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.
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.
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.