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Archive for the ‘Private Lending’ Category

Fishing For Commercial Borrowers

April 26, 2012 Leave a comment
Fishing for Commercial Borrowers

Fishing For 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.

Private Lenders are looking for borrowers. Most brokers don’t have the resources to alert the masses and most borrowers instinctively go to banks. This article will give you some ideas on how to fish for borrowers and get them to come to you.

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TOP 10 Deal Killers

February 12, 2012 Leave a comment

Commercial lending, for the most part is based on the value and performance of the commercial assets used as collateral. Because 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.Commercial Loan RIP

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Broker Chains

February 2, 2012 Leave a comment

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

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And the Answer is…

December 27, 2011 Leave a comment

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

July 29, 2011 Leave a comment

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

The lure of easy money

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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The Big Taboo in Private Lending for Commercial Real Estate

May 16, 2011 2 comments

Happy Anniversary Andy & Monalisa Sabo

My wife, Monalisa and I just celebrated our 24th anniversary. She is my soul mate and I could never have found a better person to spend my life with. We have truly loved and respected each other all these years and are the perfect match.

The Perfect Match

By now you know that I am an Agent representing Private Lenders for Commercial Real Estate. Those of us in this business specialize in certain types of loans, based on the offerings of our Lending Groups.  One of the problems in this industry is that the lending groups are looking for the perfect match.

This article may seem self-deprecating as I try to give a realistic view of Private Lending Groups for Commercial Real Estate. Many agents contact me with loan requests that were turned down by their lender. Instead of walking away, they try to find someone who can solve their problem. We all do this because we want to help our clients. That should be a good thing, but it is frowned upon by the Lending Groups.

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The Key to the Private Lending Vault

May 2, 2011 1 comment

As a private lender for commercial real estate, I receive requests everyday for loans and equity partnerships. On average, about 1 out of 100 is presentable to the lender and 1 out of 25 of those is fundable. If you are a broker or an investor looking for a loan for a commercial real estate purchase or refinance, you could save yourself some time and frustration by giving the lender what they need to evaluate your request.

Start by Selling the Borrower

The best loan request I ever got started out with a short paragraph telling about the borrowers. “Chris and Anthony Jones have made an offer that has been accepted on an apartment building in San Francisco, CA. The purchase price is $12M. The borrowers own 2 other buildings in the area that are free and clear. Their combined net worth is $80M. Their
credit is excellent. Their total debt is $3M on their home and they have sufficient reserves to cover their debt.”

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