that traditional Banks do not. We have funded the following property types that banks generally do not:
1. Gas Stations
2. Care Homes
4. Vacant property
5. Properties with a less than 2-year rental history.
6. Commercial Rehabilitation projects
7. RV Park
8. Mobile Home Park
9. Commercial Land
10. Cannabis property
11. Mixed-use buildings
12. Night Clubs
14. Golf course
15 And many other projects Banks have failed to fund.
Click here to submit your scenario and we can provide you with a quote usually within 24 hours.
Or Call us at (916) 672-6130
Analyzing Return on your Investment:
We can help you analyze the property's current and future cash flow that will contribute to your ROI. So give us a call today, and we’ll help you get started and answer any other questions you may have.
We can both Represent you for the Purchase and get the Loan done for you as well. Get experienced advice throughout the transaction and know that the seller pays our fee at the end so it won't cost you anything to be fully represented. Call us today for more info at 916-672-6130 ask for Gregg Mower or complete the form below and we will be in contact with you. Thank you for considering us in your transaction.
Example: of a recent closing where we help the buyer get a great deal this commercial property and we secured the private funding:
Property on J street across from the New Area Project Closed.
Then Refinanced $2,500,000 with private funding!
Call our Offices at 916-672-6130 Brokers Welcome!
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