Benefits of a Commercial Mortgage Broker

Hiring a commercial mortgage broker can prove very beneficial, especially if you do not have experience or knowledge about this type of mortgage, the fees involved and terms, among others.

People tend to think that when it comes to real estate or property matters, they should do it themselves only because they feel like it is the right thing to do – after all, it is their own property and there really is no need to involve a third party.

What they do not know is that dealing with real estate issues, especially mortgages, involves tons of effort and a lot of time that it becomes too overwhelming to handle for someone who has absolutely no experience in real estate properties as well as mortgages.

In such situations, getting a broker would be a lot of help.

Here are some of the benefits of working with a commercial mortgage broker:

Because brokers are experienced and they have already established their contacts in the financial industry, they will surely be able to give you expert advice when it comes to your property.

Aside from the advice, brokers can also help you find loans which may fulfill your needs in a personalized manner.

Commercial mortgage brokers can definitely offer you help in getting a loan even if you have a history of late payments causing you to have bad credit rating.

Moreover, since they have a pool of contacts, they have gained access to more specialized information which can be helpful in finding you a loan that has low interest rates and fees.

Looking for a lender that can meet your needs is very time consuming but a good broker can even help you compare the loans offered by lenders so you can choose which one will be more appropriate for you.

When taking out a loan, you would have to prepare various documents, information and forms that are necessary for the application.

This process can be very confusing especially for someone who does not really know where to start and how to go about the whole thing.

Since a broker is already an expert in gathering information and summing up the paperwork, it will surely save you a lot of time and headaches making you capable to focus more on other important work.

When applying for a loan, there are times wherein you will come across legal terms that cannot be avoided for such transactions.

Mortgage brokers will prove to be handy in this matter because they can easily explain to you the legal terms that are way beyond the comprehension of most amateurs.

Given that intermediaries such as agents and brokers do not get paid unless a loan is closed, brokers make sure that they follow the different lending policies of banks and other financial institutions.

They already know which lenders are really funding loans and which ones do not, therefore, they will not waste any of their time or yours applying for a deal with someone who they know won’t close it in the end.

This increases your chances of getting your loan application approved. Brokers will use all their contacts and exhaust all means just so they can close your loan.

 

Insurance Considerations for Real Estate Investors

COMMERCIAL REAL ESTATE INVESTOR FINANCING ONLINE

In any kind of investing, making money is only half the battle. You must also expend considerable effort, time and capital on protecting your gains and making sure they aren’t stripped away from you, whether by an act of God, a criminal act on someone else’s part, or just random misfortune. After all, every successful football team has to have at least a competent defensive unit.

If you’re investing in real estate, getting a great deal will only boost your business if you protect the investment with appropriate insurance coverageWith real estate investing, your offense is your ability to sell properties at a decent price on a regular basis, to acquire properties at a below-market price, and to make appropriate and profitable renovations that quickly add value.

Your defense, on the other hand, is just as important. Perhaps even more so, because while a weak offense will simply make it hard for you to earn profits, a weak defense can leave you bankrupt in a flash.

For a real estate investor, your primary defense is your use of entities to separate your liability-generating assets from your personal assets, and, of course, insurance – and you had better understand both, if you plan to be in real estate for a long time. If you own property, a certain class of people will perceive you as wealthy. Attorneys are circling, trying to earn a bite of flesh for themselves and their clients.

We dealt with entities in a prior column. As an investor, it’s not enough to sit on your laurels, expecting a garden-variety homeowners policy to take care of your protection needs. Indeed, as we shall see, a standard homeowners insurance policy may not provide a flipper any protection at all, if no one is living in the home while you renovate it! Let’s take a closer look at the insurance part of the equation – particularly as it applies to short-term real estate investors.
Liability Insurance

Liability insurance provides protection and liquidity against people who claim to be injured as a result of something that occurred on your property, or a property owned by a corporation or LLC controlled by you.

Note that many of these claims could happen to flippers just as easily as to owners of rental properties. But a standard home insurance policy plus umbrella coverage protection – the “plain vanilla” option offered by most rookie insurance agents, may not be appropriate for your needs.

Why? Because most standard home insurance policies contain exclusions for vacant or neglected properties. To fill the gap, you will likely need a special kind of coverage called “vacant property” coverage, or to buy a rider on an existing homeowners policy, say, if you have a tenant moving out.

You may also want coverage for malicious mischief. This protects you against the kinds of things the neighborhood kids or area vandals and vagrants might commit while occupying your vacant property. Most homeowners insurance will cover this, but not if the property’s been vacant for more than two months while it’s being renovated! This is a specialty area of coverage, and you need a separate policy to protect you.

Dwelling vs. Homeowners Insurance

Generally, real estate investors should be covering their investment properties with dwelling policies, and not homeowners policies. The difference: A homeowners policy covers belongings in the home, too. Most investors don’t need that much coverage. A dwelling policy covers the building itself.

This doesn’t mean dwelling insurance comes cheaper. Typically, any policy designed to cover vacant buildings is much more expensive than a standard homeowners insurance policy would be. You can bid premiums down, however, if the dwelling has a functional fire alarm and burglar alarm system, if you have insulation and climate control in place to prevent pipes from freezing, and other basic risk mitigation measures in place.

Vacancy Considerations

Courts have defined a vacant home to mean one in which there is not enough furniture or appliances to reasonably allow someone to live there. So, if you have a standard homeowners insurance policy, and you have an incident of vandalism or arson that causes significant damage to the home, and it comes out that you had stripped the place bare of furniture and appliances, your insurer could well evoke the “vacancy exclusion” to get out of paying the claim. And they should! Standard homeowners insurance policies are not designed to cover the risks of vacant dwellings, which would drive premiums up for everyone.

To protect yourself, keep some furniture in the unoccupied home so it doesn’t meet the court’s definition of “vacant.” It may be worth renting or buying some garage sale furniture to do this in the short term, suggests Jack Hungelmann of Corporate 4 Insurance Agency Inc. in Edina, Minnesota, and author of “Insurance For Dummies.”

Some policies only cover the actual cash value of the structure, after depreciation. This is generally less desirable than a policy that covers replacement cost. With an actual cash value policy, the insurable value of rental buildings gradually diminishes over 27.5 years, using IRS MACRS rules. (There are other ways to calculate cash value as well.) This is a big deal to rental property investors who hold on to properties for many years. It’s not as much of a concern to a flipper, because if you unload the property very quickly, there’s not much time for the property to depreciate!

Because vacant dwelling coverage is a specialty line, there are no real industry standards. Policies aren’t written to conform to anything like a homeowners HO-2 form. So policies can vary widely in terms of coverage definition, exclusions and price.

For this reason, I would recommend going to an independent insurance broker who is experienced in this type of coverage, and who can write policies for several different insurance companies. This will save you time going over the fine print and comparing the contract language of many different policies from many different carriers, which you would have to do yourself if you went direct with a carrier, or with a captive agent representing only a single carrier.

Construction Insurance

If you have a property that’s under construction, you will also want construction insurance in place. Why? Because chances are good that you will have tens of thousands of dollars in construction supplies sitting on the property during the process – an open invitation to thieves. One of my earlier Flippin’ Insider columns deals precisely with this construction coverage.

Commercial Real Estate Loan Check List Winston Rowe & Associates

Commercial Loan Processing

Winston Rowe & Associates, a national no advance fee commercial real estate advisory and financing firm. Their primary objective is to provide the most reliable and efficient means of sourcing both debt and equity for your commercial real estate loans.

They have prepared this article to provide insight into the supporting documentation needed to perform the due diligence and underwrite a commercial real estate transaction. This is not a comprehensive list of supporting documentation, only a general guideline.

General Supporting Documents Needed For Commercial Real Estate Financing:

1. Last 3 Years Personal Tax Returns (For Purchase or Refinance)
2. Last 3 Years Business Tax Returns (Needed From Seller and Buyer For a Purchase)
3. Personal Financial Statement (For all Guarantors of the Loan)
4. Business Profit & Loss 3 Years (From Seller and Buyer for Purchase or Refinance)
5. Articles of Incorporation (Buyer and Seller for Purchase and Refinance)
6. Schedule of Tenant Leases (For Purchase or Refinance)
7. Schedule of Units With Square Foot Per Unit (For Purchase or Refinance)
8. Resume (For Buyers)
9. Schedule of All Assets Owned (For Buyers and Refinancing)
10. 4506 (T) IRS Form (Patriot ACT Requirements for All CRE Transactions)
11.Purchase Agreement Executed (For a Purchase)
12.TRI Merge Credit Report (For Purchase and Refinance for all Guarantors)
13. Exterior Photos of Subject Property (For Purchase and Refinance)
14. Interior Photos of Subject Property (For Purchase and Refinance)
15. Most Recent Appraisal (For Purchase and Refinance)
16. Current Property Insurance Binder (For Purchase and Refinance)
17. Signed and Dated Personal Financial Statement (For Purchase and Refinance)

Winston Rowe & Associates provides no upfront fee bridge loans in the following states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia,   Washington, Washington DC, West Virginia, Wisconsin, Wyoming

No Upfront Fee Commercial Loan Check List Apartments Shopping Center Office Buildings

Commercial Loan Check List

Winston Rowe & Associates has prepared this article to provide general guidance as it pertains to commercial mortgage applicants supporting documentation checklist for apartment buildings, office buildings, shopping center and hospitality.

To speak with a commercial real estate finance specialist you can contact Winston Rowe & Associates directly at 248-246-2243 or visit them on line at http://www.winstonrowe.com

General Supporting Documentation Used For Commercial Loans:

3 most recent years tax returns, personal and business
Extensions for any filings
3 months most recent bank statements, personal and business
Personal financial statements updated within last 60 days
Year-to-date business operating statements-
Year end business operating statements if business tax returns are on extension
Personal resume
Property management resume, or letter of credentials
Letter of explanation for any derogatory credit, including: slow pays charge-offs liens, judgments, child support, etc.
Schedule of real estate holdings
Subject property rent roll
Subject property leases
Subject property income and expense statements, including year end and year-to-date
Commercial Mortgage Loan Purchase Documentation
Valid purchase contract
Selling agent or individual contact information
Verification of escrows
Property insurance information
Title policy
Survey
Property insurance information

Winston Rowe & Associates has a core focus on building long-term relationships, delivering exceptional and individualized customer service, and positioning loan products that best achieve their client’s goals. Their preemptive problem-solving approach is perfect for clients with credit and time sensitive issues.

Winston Rowe & Associates has no upfront free commercial loans in the following states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee,   Texas, Utah, Vermont, Virginia,   Washington, Washington DC, West Virginia, Wisconsin, Wyoming