Strategies for Managing the Commercial Loan Post-Closing Process

Contact Winston Rowe and Associates

After a commercial loan transaction closes, it’s easy to feel that all the important work has been completed, but the truth is there are many post-closing matters that still require the lender’s attention.

Often, the tasks that must be performed after a loan closing involve perfecting the lender’s collateral liens, and in many situations, lenders need the borrower’s cooperation in order to satisfy post-closing requirements.

However, borrowers are often eager to focus on managing their businesses, creating difficulty for the lender to redirect their attention back to the loan closing. Taking an opportunity during the closing process to define and communicate the responsibilities of each party, including post-closing expectations, can help simplify the cumbersome post-closing process for lenders.

A crucial step in an efficient post-closing process is letting borrowers know that their cooperation may still be required after a loan closes, which is why we recommend using a Post-Closing Agreement with all loan transactions.

These agreements outline specific requirements that need to be satisfied post-closing, and they provide an opportunity to manage the borrower’s expectations while informing them that they still have a responsibility to communicate and work with their lender after their loan closes. It is advisable that all post-closing requirements have specified deadlines listed in the agreement.

Another document we recommend lenders use is an Errors and Omissions Agreement. This document requires borrowers to provide additional information and execute additional documentation, as may be required by the lender after a loan closing.

The closing process presents several opportunities for mistakes to be made, including omitting certain documents from the closing document package, incorrect signatures on documents, and execution of outdated versions of documents.

The Errors and Omissions Agreement is a good way for all parties to agree to resolve these potential issues after closing.

An additional tool that lenders can use to help manage post-closing issues is the Loan Agreement. A good Loan Agreement clearly outlines each party’s ongoing responsibilities, and in doing so, helps manage the borrower’s expectations. Loan Agreements are particularly useful in more complicated transactions because the agreements can be tailored to fit various scenarios and include additional terms a lender may require.

The Loan Agreement may include events of default should the borrower fail to satisfy any post-closing requirements prior to the applicable deadlines.

Depending on the type of collateral involved in a transaction, there can be many different potential post-closing issues for a lender to track and resolve.

Real estate is a good example of a potentially complicated type of collateral to deal with post-closing because it involves ensuring mortgages get recorded properly, tracking receipt of recorded documents and final title policies, confirming the adequacy of title policies, and working with title companies to resolve any issues or unexpected exceptions that may appear on a final policy.

Automobile liens can also be especially tricky, and not only require the correct documentation from the borrower, but also may require substantial interaction with the DMV in the state where the vehicle is titled.

Additional post-closing responsibilities include review of executed loan documents, filing UCC financing statements, obtaining confirmation of UCC terminations, tracking financial reporting covenants, ensuring proper documentation is received in connection with draw requests, and following-up on collateral insurance expirations.

As complicated as the post-closing process can be, lenders can help ease the burden by utilizing Post-Closing Agreements,

Errors and Omissions Agreements, and Loan Agreements, all of which clarify the responsibilities of each party and help manage post-closing expectations with borrowers.

 

Reasons to Reject a Tenant Application

Reasons to Reject a Tenant Application

Many landlords believe that they cannot reject a tenant application for any reason, that they have to accept the first one to come along with the money or risk the grief of a lawsuit.

Not so.

There are numerous legitimate, businesslike reasons to reject a prospective tenant’s application.

Unsatisfactory references from landlords, employers and/or personal references.

These could include reports of repeated disturbance of their neighbors’ peaceful enjoyment of their homes; reports of gambling, prostitution, drug dealing or drug manufacturing; damage to the property beyond normal wear and tear; reports of violence or threats to landlords or neighbors; allowing people not listed on the lease or rental agreement to live in the property; failure to give proper notice when vacating the property; or a landlord who would not rent to them again.

Evictions.

Frequent moves. You have to decide what constitutes frequent moves and apply the same criteria to every applicant.

Bad credit report.

If a report shows they are not current with any bill, have been turned over to a collection agency, have been sued for a debt, or have a judgment for a debt, that is grounds to reject. These do not have to be debts connected in any way with housing.

Too short a time on the job.

As with frequent moves, you have to decide what too short a time is and apply the same criteria to every applicant.

Too new to the area.

There is nothing to say you have to rent to people who have just moved to town. Be careful, though, many times these would be excellent tenants and the time and long distance call expense of checking them out could pay big dividends.

Smokers.

Some newspapers mistakenly believe that smokers are a protected “handicapped” class. They will never be. The tobacco companies would not allow it. Do do so would be to admit that tobacco and nicotine are addicting. Industry lobbyists would be sure to fight that idea tooth and nail. So you can safely discriminate against people who smoke. Newspapers will not accept ads that say “no smokers,” but they will accept ads that say “no smoking.”

Too many vehicles.

Lots of cars can be a real source of irritation to neighbors and make the entire neighborhood or apartment complex look bad. Chances are, if they have more than one vehicle for every adult they spend a lot of time broken and being fixed. That means they could be in pieces in the front yard or parking lot.

Too many people for the property.

Be extremely careful with this. Before the familial status protection clause of the Fair Housing Act, you could discriminate on this basis without fear of any problems. Not any more. Now the same criteria must be applied without regard to the age of the inhabitant. Be sure it is applied equally to all applicants. Check your state’s Landlord-Tenant Law.

Drug users.

They must be current drug users. If they are in a drug treatment program and no longer use drugs, the Federal Government considers them handicapped and protected by the Fair Housing Act.

Any evidence of illegal activity.

You must be able to come up with some kind of satisfactory evidence. I don’t know what that would be, every case would be different. Certainly a letter from the police department warning a previous landlord of their illegal activity and threatening to close the property is considered sufficient evidence.

Insufficient income.

You must set up objective criteria applied equally to each applicant. Insufficient income could reasonably be if the scheduled rent exceeded 35% of their gross monthly income.

For example, if the rent is $600, their gross monthly income must be at least $1714.29. The formula is: Acceptable income= scheduled rent divided by income ratio. You can require proof of all income.

Be careful, though, if you are willing to accept only one member of a married couple to supply the total dollar income, you must be willing to accept the same of unmarried, co-tenants that share the housing. Under Fair Housing law you cannot require that unmarried people meet different income requirements than married people.

Too many debts.

Even if their gross income is sufficient, they may have so many other debts that they would be hard pressed to make all the payments.

A rule of thumb might be that all contracted debts, including rent, cannot exceed 50% of their gross income. Contracted debts would be such things as credit card payments, car payments, loans, etc. Those would not be cable TV, water and garbage, telephone, or other utilities.

Conviction of a crime which was a threat to property in the past five years.

Included in this could be drunk driving convictions, burglary convictions, robbery convictions, and other such misbehaviors.

Conviction for the manufacture or distribution of a controlled substance in the past five years.

The best way to proceed is to post a list of the acceptable rental criteria and hand it to each applicant.

You can use the list above, but under no circumstances is it intended to be legal advice. Check with an attorney who is familiar with the Landlord-Tenant Law before posting or handing out anything like a list of acceptable criteria for applicants. Laws change constantly, and what you don’t know can and will hurt you.

 

What Is Equity Financing?

What Is Equity Financing?

Equity financing is the process of raising capital through the sale of shares. Companies raise money because they might have a short-term need to pay bills or they might have a long-term goal and require funds to invest in their growth.

By selling shares, they sell ownership in their company in return for cash. Equity financing comes from many sources; for example, an entrepreneur’s friends and family, investors, or an initial public offering (IPO). Industry giants such as Google and Facebook raised billions in capital through IPOs.

While the term equity financing refers to the financing of public companies listed on an exchange, the term also applies to private company financing.

Equity financing is distinct from debt financing, which occurs when a business borrows funds.

Types of Equity Financing

Equity financing involves the sale of common equity but also the sale of other equity or quasi-equity instruments such as preferred stock, convertible preferred stock, and equity units that include common shares and warrants.

A startup that grows into a successful company will have several rounds of equity financing as it evolves. Since a startup typically attracts different types of investors at various stages of its evolution, it may use different equity instruments for its financing needs.

Later, if the company needs additional capital, it may choose secondary equity financing such as a rights offering or an offering of equity units that includes warrants as a sweetener.

How Equity Financing Is Regulated

The equity-financing process is governed by rules imposed by a local or national securities authority in most jurisdictions.

Such regulation is primarily designed to protect the investing public from unscrupulous operators who may raise funds from unsuspecting investors and disappear with the financing proceeds.

Equity financing is thus often accompanied by an offering memorandum or prospectus, which contains extensive information that should help the investor make an informed decision on the merits of the financing.

The memorandum or prospectus will state the company’s activities, information on its officers and directors, how the financing proceeds will be used, the risk factors, and financial statements.

Key Takeaways

Companies seek equity financing because they might have a short-term need for funds or they might need to finance a long-term growth strategy.

Companies raise capital through equity financing by selling common equity, preferred stock, convertible preferred stock, and equity units that include common shares and warrants.

  • A startup that grows into a successful company will have several rounds of equity financing as it evolves.
  • An IPO occurs when a private company decides to issue stock to the public.
  • Equity financing is heavily regulated by national and local government.

Investor appetite for equity financing depends significantly on the state of the financial markets in general and equity markets in particular.

While a steady pace of equity financing is a sign of investor confidence, a torrent of financing may indicate excessive optimism and a looming market top.

A Real Estate Investing Guide

A Real Estate Investing Guide

When you think about buying real estate, the first thing that probably comes to mind is your home. But physical property can play a part in a portfolio too, especially as a hedge against the stock market.

However, while real estate has become a popular investment vehicle over the last 50 years, buying and owning brick and mortar is a lot more complicated than investing in equities and bonds. In this article, we’ll examine the leading options for individual investors, listed in approximate order of how direct a real estate investment they are, and reasons to invest.

Basic Rental Properties

This is an investment as old as the practice of land ownership. A person will buy a property and rent it out to a tenant. The owner, the landlord, is responsible for paying the mortgage, taxes, and maintenance of the property.

Ideally, the landlord charges enough rent to cover all of the aforementioned costs. A landlord may also charge more in order to produce a monthly profit, but the most common strategy is to be patient and only charge enough rent to cover expenses until the mortgage has been paid, at which time the majority of the rent becomes profit.

Furthermore, the property may also have appreciated in value over the course of the mortgage, leaving the landlord with a more valuable asset. According to the U.S. Census Bureau, real estate in this country has consistently increased in value from 1940 to 2006.

While there was a dip during the subprime mortgage meltdown of 2008 to 2010, it has now rebounded and has been increasing overall.

An investor must know the market in which he is searching for property or hire an expert to help. For investors seeking an income stream from rental properties, the most important aspects to consider are property location and market rental rates.

As for location, many successful rentals are located in close proximity to major schools. For example, if you buy a property near a state university, students are likely to want to rent it year after year.

There are also many other features of a profitable rental property, and some take time to learn.

There are, of course, blemishes on the face of what seems like an ideal investment. You can end up with a bad tenant who damages the property or, worse still, ends up having no tenant at all. This leaves you with negative monthly cash flow, meaning that you might have to scramble to cover your mortgage payments.

There is also the matter of finding the right property. You will want to pick an area where vacancy rates are low and choose a place that people will want to rent.

Once you’ve found an ideal property in an area where people want to rent, use a mortgage calculator to determine the total cost of the property with interest. It’s also worth researching different mortgage types in order to secure a favorable interest rate for your rental.

Perhaps the biggest difference between a rental property and other investments is the amount of time and work you have to devote to caring for it.

If you don’t want to, you can hire a professional property manager. But his or her salary then becomes an expense that impact’s your investment’s profitability.

The Flip Side: Real Estate Trading

This is the wild side of real estate investment. Like the day traders who are leagues away from a buy-and-hold investor, the real estate traders are an entirely different breed from the buy-and-rent landlords.

Real estate traders buy properties with the intention of holding them for a short period, often no more than three to four months, whereupon they hope to sell them for a profit. This technique is also called flipping and is based on buying properties that are either significantly undervalued or are in a very hot area.

Pure property flippers will not put any money into a property for improvements; the investment has to have the intrinsic value to turn a profit without alteration, or they won’t consider it.

Flipping in this manner is a short-term cash investment.

If a property flipper gets caught in a situation where he or she can’t unload a property, it can be devastating because these investors generally don’t keep enough ready cash to pay the mortgage on a property for the long term. This can lead to continued losses for a real estate trader who is unable to offload the property in a bad market.

The second class of property flipper also exists. These investors make their money by buying cheap or reasonably priced properties and adding value by renovating them. They then sell the property after renovations for a higher price.

This can be a longer-term investment, depending on the extent of the improvements. The limiting feature of this investment is that it is time-intensive and often only allows investors to take on one property at a time.

Real Estate Investment Groups

Real estate investment groups are sort of like small mutual funds for rental properties. If you want to own a rental property, but don’t want the hassle of being a landlord, a real estate investment group may be the solution for you.

A company will buy or build a set of buildings, often apartments, and then allow investors to buy them through the company, thus joining the group.

A single investor can own one or multiple units of self-contained living space, but the company operating the investment group collectively manages all the units, taking care of maintenance, advertising vacant units and interviewing tenants. In exchange for this management, the company takes a percentage of the monthly rent.

There are several versions of investment groups, but in the standard version, the lease is in the investor’s name, and all of the units pool a portion of the rent to guard against occasional vacancies, meaning that you will receive enough to pay the mortgage even if your unit is empty.

The quality of an investment group depends entirely on the company offering it. In theory, it is a safe way to get into real estate investment, but groups are vulnerable to the same fees that haunt the mutual fund industry. Once again, research is the key.

Real Estate Limited Partnerships

A real estate limited partnership (RELP) is similar to a real estate investment group: It is an entity formed to purchase and hold a portfolio of properties, or sometimes just one property – only it is in existence for a finite number of years.

An experienced property manager or real estate development firm serves as the general partner. Outside investors are then sought to provide financing for the real estate project, in exchange for a share of ownership as limited partners.

They may receive periodic distributions from income generated by the RELP’s properties, but the real payoff comes when the properties are sold – hopefully, at a sizeable profit – and the RELP dissolves down the road.

REITs

Real estate has been around since our cave-dwelling ancestors started chasing strangers out of their space, so it’s not surprising that Wall Street has found a way to securitize it, turning real estate into a publicly-traded instrument.

A real estate investment trust (REIT) is created when a corporation (or trust) is formed to use investors’ money to purchase, operate and sell income-producing properties. REITs are bought and sold on the major exchanges, just like any other stock.

To keep its status as a REIT, this entity must pay out 90% of its taxable profits in the form of dividends. By doing this, REITs avoid paying corporate income tax, whereas a regular company would be taxed on its profits, thus eating into the returns it could distribute to its shareholders.

Much like regular dividend-paying stocks, REITs are appropriate for stock market investors who want regular income, though they offer the opportunity for appreciation too. REITs allow investors into non-residential properties such as malls (about a quarter of all REITs specialize in these), health-care facilities, mortgages or office buildings. In comparison to the aforementioned types of real estate investment, REITs also are highly liquid.

Real Estate Mutual Funds

Real estate mutual funds invest primarily in REITs and real estate operating companies. They provide the ability to gain diversified exposure to real estate with a relatively small amount of capital. Depending on their strategy and diversification goals, they provide investors with much broader asset selection than can be achieved in buying individual REIT stocks, along with the possibility of fewer transaction costs and commissions.

Like REITs, these funds are pretty liquid. Another significant advantage to retail investors is the analytical and research information provided by the fund on acquired assets and management’s perspective on the viability and performance of specific real estate investments and as an asset class.

More speculative investors can invest in a family of real estate mutual funds, tactically over weighting certain property types or regions to maximize return.

Why Invest in Real Estate?

Real estate can enhance the risk and return profile of an investor’s portfolio, offering competitive risk-adjusted returns. Even factoring in the subprime mortgage crisis, private market commercial real estate returned an average of 8.4% over the 10-year period from 2000 to 2010, based on data from the National Council of Real Estate Investment Fiduciaries (NCREIF). And usually, the real estate market is one of low volatility especially compared to equities and bonds.

Real estate is also attractive when compared with more traditional sources of income return.

This asset class typically trades at a yield premium to U.S. Treasuries and is especially attractive in an environment where Treasury rates are low.

Diversification and Protection

Another benefit of investing in real estate is its diversification potential. Real estate has a low, and in some cases, negative, correlation with other major asset classes – meaning, when stocks are down, real estate is often up. In fact, in 14 of the 15 previous bear markets, going back to 1956, residential real estate prices rose, according to data from Yale University’s Robert Shiller, the co-creator of the Case-Shiller Home-Price Index. Of course, there are exceptions: real estate tanked along with equities during the Great Recession (though this was an anomaly, Schiller argues, reflecting the role of subprime mortgages in kicking off the crisis).

This means the addition of real estate to a portfolio can lower its volatility and provide a higher return per unit of risk. The more direct the real estate investment, the better the hedge: More indirect, publicly traded, vehicles, like REITs, are obviously going to reflect the overall stock market’s performance (and some analysts think the two will become ever more correlated, now that REIT stocks are represented on the S&P 500). Interestingly, though, this also has been changing of late. The correlation between listed REITs and the broad stock market hit a 12-year low in 2015, according to research by the National Association of Real Estate Investment Trusts (NAREIT), “suggesting that whatever factors happen to drive the non-REIT part of the market will not necessarily spill over to affect the REIT market,” an article on Reit.com, the association’s website, concluded.

Because it is backed by brick and mortar, real estate also carries less principal-agent conflict or the extent to which the interest of the investor is dependent on the integrity and competence of managers and debtors. Even the more indirect forms of investment carry some protection: REITs for example, mandate a minimum percentage of profits be paid out as dividends.

Inflation Hedging

The inflation-hedging capability of real estate stems from the positive relationship between GDP growth and demand for real estate. As economies expand, the demand for real estate drives rents higher and this, in turn, translates into higher capital values. Therefore, real estate tends to maintain the purchasing power of capital, bypassing some of the inflationary pressure on to tenants and by incorporating some of the inflationary pressure, in the form of capital appreciation.

The Power of Leverage

With the exception of REITs, investing in real estate gives an investor one tool that is not available to stock market investors: leverage. If you want to buy a stock, you have to pay the full value of the stock at the time you place the buy order – unless you are buying on margin. And even then, the percentage you can borrow is still much less than with real estate, thanks to that magical financing method, the mortgage.

Most conventional mortgages require a 20% down payment. However, depending on where you live, you might find a mortgage that requires as little as 5%. This means that you can control the whole property and the equity it holds by only paying a fraction of the total value. Of course, the size of your mortgage affects the amount of ownership you actually have in the property, but you control it the minute the papers are signed.

This is what emboldens real estate flippers and landlords alike. They can take out a second mortgage on their homes and put down payments on two or three other properties. Whether they rent these out so that tenants pay the mortgage or they wait for an opportunity to sell for a profit, they control these assets, despite having only paid for a small part of the total value.

The Drawback of Real Estate Investing: Illiquidity

The main drawback of investing in real estate is illiquidity or the relative difficulty in converting an asset into cash and cash into an asset. Unlike a stock or bond transaction, which can be completed in seconds, a real estate transaction can take months to close. Even with the help of a broker, simply finding the right counterparty can be a few weeks of work. REITs and real estate mutual funds offer better liquidity and market pricing, but come at the price of higher volatility and lower diversification benefits, since they have a much higher correlation to the overall stock market than direct real estate investments.

Maximizing Apartment Building Investments

Maximizing Apartment Building Investments

Real estate investors, especially those that invest in residential apartment buildings or entire complexes, have a wide range of products and services at their disposal to help ensure they keep their units filled and properly maintained.

As we all know, each time an apartment turns-over it costs money in order to prepare the apartment for the next resident. It must be cleaned, often updates may be necessary, such as replacing counter tops, appliances, carpeting and tiles.

The better resident you can place and the longer they stay the more money you save. One of the main ways to maintain residents is to provide a wide range of amenities and keep the property well maintained. Not just the interior, but the exterior and the surrounding grounds like fountains, playgrounds, pools, gym-facilities and dog areas.

There are several products and services that can help building management find the right residents. Other than screening and conducting the proper credit procedures, having a company in place to take care of the maintenance is another key area of importance.

Hiring the right property management firm can be instrumental in helping apartment building owners keep their properties attractive to the right kind of renters and maintain the property inside and out in order to maintain the integrity of the asset.

Many property management companies offer a wide range of products and services that will keep a property well-maintained. They can create a schedule of services to make sure that all units get seasonal maintenance several times a year.

Defining Normal Wear and Tear for Apartment Owners

Simply living in a rental place will eventually lead to scuffs, scrapes, and stains. The longer a tenant lives in a property, the more potential there is for accidents and everyday deterioration.

In America, the onus is on landlords to understand that a certain level of wear and tear is unavoidable and an expected aspect of renting out their unit or home. Despite this, many landlords are sticklers and it is not uncommon for property owners to try and withhold a security deposit for minor concerns, leaving their tenants in a financial predicament.

To combat these cases, many states have implemented legislation that safeguards tenants from this type of unfair treatment— making landlords potentially liable if they do not adhere to the applicable regulations.

When approached correctly, disputes can often be avoided, and if they do occur, can be resolved more easily and quickly, making the rental experience more enjoyable for both tenants and owners.

What is Normal Wear and Tear?

In a nutshell, normal wear and tear refers to any damage that takes place as the result of aging and/or regular usage.

It’s important to note, however, that each case is unique. This means that if a landlord and tenant dispute is handled in court, it will be up to the judge’s discretion to determine if an inappropriate amount of damage has occurred.

It’s also important to remember that laws differ from state to state, so rulings relating to these types of issues can vary significantly.

For the purposes of this explanation, though, we’ll be sharing an example that is more definitive.

EXAMPLE:

Small nail holes and minor scrapes in wall paint would be considered usual wear and tear, while large, gaping holes in gyprock would be considered excessive damage.

Understanding Normal Wear and Tear VS Excessive Damage

It isn’t always easy for a landlord to determine when an issue qualifies as excessive damage, or when the responsibility should fall on the tenant to repair a particular concern.

Below are some guidelines that can assist with differentiating between ordinary wear and tear and unreasonable damage:

Wear and tear does NOT include damages that occur as a result of a tenant’s negligence, abuse, or accidental destruction.

Wear and tear does NOT include damages that occur as a result of negligence, abuse, or accidental destruction by a tenant’s guests or pets.

Excessive damage does NOT include the cost of regular maintenance and repairs that must be completed after a tenant moves out and prior to another tenant occupying the space.

Examples of Normal Wear and Tear

To further clarify the normal wear and tear definition, below are some common issues that landlords would NOT be justified in deducting from a tenant’s security deposit:

  • Carpet deterioration caused by foot traffic, normal use, etc.
  • Broken cords on blinds or curtains
  • Fading on carpets or flooring caused by sun exposure
  • Non-functional light bulbs, wiring issues, etc.
  • Loose door handles, hinges, cabinetry, etc.
  • Leaky toilets
  • Broken light switch plates

Examples of Excessive Damage

Below are damages that would NOT qualify as normal wear and tear rental concerns:

  • Excessive amounts of pet urine on carpets
  • Smoke or burn marks from cigarettes on flooring, walls, etc.
  • Broken or missing cabinet doors
  • Unauthorized renovations
  • Gaping holes in walls, doors, etc.
  • Smashed mirrors, broken window glass, etc.
  • Clogged toilets as a result of improper use

Examples of Regular Maintenance

It is unlawful to claim regular maintenance as security deposit wear and tear, since landlords assume responsibility for a certain level of property upkeep when they make the decision to rent their space.

Below are some examples of projects or activities that would be considered regular maintenance:

  • Rodent or insect exterminations
  • Repairing of water damage or leaks
  • Installation of functioning fire and carbon monoxide detectors
  • Gutter cleanings
  • Sprinkler system repairs
  • Safety inspections
  • Replacing fire extinguishers
  • Updating or replacement of kitchen appliances

If you aren’t sure whether or not an issue qualified as reasonable wear and tear rental concern, it’s always advisable to seek a second opinion.

Too often, landlords bring their case to court, only to realize their definition of wear and tear rental property issues differs from the definition set forth by the law.

You can review Winston Rowe and Associates by clicking here.

 

Appealing To Millennial Renters Who Wish To Remain Child-Free And Mortgage-Free

Apartment Building Investing

If you own or manage rental properties, your ideal tenant is likely a young, gainfully employed person who plans to rent long-term.

Luckily for you, this dream occupant comprises one of the largest renting demographics: millennials.

According to Pew Research Center, 74% of them are renters. And given that the same study states that they’re also less likely than other age groups to move once they’ve found an ideal rental space, marketing your properties to millennials is a great way to attract reliable, long-term tenants.

Most millennials view home ownership as a risk they’d prefer to avoid. Many have amassed stifling levels of student loan debt and, having come of age during the 2007-2009 credit crisis, are more cautious about investments.

This is good news, but it also means that appealing to this market requires a nuanced marketing strategy. Here are five guidelines:

  1. Become Tech Savvy

You need an online strategy that includes not only websites like Craigslist, but also top rental sites and social media platforms. The importance of the latter cannot be overstated: Over 76 million millennials in the U.S. are on social media.

Be sure to include numerous high-quality photographs (preferably professional) with your listing. Write-ups should be thorough. Applicants should be able to apply online and easily ask questions.

In addition to offering prospective tenants a seamless online experience, be prepared to upgrade the technology available to current residents. Wi-Fi is a must, and such things as USB-equipped wall plates or keyless entry have great appeal.

  1. Go Eco-Friendly

According to research by Nielsen, millennials care deeply about and allow their purchase decisions to be influenced by a company’s environmental focus. For property owners, that means it is best to use digital statements, communications and marketing.

Energy efficiency should also be top of mind. Install solar panels to curb electricity costs, and switch to Energy Star appliances, energy-efficient lights and self-regulating thermostats.

Building materials are equally important, and the use of paints and construction materials with low or no volatile organic compounds (VOCs) will be viewed favorably.

If your property is close to public transportation and can thus reduce driving and carbon emissions, say so. It’s also worth mentioning if your corner of the city or town features bike-sharing programs, bike lanes or walking trails.

  1. Allow Pets

While properties have had the luxury of restricting pets in the past, shifting priorities among younger generations have made it a real handicap to ban animals. Millennials may not want to own houses or cars or become parents, but they are the largest demographic of pet owners.

Therefore, it’s wise to adopt a lax pet policy and ensure that whenever opportunities arise to reassess furnishings or to renovate, pet-friendly materials are chosen.

Certain flooring and fabric options tolerate pet accidents better than others, and choosing those will likely prove more lucrative than preventing renters from co-habitating with their furry family members.

  1. Promote Neighborhood And Lifestyle

Location is everything, and when you’re describing yours, it’s imperative to think through the elements of your neighborhood and the lifestyle they beget. If you’re in the city, highlight walk-ability and access to co-working spaces, nightclubs, breweries, parks or other places where young professionals will likely congregate.

Likewise, if your rental is outside of the city, advertise it as a quiet retreat that’s close to nature, where residents can decompress.

Make a list of everything your area offers that could interest people in their 20s and 30s, and include them in the descriptions of your property.

This demographic is very interested in their proximity to work and their options for play, so focus should be placed on those neighborhood conveniences rather than school districts or safety.

  1. Offer Better Amenities

It’s time to assess what conveniences you are offering to tenants. Installing a washer and dryer can often be the best and easiest way to add value to your property. Parking (especially of the off-street variety) is another priority for most tenants.

If you own older buildings, you’re likely competing with newer rental properties that offer glitzy amenities like gyms, pet spas, swimming pools or room service. Ensure that you’re competing to the best of your ability by offering as much as your checkbook and your property can reasonably accommodate.

Older buildings typically benefit from having larger units than newer construction. Coupling that space with a handful of alluring amenities positions properties to go head to head with the newer, luxury-branded options that are emerging across the country.

Community spaces are also really important for young professionals, especially unmarried individuals who are seeking opportunities to meet new people and congregate with friends.

Having built-in communal areas like shared decks, lounges or gardens can make a huge difference with millennials. Perhaps your property could accommodate a fire pit, a grill or a garden. Or, if you’re lacking outdoor space, consider transforming an unused room into a game room, fitness center, library or kids’ playroom.

Whatever you decide, remember that millennials are longer-term tenants who expect their apartments to offer all the comforts of home (if not more).

While all of these suggestions aren’t going to apply to every millennial applicant, and many might not be cost-effective options for you, every landlord and property manager needs to be thinking about how to maximize their properties’ assets in the context of these millennial-friendly features.

Simplify Your Landlord Duties in 3 Steps

Simplify Your Landlord Duties in 3 Steps

The digital age has brought new technology that will make your landlord duties easier than ever. Here are 3 simple ways to get your landlord tasks done faster and more efficiently.

Automatic Rent Payments:

Your first order of business is to simplify your rent collection method. Your tenants are sure to appreciate this just as much as you will. Rent is how you make money, and you should aim to reduce any obstructions that slowdown that cash from entering your bank account.

If you haven’t done so already, bid farewell to the days of mailed-in cash and check. Mailing money has plenty of inconveniences:

Tenants must go to the bank if they don’t have cash or have run out of checks

Tenants must take the envelope to the post office

You must wait for the envelope to arrive

The money could get lost in the mail

You’ll have to make your own trip to the bank to cash or deposit the rent

Mailing should always be an acceptable option for tenants, but most folks nowadays have Internet access. Use software like Cozy to let tenants pay their rent online. Rent collection software will save everyone time and inconvenience, and you’ll get your money faster.

Digitally Manage Contractors:

One of the toughest things about being a landlord is having to manage all the maintenance requests at each of your properties. If a drain gets clogged, you’re the one who must call a plumber.

If a property’s HVAC stops working, you’re the one who must hire someone to fix it. If you want to be productive in the contracting department, you’ll want to:

Keep digital lists of reliable contractors that can service your properties

Digitally record contractors’ contact information

Keeping a set list of contractors will shorten the amount of time it takes for you to respond to a maintenance emergency at one of your properties, and you’ll be able to familiarize yourself with each contractor’s pricing so that you can budget more efficiently.

If possible, find contactors who are able to do invoicing through certified software. For example, House call Pro plumbing software sends invoices and maintenance updates to the property owner and tenants automatically.

High-tech contractors are more communicative and prompter, and that’s important because you always want to know that maintenance tasks are being performed efficiently. After all, happy tenants make a happy landlord.

Hands-Off Tenant Screening:

One of the most important responsibilities you have as a landlord is to find good tenants. You probably want to avoid tenants that have:

A lengthy criminal record

History of evictions

Poor financial history

Tenants with any of these characteristics could wreak havoc upon your property and finances. Not to mention, a tenant who engages in criminal activity may very well draw criminal activity onto your property.

A tenant with a poor financial history is less likely to pay his or her rent on time. And a tenant who has been evicted numerous times could have a number of issues, such as causing property damage or consistently breaking the rules of the lease.

Suffice to say, you don’t want these kinds of tenants. And you can easily avoid them with proper tenant screening. Although tenant screenings are important, they’re also very tedious to perform on your own.

Thankfully, a middle-man exists! Tenant screening companies’ shoulder most of the workload for you.

Many of these companies perform both background checks and credit checks, and some even take on the task of collecting personal information from the prospective tenant. This is the safe, reliable, and easy way to find the best tenants for your properties.

With these 3 steps, you’ll automate and simplify your most important landlord tasks so that you can be more productive in managing each of your properties. Like they say, time is money. By reducing your workload, you’ll be able to boost your amount of free time and maximize your profits.

Fed Keeps Interest Rates Steady Despite Political Pressures

Fed Keeps Interest Rates Steady Despite Political Pressures

With U.S. inflation at 1.6 percent for Q1 2019, the Federal Reserve continues to hold off on any interest rate changes following last week’s meeting of the Fed’s Open Market Committee.

With both President Trump and Vice President Pence urging the Fed to cut interest rates, the central bank is working to convince observers that its goal is to see price and wage increases without the expectation of rate cuts.

Fed Chairman Jerome Powell said the Fed, as a nonpolitical institution, would not be swayed by pressure from the White House.

Powell said he expects price gains to emerge eventually. U.S. employers added 263,000 jobs in April, resulting in a 3.6 percent unemployment rate.

If the labor market continues to tighten, employers may raise wages to attract talent, while consumer demand may allow companies to raise prices. Both are slow to appear at this time.

Economists agree that today’s job boom and low inflation seem unlikely, as low unemployment tends to slow the rate of job creation.

What’s interesting is how wrong the talking head economists have been for the last 24 months.

These are the same experts that thought it was a great idea to have home mortgages of 125%+ of value some years ago.

It appears that the Q4 2019 fears of an economic slowdown are completely unfounded.

 

 

Tips for Buying A Commercial Investment Property

Tips for Buying A Commercial Investment Property

Buying a property is always a great way to invest. However, there are several things to keep in mind before buying an investment property.

How well you manage the proceedings will go on to determine whether your financial goals will be realized.

You don’t have to be wealthy to buy an investment property. Yet it is extremely important to make wise decisions whether you have bought three investment properties or this will be your first.

Since the property market is one of the most volatile ones, understanding the correct dynamics can be pretty difficult, especially if you are not familiar with the market.

Hence, it would be prudent to make a purchase only with much forethought. The following tips can be helpful.

Choose the right property and the right price

Investing in a property is only sensible if the given property is going to increase in value in the upcoming years. In addition to this, it is also equally important to understand the correct market price so that you make a fair deal.

Since the market prices of real estate are not highly transparent, it can be difficult to understand the actual price.

Therefore, it would count to do some background research. This is also where using a qualified local realtor can really pay off.

Prepare a long-term financial plan

If done in the right way, property investment can be one of the most profitable sources of income generation, giving you very quick returns.

However, it is important that you have a clear financial plan. For example, you can use a loan or a mortgage when buying the property and then later rent out the property. This way, the rental income itself can be used for paying the mortgage.

However, the rental income will also be affected by the system of taxation followed in the area. Therefore, make sure that you learn about the cost of all insurances and taxes before making a move. Many areas charge a bed tax which can be between 10% – 15% on top of normal taxes.

Hire a property manager

Buying a property involves a massive financial investment. If you are not familiar with the market, it can be hard to understand the actual value of different properties. Along with this, the process also involves a number of other things such as taxes, legal process, rental laws and much more.

Property managers, being professionals in the field, can easily help you through all of these issues. You may have to shell out some amount as a fee for the property managers. However, they will definitely help you secure a constant flow of renters in your home as well as make sure maintenance is kept up.

Understand the area

When you are buying a property, it is important to understand the area. It is not possible to learn everything on the internet. Hence, it would be advisable to talk to knowledgeable local real estate agents. This is important because your local realtor will know which neighborhoods have the best chance or history of increasing or decreasing property values.

Go for a massive down payment

FHA and VA mortgages are generally not available when you are buying an investment property. However, you can always opt for conventional financing, which will require you to make a down payment of 20%.

You can also opt for a higher down payment so as to bring down the rates and monthly payments. It should be noted that the mortgage rates for investment property tend to be higher than those of primary residences. Hence, it is important that you plan on this when adding up your potential profits on homes you’re looking at.

Additional costs for repairs

If you are buying an old property, you may have to make a number of repairs before renting them out or making a resale. Not doing so can affect its market value. Hence, it is important that you include the cost of upkeep and repair to the total cost of the property.

Do not put off making repairs to save money. It will cost you much bigger in the end.

While investing in property, it can be tempting to go for large-scale investments with the expectation of getting an equally large profit line. However, this can be very risky unless you have grown very familiar with the market and can afford to play around with the investments.

If you are new to the area, it would be more advisable to start small and then gradually move on to larger properties when you are prepared enough to handle them. This will give you an idea of how things work out in the market while also giving you a continuous profit on the side.

 

Fees to Expect When Financing Your Commercial Loan

Fees to Expect When Financing Your Commercial Loan

Credit Report

Lenders usually request a copy of your credit report to review your credit history and ultimately determine if they should risk lending your money.

Appraisal

Since the commercial appraisal process requires a certain level of knowledge and experience with a particular type of property and market area, lenders will typically only accept appraisals from one of their tested and approved partners.

Environmental Report

Since the commercial appraisal process requires a certain level of knowledge and experience with a particular type of property and market area, lenders will typically only accept appraisals from one of their tested and approved partners.

Building Inspection Report

This is usually paid before closing as well.

Buyer’s Attorney Fee (Not required in all states)

This fee is paid to the attorney who prepares and reviews all of the closing documents on your behalf.

Closing Fees

The other expenses involved in the financing of a commercial transaction are closing costs. These are due at the time of funding of the loan and can be included in the financing. These costs are usually the origination fee, property insurance, title insurance and title related expenses, property insurance, and escrows for property taxes.

Commercial Property Insurance

This cost protects you and the lender if there is ever any damage to your property. The cost range from state to state and depends on the value of the property.

Legal Fee for Lender

Lenders can require the borrower to cover reasonable legal fees and costs needed by the lender in order to complete funding. This fee amount ranges depending on loan size and details of the loan and/or property.

Title Insurance

This fee is associated with loan policy, loan endorsements, and settlement fees. This generally protects the lender from liability with inadequately performed lien or title searches.

How to Make A Commercial Property Stand Out

Optimizing properties is about more than installing new appliances and a fresh coat of paint. Here’s a step-by-step playbook to help landlords target niche demographics and optimize their properties to maximize value.

Understand your tenants:

Always be transparent with clients and let them know how the value you present meets their needs, with an emphasis on accommodating their budget.

Trustworthy landlords not only empower tenants to confidently buy or rent from them, but may also ultimately improve their own bottom line with higher sales. When both you and the tenant understand the meaning behind what you’re charging, both sides can feel confident that they’re getting the most out of the transaction.

Understand your property:

Just like people, buildings age and require maintenance. Understanding the values and faults of your property helps fix problems as they happen, not as they spiral out of control. The last thing you want to sell is a flawed piece of property.

Location:

Connect with the property’s neighborhood to understand of what you’re presenting to clients. Knowing about amenities, transportation and demographics only scratch the surface — if you’re serious about investing in a particular neighborhood, consider opening local offices to show future tenants that you’re serious about the area they’re considering living in.

Renovations:

Regular property inspections allow landlords to find problems with the unit’s structure right away. Renovations and updated finishes can increase your asking price. Based on property type, consider what kind of renovations will pop up in the future.

Develop a unique strategy based on that understanding:

Powerful and unique marketing strategies separate the best landlords from the rest. Strategies materialize from a deep understanding of your properties and the tenants you want to attract.

Data-driven leasing:

Over the years, I’ve seen the more renters have lease terms that appeal to them, they are more likely to stay at a property. Today’s best leasing solutions use data and predictive analytics to assess patterns in consumer behavior so that landlords can attract and generate more qualified leads. Data allows landlords and brokers to work together to reach the right audience.

Timing:

Consider the timing and execution of your construction schedule. Marketing units during peak seasons can attract the highest rents and keep leases in the right cycle. These concerns demand collaboration between landlords, brokers, and contractors to deliver high-quality luxury units when the market needs them most.

Real estate isn’t easy, and success requires more than drive. It calls for a deep understanding of the fundamental appeal of a great property, and without a solid underpinning, you’re selling facades rather than strong foundations.

10 Things to Include/Outline in a Lease

Tenant Lease Agreements

Developing a lease isn’t an easy task. It requires a lot of your time and energy, and even then it’s possible you’ve forgotten some pivotal information. For that reason, it’s all the more important that you understand what details absolutely need to be outlined in your lease.

When it comes to renters, consider the fact that many are renting for the first time, and every detail truly needs to be spelled out for them.

When you look at your lease that way, it’s imperative that you include all vital information. In order to help you get started when it comes to the more important details, here are ten things to include/outline in a lease.

  1. All Relevant Dates

Any time you draft a lease, it’s important to outline the relevant dates, all of them. This includes the move-in date(s), the move-out date(s), the length of time the lease is for and even the dates when you can resign your lease are (as well as the deadline). Also, though this is typically an item due at signing, you should always mention when the security deposit is due as well as how long it takes to process these payments to avoid any late fees etc.

Essentially, any information as far as dates that are pertinent to your renters go, they should be clearly outlined in a lease to avoid any confusion on their end as well as to have written proof that the renters were notified well in advance regarding all dates pertinent to the lease.

If there are any additional dates of note (i.e. dates when first month and last month of rent are due) make sure you clearly indicate those in your lease as well. Basically, if there’s a date they need to know about, those are items that you need to clearly outline in a lease.

  1. Subletting Information

Subletting an apartment is stressful for college students, but oftentimes extremely necessary. Most leases run from fall to fall, but students attend school from fall to summer in most circumstances. For this reason, they are left with the options to pay their lease and stay on campus, to pay their lease while returning home for the summer, or to sublet their apartment while they stay home for the summer.

Again, many students are renting for the first time, so it stands to reason they would also be subletting for the first time. Therefore, something essential to outline in a lease is any subletting information relevant to your renters. This includes, but is not limited to, who is liable for what, how those payments work, whether or not subletting is done through the main office or on their own, and if subletting is even an option available to them. (If your office doesn’t allow subletting, you may also want to include relevant information related to summer rent – i.e. what a student is supposed to do if they are returning home for the summer but still paying rent. Is there any upkeep that needs to be done in the apartment? If so, make sure they are aware of this information well in advance, otherwise, their plans may not work out with how your lease is outlined.)

For some, subletting rules are a deterrent from signing a lease; while you may lose out on the rent from that individual, it’s better than taking advantage of them by leaving out pertinent information that could have been outlined in a lease. So, make sure that all rules related to subletting are clearly stated to avoid any confusion and harm to your renters.

  1. Emergency Details

Nobody likes to think about it, but there are instances of emergencies. This could be, but isn’t limited to, fire, break-in, gas leaks, campus shooters, etc. There are so many variables here, but being prepared for any one of them is a good first step, whether or not an emergency actually presents itself.

If there are any details that a renter would need to know, such as a location to take shelter during a tornado siren or a protocol to follow if there is a break-in, make sure you outline this in your lease. Again, this doesn’t necessarily mean that anything will happen, but, as they say, better safe than sorry when it comes to the safety of you and your renters.

Also important is to include a number to call in case of emergency (i.e. gas leaks) and when it’s important to notify authorities. While it’s always a safe bet to alert the police or fire department, outlining this information can prevent unnecessary calls when there is an easier series of steps for your renters to take. Many renters are unfamiliar with such circumstances so, again, it’s much better to be safe than sorry.

  1. Maintenance Details

It’s very likely your renters will need to reach out to maintenance at least once during their lease. For others, the outreach to maintenance may be more common. When you develop your lease, maintenance schedules and contact information are very important to outline in a lease. Whether you’re simply including the contact information for your maintenance people, the emergency contact information or a basic time frame of expected response for maintenance requests, this is all relevant information that your renters should be equipped with from the start.

I recommend speaking with the maintenance department, determining the best course of action for working together and outlining those details in the lease. This provides students with a general idea of what to expect when something breaks or goes wrong in an apartment.

As a side note, you should also outline in your lease what move-in day looks like from a maintenance perspective. Typically, they are provided with a checklist and required to document any aspects of the apartment that aren’t working, so let them know what this looks like and what to document to avoid charges later on. It should also be mentioned that maintenance is typically busy this day, so requests are handled on a first come first serve basis (or in another manner if applicable.)

  1. Cleaning Specifications

Typically, before an individual moves into their new apartment, there is a certain amount of cleaning that needs to be done. For many landlords, this work is outsourced and charged in the last month’s rent of the previous owners. However, in many cases, there are additional costs that aren’t specified in the lease and come as a surprise when they are deducted from the security deposit. Getting ahead of this confusion and clearly letting your renters know what costs for cleaning entail is in your best interest.

Repeat customers are big for business, so negatively impacting your current renters doesn’t make sense. For this reason, let them know what costs to expect when you outline in a lease what these costs would be.

Let them know the charges for paint, for additional cleaning, for damages etc. You don’t need to provide specifics on every item, but essentially give them an outline of what to expect should there be any damage to the apartment.

  1. Rent Details

Rent details are obviously essential to outline in a lease. This comes down to what your student is going to be paying monthly to live in their apartment. This also includes any additional costs they may not have considered in apartment hunting.

For example, if they plan to pay by credit card, is there an associated fee? Can they pay by check? Do they have to drop the check off at the leasing office every month, or can they mail it in? Can they pay cash? What happens when their rent is late? Is there a late fee? Is there a grace period? Does the fee increase after a certain number of days?

There are countless details to include here, and it’s all information that they will need to know, guaranteed. Think of all the questions you’ve gotten as a landlord and include their answers in your lease, as this is the best way to ensure you’ve included all the information they need.

  1. Additional Rules

Let’s be honest, there are always rules. Some are unspoken, but additional rules are something to definitely outline in a lease.

For instance, do you allow pets? If not, what happens when a family member visits with a pet? Are there any areas students aren’t allowed in an apartment complex? What are the repercussions? Is there a rule for having guests? Is there a length of time before they need to leave?

These are all rules that may not necessarily be understood without being clearly written out, so I recommend clearly defining them in your lease to avoid any questions when it comes time for reprimanding your renters.

  1. Additional Fees

Stating additional fees in your lease is imperative. Is there a charge for owning a pet? Is it a per-pet charge? Is there a laundry charge? What about charges for parking?

Any additional fees are imperative to outline in a lease. Basically, if there is an extra charge for something, you definitely need to state that in your lease. Additional costs should never be hidden – always state everything upfront, very clearly to avoid any problems when it comes to payment later on.

The more upfront you can be with your renters, the more likely they are to return or recommend your complex to another student. So, in other words, it’s in your best interest.

  1. On-Site Resources

Most apartment complexes have a variety of on-site resources that are available to their renters, but many renters aren’t aware of these resources. For this reason, it’s a good idea to mention the available resources to your renters and include them when you outline your lease.

For instance, if you have a fitness or recreation center, that’s something to outline in a lease. You should also include any laundry facilities, parking garages, cafeterias etc. that you have available to your renters.

Many students look for these on-site resources, and they are often large perks to signing a lease, so including these details is a great idea to show all available options to your student so they feel they are getting the most out of their lease.

  1. Office Availability

Last, but definitely not least, it’s important to provide your renters with your office availability. This might not be the first thing that comes to mind when thinking about drafting a lease, but it’s definitely information you should outline in a lease.

Like it or not, there are going to be a large number of times in which your renters need to get a hold of you. Sometimes, it’s related to quick questions that can be answered on the phone, and other times, they need to come into the office to speak with one of your leasing agents about changes to their lease etc. No matter the circumstances, you should always list your office availability in a lease.

This includes your contact number (both the main office and individual contact information), perhaps a link to the website for an FAQ section, your office hours and any other emergency contact information not previously listed in your lease.

It’s important that your renters always have someone they can contact, so the more information you provide in your lease to that end, the better off you are and the more comfortable they (and their parents) will feel.

While this is by no means the entirety of the information required in a lease, this is a good starting point as far as items to outline in a lease go. Again, there will be plenty of information pertinent to your complex alone, and other information that you may need to leave out, but make sure you develop some form of outline to begin with to ensure you’re not missing any relevant information.

When it comes to including information to outline in a lease, more is always better, as you would much rather provide them with too much information than not enough. So don’t be afraid of being wordy, it’s not going to do you any harm!

Use these items to outline in a lease in order to develop yours and good luck drafting your lease!

Structural Liabilities For Apartment Buildings

Structural Liabilities For Apartment Buildings

Apartment deals that involve significant remediation or structural mitigation cost more, are more difficult to broker, and carry far more risk for all commercial real estate stakeholders.

Looking for small signs and reversing correctable issues through proactive due diligence such as building assessments and property-condition assessments is essential to formulating informed decisions and mitigating risk.

Here are potential liabilities to consider at your current and prospective properties.

Balconies and Stairs Balconies and exterior stairs are a component of many multifamily projects but are often overlooked as a potential source of water intrusion and life-safety liabilities.

They require regular maintenance and inspection to limit the loss of structural integrity due to corrosion, wood rot, or concrete deterioration. Maintenance may also help to prevent water intrusion into the interior living spaces.

Garages Multifamily developments in densely populated or high property–value areas often include multilevel parking garages to increase the utilization of land area.

These structures include below-grade parking decks, adjacent or adjoining parking decks, and tuck-under parking. A current trend is to place living spaces around a central parking deck.

Small garages may be built with steel structural elements, while large garages are typically made with reinforced concrete. Either construction is susceptible to deterioration over time, especially due to the corrosion of steel elements that are exposed to water.

Properties in Northern climates, where residents routinely traverse roads that have been treated with brine to remove snow and ice, are especially susceptible to corrosion.

Accessibility can be a very complicated issue. Two federal laws, the Americans with Disabilities Act and the Fair Housing Amendments Act, dictate that properties built after 1991 meet accessibility guidelines.

State and municipal governments may have differing statutes, but owners who obtain financing through publicly funded lenders may be required to retrofit their property to meet current accessibility requirements.

Seismic Retrofits Determining structural risks posed by seismic activity requires an analysis of the structure and evaluation of the location relative to the known faults, hillsides, and liquefaction zones.

In earthquake-prone areas, many cities are mandating the retrofitting of vulnerable building types. San Francisco, Los Angeles, and Santa Monica in California, as well as other cities in areas of elevated seismic activity, have instituted mandatory compliance guidelines for retrofitting vulnerable buildings.

The two most frequently identified types of seismically vulnerable buildings are wood-frame “soft story” buildings, where the ground floor is used for parking and built with open walls on one face of the building; and nonductile concrete buildings, which are prone to crumble and collapse under seismic forces. Retrofit costs vary widely depending on the size and construction of the building and the objectives of the retrofit.

Attention to small indications of impending issues, paired with preventive measures to stave off greater structural concerns, can extend the life and structural integrity of a building, saving money and minimizing risk in the long run.

A thorough property-condition assessment by a qualified, experienced consultant can simplify the due-diligence and risk-evaluation process, helping to ensure a safe and viable property.

Debtor-in-Possession (DIP) Financing Defined

Debtor-in-Possession (DIP) Financing

Under Chapter 11 bankruptcy, a business files for protection from creditors while it reorganizes itself.  During the reorganization process the bankruptcy count allows the business to secure additional financing from lenders in order to continue its operations.

Under the jurisdiction of the bankruptcy court, such post-bankruptcy lenders assume a senior position on liens and security interests in the business assets, normally by consent of the pre-bankruptcy senior lenders.

In practice, the continued operation of the business allows the debtor in possession to reorganize, reposition itself, and improve its chances of repaying its debts.

DIP financing is important since it extends a lifeline to any business in Chapter 11 bankruptcy, enabling it to maintain payroll and suppliers, stabilize operations, restructure its balance sheet, and eventually repay creditors and emerge from bankruptcy.

A business in bankruptcy is normally able to obtain DIP financing only by giving its post-bankruptcy lenders protection in the form of a senior lien position.

While a senior lien position ensures that the lender will be repaid fully even in liquidation, it also limits the business with strict payment terms, which can hinder the reorganization process.

Strict oversight by the bankruptcy court serves as an additional protection to DIP financing lenders, helping to assure that new credit can be extended to businesses in bankruptcy.

Breaking Down Debtor-in-Possession Financing (DIP Financing)

Since Chapter 11 favors corporate reorganization over liquidation, filing for protection can offer a vital lifeline to distressed companies in need of financing. In a debtor-in-possession financing, the court must approve the financing plan consistent to the protection granted to the business. Oversight of the loan by the lender is also subject to the court’s approval and protection. If the financing is approved, the business will have the liquidity it needs to keep operating.

When a company is able to secure debtor-in-possession financing, it lets vendors, suppliers and customers know that the debtor will be able to remain in business, provide services and make payments for goods and services during its reorganization. If the lender has found that the company is worthy of credit after examining its finances, it stands to reason that the marketplace will come to the same conclusion.

DIP financing is frequently provided via term loans. Such loans are fully funded throughout the bankruptcy process, which means higher interest costs for the borrower. Formerly, revolving credit facilities were the most utilized method — a favorable arrangement for the borrower, as it offers good flexibility and the option of reducing interest expenses by actively managing borrowings to minimize funded amounts.

GSA’s Real Estate Leasing Policies

GSA’s Real Estate Leasing Policies

When looking for a starting point for examining the federal government’s real estate policies, it is best to start with the GSA’s Public Building Service (PBS). PBS is the arm of the GSA that leases space for numerous federal agencies.

PBS is also the caretaker of federal properties the GSA owns, occupies, and leases to other federal agencies across the country. PBS’s real estate policies are numerous and address almost all the federal government’s real estate leasing activities since the formation of the GSA in 1949.

Narrowing the focus to policies currently in place finds that PBS sets the policy baseline for the federal government’s real estate policy.

This policy baseline is best described by PBS as its “basic policy” to lease quality space that is the best value to the federal government, is located in a central business district (with some exceptions), is accessible by persons with disabilities, and is sustainable and provides a safe work environment.

The bulk of PBS’s real estate policies are found in the PBS Leasing Desk Guide (Desk Guide). The Desk Guide sets forth the guiding principles and policies for GSA employees engaged in government real estate contract activities.

The policies in the Desk Guide also apply to federal agencies leasing space under delegated authority from the GSA. In 1996 the GSA administrator granted GSA leasing authority to all federal agencies.

Known as “delegated authority,” this change permits federal agencies to lease their own space without using the GSA as their real estate representative.

If a federal agency uses the GSA for its real estate needs, that agency becomes either a tenant in federally owned GSA-managed space or a subtenant to the GSA, with the GSA holding the primary lease with the private-sector property owner.

The GSA has a separate occupancy agreement with the federal agency to which it is subleasing the space. The costs for managing that space are usually added to the lease payments made to the GSA by the subtenant leasing the space from the GSA.

The GSA typically has special clauses in its occupancy agreements that allows the federal agency to vacate the leased space before GSA’s lease term expires with the private-sector landlord; the GSA is typically left paying the remainder of the lease term rents regardless of the whether the space is still occupied by the federal agency subtenant.

As recently as 2014, the GSA made changes to its leasing delegation authorization process. Some of these modifications centralize the GSA delegation authorization process and require additional oversight of federal agencies, which now are required to show they can manage and administer their own leases.

To better understand the GSA’s leasing authority and the GSA’s authority to delegate this authority to other federal agencies, it is best to look at the United States Code (USC) Title 40, formally known as the Public Buildings Act of 1959.9

Multifamily Investing Due Diligence Do’s and Don’ts

Multifamily Investing Due Diligence Do’s and Don’ts

With historically high rents fueling the apartment market, sellers are once again demanding top dollar and buyers have become increasingly aggressive in their pursuit of available inventory. During this process, the prevalence of defective construction in the apartment industry over the past several decades should not be overlooked.

Amateurs and professionals alike have purchased properties that were economic disasters because they were fraught with undetected construction defects. As a consequence, conducting thorough “due diligence” investigations are essential in avoiding the substantial repair and maintenance costs that can result from latent construction defects.

Understanding Apartment Construction

As owners and operators know, apartments are hybrid commercial/residential projects that have a history of problems unique to their classification. Making sure that a buyer, or a buyer’s inspection company, understands these problems, and where and how they manifest in apartment construction, can make or break a due diligence investigation.

Even reputable commercial inspection companies focus their due diligence investigations on interior systems, such as mechanical and plumbing systems, and generic sources of water intrusion common to all construction (roofs and windows). It’s doubtful, however, that these inspectors will discern hidden points of water intrusion such as handrails, deck edges, and stair stringers. Thus, it’s important the investigator be aware of not only how and where water penetrates, but how evidence of that water penetration—even when hidden behind finish materials like concrete and stucco—manifests itself on the finished surfaces of the building.

Forensic investigators who provide support to attorneys can be an excellent resource for buyers, too, during the due diligence process. They can, for example, review a building’s architectural plans for common architectural details that can allow water intrusion. They can also walk a project and identify areas that have a high probability of leaking, without conducting destructive and costly testing. If destructive testing is necessary, the forensic investigator can perform the testing and provide estimates the buyer can then use in soliciting bids for the repair work. The investigator’s findings can also help the buyer evaluate the economics of the purchase and renegotiate the sale price, if desired.

Understanding the Construction Team

An apartment building’s original construction documents are commonly made available as part of the due diligence process and should contain design drawings, subcontracts, and prime contracts, at the very least. These files can answer many questions you, as a buyer, may have, including the following:

First, ask whether the builder built the property for the builder’s own profit. Some extremely reputable developers occasionally function as their own general contractors. This is a red flag that should trigger caution, because the economics of development can be in conflict with the time and cost requirements of contractors. When developers act as their own general contractors, there’s an increased probability that quality control will suffer for the sake of maintaining the development pro forma and schedule. This is particularly true if the developer didn’t “hold” the asset for a significant amount of time after it was built.

Second, ask about the design professionals who worked on the job. Different firms have different reputations. Some architectural firms are better at generating plans that are more subcontractor–user-friendly than other firms. If the plans are too complicated, it’s common for subcontractors to ignore them.

Third, ask about the subcontractors who were retained to perform the construction work. Among the major trades, such as framing, waterproofing, sheet metal, and lightweight concrete, how many of those subs are still in business? What was their reputation when they worked on the project?

Trade contractors tend to use the same means and methods on every project they work on, often despite the requirements of their contract documents. It would astound the common consumer to learn how frequently trade contractors ignore essential contract drawings and specifications. As a consequence, a builder’s habits tend to carry over from project to project, good and bad. Attorneys and inspectors who work with apartment owners in your region should know who they are.

Understanding the Maintenance History

Because purchase and sale agreements commonly have limited representations and warranties, buyers should seek to gain as much “actual knowledge” about the function of the project as possible. Maintenance records are often the most important records for ascertaining this information, yet they are commonly ignored.

Patterns in maintenance records can provide valuable insight into which, if any, of the building’s systems aren’t performing. For example, is there a history of complaints of water coming through door thresholds or windows? Are there particular units with multiple maintenance requests for mold abatement? Is there a correlation between maintenance requests in a particular place (such as on a certain floor, or facing one particular orientation)? The problem may lie not with the tenants but with the system itself.

Talk to the maintenance personnel. What do they think works well and not so well at the property? On one occasion, a client of ours was horrified to learn that a team of painters did nothing but caulk and paint siding, because of installation errors in the building envelope. The buyer never bothered interviewing any members of the maintenance staff, some of whom freely volunteered to lawyers in subsequent litigation that the project was referred to as the Golden Gate Bridge because the asset was perpetually being painted.

Understanding Claims Preservation

Besides the building, its construction team, and the maintenance staff, there are three important legal theories apartment buyers should be aware of prior to closing escrow on a property.

Ten-year defective-construction limit. There is an absolute bar against suing a builder for defective construction more than 10 years after the project was completed. As a consequence, when a purchaser fails to identify defective construction in older properties, there can be no recovery against the builder to help offset repair costs, making thorough and effective due diligence inspections all the more important.

Three-year potential claims limit. For projects less than 10 years old, claims for construction defects can nonetheless become time barred if not pursued within three years of when an owner knew or should have known that the defect existed. Moreover, when a buyer purchases a piece of real property, the buyer is charged with the knowledge of the prior owner. Thus, if a prior owner discovers or should have discovered defective workmanship, the statute-of-limitations period commences as to that owner and all future owners.

Limits of transference. The right to sue for defective construction is a personal property right that does not automatically transfer with the sale of the real property. To the contrary, if a seller is aware of defective construction prior to the close of escrow and does not specifically transfer the legal right to sue for that defective construction (through a document called an “assignment of choses in action”), the right remains the personal property of the seller, and the buyer will have no recourse against the builder.

By conducting a thorough review of the project file, maintenance materials, and any prior sales documents, an apartment buyer should be able to determine whether the seller discovered or should have discovered any defects at the property. However, as a matter of course, purchasers of property less than 10 years old should demand that assignments of choses of action be included in the closing documents.

Good due diligence requires patience, hard work, and professionals who possess the expertise to correctly advise their clients. A proper investigation yields a thorough understanding of the building’s construction and maintenance history as well as the available rights to be conveyed.

How Commercial Construction Loans Work

How Commercial Construction Loans Work

Securing a commercial construction loan for various types of commercial real estate can be a difficult process to navigate. This post will shed some light on commercial construction loans and demystify the lending process.

Commercial Construction Loans and Lenders

The construction loan process begins when a developer submits a loan request with a lender. Construction or development lenders are almost always local community and regional banks.

Historically this was due to bank regulation that restricted trade areas for lending. More recently, life insurance companies, national banks, and other specialty finance companies have also started making construction loans.

However, community and regional banks still provide the majority of construction financing, since they have a much better understanding of local market conditions and the reputation of real estate developers than larger out of area banks.

There are two normally two loans required to finance a real estate development project, although sometimes these two loans will also be combined into one:

Short term financing. This stage of financing funds the construction and lease up phase of the project.

Long term permanent financing. After a project achieves “stabilization” and leases up to the market level of occupancy, the construction loan is “taken out” by longer term financing.

When a bank combines these two loans into one it’s usually in the form of a construction and mini-perm loan. The mini-perm is financing that takes out the construction loan, but is shorter in duration than traditional permanent financing.

The purpose of the mini-perm is to pay off the construction loan and provide the project with an operating history prior to refinancing in the perm market.

Commercial Construction Loan Underwriting

After the initial loan request is submitted, the bank typically goes through a quick internal go/no-go decision process.

If the project is given the go-ahead by the bank’s senior lender, the lender will sometimes issue a term sheet which outlines the terms and conditions of the proposed loan, provided all of the information presented is accurate and reasonable.

Once the non-binding term sheet has been reviewed, negotiated, and accepted, the lender will move forward with a full underwriting and approval of the proposed loan.

During the underwriting process the lender will evaluate the proposed project’s proforma, the details of the construction budget, the local market conditions, the development team and financial capacity of the guarantors, and in general address any other risks inherent in the loan request.

Typical documents required in the underwriting process include borrower/guarantor tax returns, financial statements, a schedule of real estate owned and contingent liabilities for the guarantor(s), the proposed project’s proforma, construction loan sources and uses, cost estimates, full project plans, engineering specifications, and in general, any other documents that can support the loan request.

From an underwriting standpoint, one of the most notable differences between a commercial construction loan and an investment real estate loan is that with a construction loan there is no operating history to underwrite.

The economics of the project, and thus the valuation of the property, is based solely on the real estate proforma.

The credit approval process is similar to other commercial loans, but because of the additional risks inherent in construction loans, further consideration is given to the development team and general contractor, as well as the prevailing market conditions.

Once the commercial construction loan is approved, the bank will issue a binding commitment letter to the borrower.

The commitment letter is similar to the term sheet, but contains much more detail about the terms of the loan.

Additionally, the commitment letter is a legally-binding contract whereas the term sheet is non-binding.

Commercial Construction Loan Closing and Beyond

Upon completion of the loan underwriting and approval, a loan then moves into the closing process, which can take on a life of its own.

Commercial construction loan closings are complex and involve an overwhelming quantity of documentation and procedural nuances. Typically, the closing is handled by the lender’s attorney, the borrower, and the borrower’s attorney.

A loan closing checklist is also normally issued to the developer along with the commitment letter, which outlines in detail what needs to be completed before the loan can close and funding can begin.

After a loan closes, the loan mechanics are primarily the responsibility of the loan administration department within a bank.

The loan administers (sometimes just called the loan admin), will fund the loan according to the internal policies and procedures of the bank.

Commercial construction loans are typically funded partially at closing to cover previously paid soft and hard costs.

After the initial partial funding, loan proceeds are disbursed monthly based on draw requests for costs incurred. These costs are submitted by the developer and verified by the lender.

Commercial construction loans can quickly become complex and difficult to secure. But understanding how construction loans work and how commercial developments are evaluated by lenders can help demystify the funding process.

In future posts we’ll dive into various parts of this process in detail. In the meantime, if you have any specific questions about commercial construction loans, please let us know in the comments below.

US Economy Grew 4.2% Second Quarter Of 2018

US Economy Grew 4.2% Second Quarter Of 2018

The U.S. economy grew at a robust annual rate of 4.2 percent in the second quarter, the best performance in nearly four years.

The performance of the gross domestic product, the country’s total output of goods and services, was unchanged from an estimate the Commerce Department made last month, the government reported Thursday.

The strong GDP performance has been cited by Trump as proof that his economic program is working.

“We’re doing much better than anybody thought possible,” Trump said at a Wednesday news conference.

How To Purchase An Apartment Complex

How To Purchase An Apartment Complex

Buying an apartment complex is a long, sometimes complicated, process. It’s important for you to gather as much information as you can before you make the decision to buy. Applying for a mortgage to finance an apartment complex is not at all similar to applying for a home mortgage. Apartment complexes with four or more units are commercial properties, and loans for them have different underwriting rules.

Types of Properties:

Decide if you want to purchase a residential apartment complex of a mixed-use building. A mixed-use building has a combination of office and residential units, but at least 80% of the space has to be residential. The complex has to have a grade of C+ or higher. This means you can’t rent the units daily or weekly, and the units can’t be single-occupancy, as in a rooming house or motel.

Gather information about the building you would like to buy. You may not be able to get a loan if the building will require excessive maintenance, or if the complex has not had 90% occupancy for the three months immediately preceding your loan application.

Background:

Talk to local real estate agents. Get their advice about the location you have in mind. Inquire about the possibilities of future zoning changes or any public works projects that may impact an income producing property. If there are plans for a regional airport to be built a few miles away in the next few years, for example, you might find it difficult to rent out your residential units. Don’t assume that everything will remain static; look at the past history of the location and try to imagine any major changes that could be likely to take place in the future.

Professional Expertise:

Have the building inspected by a professional who has experience inspecting commercial buildings. Make sure the inspection covers every aspect; don’t settle for a standard inspection, which may not include trouble spots, such as a wet basement. Pay extra money if you have to for a thorough inspection that goes above and beyond what is required by mortgage lenders. If the inspection reveals serious flaws, don’t make an offer, or reduce your offer amount by the amount it would cost to make the necessary repairs.

Supporting Documentation:

Assemble the documents you will need for the loan application. Your real estate agent will be able to assist you in this. Most lenders require the following documents, but your lending institution may require more:

The ensuing is a list of supporting documents that are required to process and underwrite (due diligence) your commercial loan request. Additional documents will be required.

Financial Supporting Documents:

The last three (3) years corporate tax returns

The last three (3) years business tax returns

Name and address of corporate bank

Business Profit & Loss 3 Years, For Seller or Buyer

Most recent copy of business bank statement

Personal financial statement for all guarantors

Use of Proceeds In An Excel Format For Cash Out Refinance

Property Supporting Documents:

Schedule of tenants leases

Copies of Tenant Leases

Schedule of Units with Square Foot Per Unit

Schedule of improvements to be made with cost breakdown to subject property

Exterior Photos of Subject Property Photos of Parking Lot, Street view

Interior Photos of Subject Property

Most Recent Appraisal

Copy of the First Page of the Insurance Binder for Refinance

List of All Litigation Past and Present

Guarantor Supporting Documents:

4506 T executed

Tri merge credit report

Government issued photo ID copy – front and back

Personal Financial Statement

Articles of Incorporation

The Difference Between Primary and Rental Mortgages

Winston Rowe and Associates

Primary Mortgage: The primary mortgage is underwritten based on the assumption that your day job income + other alternative incomes will be around so that you can comfortably pay every month. Your W2 income viability is the ANCHOR that propels a bank to move forward and give you a new mortgage. After assessing your W2 income will the bank then account for your alternative income streams if needed?

The most important ratio your bank will look at is your debt to income ratio. They ratio they are generally looking for is roughly 33% or lower. That said, my recent loan modification required just a D/E ratio of 42% or less. Each bank is different. The number one goal for the bank is to earn a consistent spread over the life of the loan.

Rental Mortgage: Your rental property mortgage is underwritten based on the assumption of the feasibility in collecting rental income. The bank then looks at your W2 income to arrive at your total income. W2 income is preferred, however underwriters try to match income sources with the types of mortgages they are lending. The main issue is the viability of your income streams.

If you are refinancing an existing rental property, you’ve got to come up with a lease and rental history. No lease and a sketchy rental history full of missed payments will probably end your rental property mortgage refinance. Rental property mortgages often require a 30% or more down payments compared with your typical 20% down payment for a primary residence.

Risk Reward: It’s all about risk assessment for a bank. From the bank’s point of view, they are making a default assumption that you as the landlord require rental income to pay the mortgage. Even if you have a huge salary and lots of money saved in the bank with the existing institution, the mortgage underwriter does not put as much weight as the rental history of the property. For rental mortgages, they are essentially making a derivative bet.

Last Property Standing: In a housing downturn, the first properties to go are vacation homes followed by rental properties. A primary residence is the last mortgage a multi-property owner will default on since s/he has to live somewhere. The primary home mortgage is presumably more affordable once the multi-property homeowner gets rid of other debt. Banks know this and are more stringent in their rental mortgage lending practices. The last thing a bank wants is to repossess a property. Banks are not in the business of buying and selling properties!

THINK LIKE A BANKER WHEN YOU BORROW MONEY

Now that you understand why a bank places a higher risk on rental properties, you now know why rental property mortgage rates are often 0.5%-1.5% higher than the SAME primary property mortgage rate. Due to higher risk, banks demand a higher return on their investment in you. Banks have tighter lending standards post crisis.

Take my current San Francisco rental for example. My 5/1 ARM rate for a conforming rental loan (<$417,000) is 3.375%. Meanwhile, my 5/1 ARM jumbo primary resident mortgage is only at 2.625%. My primary home mortgage is more than double my rental property mortgage and my rental property income is more than quadruple my rental mortgage interest payments, yet the rental property mortgage is still 0.75% higher.

Source: Financial Samurai

Review of Winston Rowe and Associates Commercial Real Estate Financing

Free Book Review

Announcing , The Free eBook Commercial Real Estate Finance published by Winston Rowe & Associates  discusses the fundamentals of the different types of commercial property, the various options that are included with properties and the capabilities that you will have as a commercial property investor.

It will enable you to make the right decisions when it comes to commercial properties. After you have read this book, you will be able to successfully choose a commercial property for your real estate business.

This book will help you to figure out everything that has to do with commercial properties. Also included with this book are different ideas on what you can do to make sure that you are getting the best financing possible. You will be able to truly enjoy the opportunities that come along with financing and with the different options that you have.

It’s loaded with all the check lists you’ll need to conduct your due diligence to avoid a bad investment. There are detailed descriptions of the various types of capital sources and how to prepare and submit your financing proposal.

You will need to make sure that you can secure financing but it is not a cut and dry experience for everyone. The tips that are included with this book will give you the best chance at getting financing.

 

 

How to Become a Success in Real Estate

How to Become a Success in Real Estate

Create a Strong Real Estate Team:

Though it is possible to have some success in real estate as a one-person business, you’ll eventually need to build a team around yourself in order to scale up.

Your team of people can include direct employees to find and negotiate property sales for you, as well as well-liked contractors to handle repairs on the properties you acquire.

By surrounding yourself with talented and driven people, you will be able to focus in on only the most important aspects of your real estate investment business.

Balance Flipping and Rental Properties:

In real estate investment, there are two basic ways to make money.

The first is to realize a large sum by buying a property, improving it in some way and then reselling it for a higher price.

The second method is to create a flow of passive income by acquiring and then renting out properties.

Though both of these are great ways to make money in real estate, truly successful investors typically include both in their businesses. By flipping and renting at the same time, you will be able to create a more stable financial situation for yourself and your business.

Getting Mortgages For Rental Homes Winston Rowe and Associates

Mortgages For Rental Homes Winston Rowe and Associates

Winston Rowe and Associates offers financing products and solutions to help you consolidate your existing loans and grow your single-family rental portfolio.

Winston Rowe & Associates Fixed and Floating Rate financing highlights include:

No Upfront or Advance Fees

National Coverage

$500 Thousand to $100MM+

Up to 75% LTV (no less than a 1.20x DSCR)

5 and 10-year terms

Up to 30-year Amortization (I/O considered for low leverage loans)

Non-recourse (standard CMBS-style carve-outs apply)

Single Purpose Entity borrower

Soft/Springing Cash Management

Minimum net worth and liquidity requirements

Whether you are looking for a creative solution through our private money investors, or in search of institutional money, Winston Rowe & Associates can help put together a loan that will secure the rental home portfolio financing you need.

When you call Winston Rowe & Associates, a principal is always available to speak with prospective clients.

 

Guide To Financing & Buying A Business Winston Rowe & Associates

Guide To Financing & Buying A Business

Winston Rowe & Associates, a no advance fee commercial real estate due diligence, advisory and financing firm has prepared this article to address the five most common mistakes that first time commercial real estate owners make when purchasing a business.

If you would like more information about Winston Rowe & Associates and their commercial real estate financing programs, they can be contacted at 248-246-2243 or visit them on line at http://www.winstonrowe.com

According to Winston Rowe & Associates, the one common denominator that most millionaires have is that, they own their own business.

Owning your own business can be a very financially rewarding experience. The thrill of being the boss and having complete control over your own destiny are the primary reasons people leave the work force to operate their own company.

Owning your own business can easily turn in to a nightmare if you make mistakes. These mistakes are avoidable if you know what to look for in the business.

You have a better chance of becoming a millionaire if you avoid these 5 major mistakes when buying a business.

1) Due Diligence:

Winston Rowe & Associates has found that through their years of experience when performing due diligence for clients commercial real estate business financing. One thing they caution clients on is that not everything is as it seems and that is especially true when buying a business.

The owner can produce financial statements that show a business is thriving. You need to do due diligence to make sure the information presented to you is valid and shows an accurate picture of the condition of the business. For example, will they produce Business Tax Returns to verify the profit and loss statement they gave you?

You want to make sure you know what items the business actually owns, what is leased, what is owed to the business and what the business owes to others. You do not want to buy a business only to find out there is a huge pile of bills that are due and the income you were expecting does not materialize.

Doing a solid job of due diligence is what a firm like Winston Rowe & Associates does that will help you to avoid buying the wrong business or paying too much for the business.

2) Not Having Enough Cash Reserves:

Running a business requires capital. Successful businesses are able to generate enough revenue to cover the cost of their expenses. In times when the revenue is less than the expenses then you need cash reserves to cover the shortfall. If you spend all your money in the acquisition of the company then you will not be able to cover shortages when they occur. This can be the quickest way to bankrupt your new business.

Winston Rowe & Associates always recommends to clients not buy a business until you have the necessary funds to both buy the business and the necessary funds to keep it open after the purchase.

3) Cash Flow & Debt Service Coverage:

There will always be a transition period when buying a new business. Some vendors will have a loyalty to the seller and will pull their business when management changes. Likewise you might lose some of your buyers after the transition. These changes are unavoidable. They can have a tremendous impact on the cash flow of your business.

If you purchase a business assuming the current cash flow will cover the payment on your debt, then you might be in for a rude awakening. Working with Winston Rowe & Associates will ensure that the business you are financing will support the monthly mortgage payments and show a profit.

4) Don’t Pay For Future Potential:

Sellers will try to set a price on a business based on the projected value of the business. For example a self-storage business that is 40% occupied at the time of purchase may be worth $1 million dollars. If the occupancy rate was 80% then the value of the business might increase to $2 million dollars. You should not pay $2 million for the business because the seller entices you on the future potential of the business.

It will be your time, effort and energy that create the future potential in the business. You should be awarded for your efforts. Do not make the mistake of over paying for a business and rewarding the seller for your hard work.

The value of the business should be based on the condition at the time that you purchase it.

5) Wrong Finance & Entity Structure:

The worst mistake that you can make is to buy a business using the wrong entity structure. First time business owners will buy a business and sign every contract in their name. This is a major mistake because it makes you personally liable for any loss that the business incurs.

If there is loss your creditors will go after your home, your car, and your savings. Buying a business using an entity structure such as a corporation or a LLC can minimize your personal risk.

Use an advisory and finance firm like Winston Rowe & Associates to ensure that you have the correct financial qualifications and a business attorney and an accountant to help determine what the best entity structure for you to use is.

Do not make the mistake of putting everything you own at risk when you buy a business.

Owning your own business can be the quickest path to becoming a millionaire but you may never reach that goal if you don’t avoid these 5 major mistakes when buying a business.

At Winston Rowe & Associates, their primary objective is to provide the most reliable and efficient means of sourcing both debt and equity for your commercial real estate loans.

Winston Rowe & Associates provides no upfront commercial real estate 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,

Direct Commercial Funding No Upfront Fees Winston Rowe & Associates

Direct Commercial Funding No Upfront Fees Winston Rowe & Associates

Commercial real estate investors have been turning to Winston Rowe & Associates, a no upfront fee commercial financing advisory and consulting firm for their excellent customer service and private banking approach.

They offer their clients direct access to the most aggressive commercial real estate loans in the industry. Whether you are in need of short term financing, such as a private capital, private equity and traditional permanent financing, they work with clients to structure a transaction that will meet or exceed their client’s expectations.

For more information about Winston Rowe & Associates loan programs, they can be contacted at 248-246-2243 or visit them online at http://www.winstonrowe.com

Winston Rowe & Associates specializes in student housing building loans, apartment loans, ethanol plants, shopping center loans, office building loans, mixed use loans, industrial and medical office loans, warehouse loans, mini storage loans, strip center loans, hotel loans, golf course loans, subdivision loans, and lot loans.

They also have direct access to financing for joint ventures, equity participations, bridge loans, construction loans, acquisition loans, and permanent financing for both owner-occupied and non-owner occupied properties.

Direct Commercial Funding From Winston Rowe & Associates:

Never an Upfront or an Advance Fee
International & Nationwide Coverage
Loan Amounts from $400,000 to $500,000,000
All Property CRE Types Considered

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

National Medical Building Financing No Upfront Fees Winston Rowe & Associates

Winston Rowe & Associates provides a diverse innovative Medical Complex lending platform provides Medical complex loans from $1,000,000 to $50+ million dollars.

For more information about Winston Rowe & Associates medical building loan programs, they can be contacted at 248-246-2243 or visit them online at http://www.winstonrowe.com

Winston Rowe & Associates specializes in arranging financing around the United States for Medical Office Developments, Medical Facilities of almost every description and Medical Research & Development Buildings.

Winston Rowe & Associates can also arrange quick close private financing, including bridge loan for all types of Medical office and commercial office properties with emphasis on speed.

Medical Building Financing Programs:

No upfront or advance fees to process your transaction
National coverage
One Million Dollars to Fifty Million Dollars
All medical property types considered
Purchase, Refinance & Cash Out
30 day close with complete submission

At Winston Rowe & Associates, their primary objective is to provide the most reliable and efficient means of sourcing both debt and equity for your commercial real estate loans.

Recognizing that people and relationships drive this business, they are affiliated with some of the industry’s most committed commercial finance professionals.

Underwriting Commercial Loans Winston Rowe & Associates

Winston Rowe & Associates, a national no upfront fee commercial real estate finance firm has prepared this article to provide prospective clients with the fundamentals of underwriting commercial real estate loans.

For more information about commercial real estate financing, you can contact Winston Rowe & Associates at 248-246-2243 or visit them online at http://www.winstonrowe.com

Commercial Loan Underwriting Overview:

Property owners conducting a commercial mortgage refinance are often surprised by the new range of loan programs that have become available in the last 5 years. Programs such as commercial 30 year fixed, second lien position loans, etc are turning heads. However the process is still expensive and time consuming and underwriting is still tied to the fundamentals – loan to value, debt service coverage ratios, global income, property analysis, and credit worthiness of the borrower.

Description & Guidelines:

Loan to Value

Loan to value restrictions on your typical commercial mortgage refinance are limited to 80% on rate and term and 75% on cash out refinances. However this guild line is what separates many banks from each others. Some get more aggressive and offer higher loan to values while others stay conservative and stay well below the percentages mentioned above.

This ratio is critical to banks as they underwrite files with the worst case scenario in mind – “what if the borrower defaults and we have to take this property back and sell it on the open market?” All loans rates are predicated on risk, therefore the lower the loan to value, the less risk for the lender and therefore lower rate for the borrower.

Debt Service Coverage Ratio:

On investment properties the Debt Service Coverage Ratio restrictions are typically set at a 1:1.25. Meaning that for every $1.25 of net income (income after taxes, insurance, repairs, etc) the property produces, the mortgage payments cannot exceed $1.00. Said in another way, after all expenses and the mortgages have been paid, the owner needs to net $.25 to qualify for the typical commercial mortgage refinance.

Lenders that allow lower DSCR are considered more aggressive (and normally charge higher rates) while banks with higher DSCR requirement are the considered the opposite – more conservative.

Global Income:

For owner occupants a different type of ratio is used called the Global Income approach. Basically this ratio compares ALL income the borrower has, including business profit, salary, dividends etc to ALL the expenses the borrower has including personal and business. The maximum Global ratio normally is 60%. For example, on monthly basis, if the borrower’s total personal and business income is $10,000, his total monthly debt payment would not be allowed to exceed $6,000.

Property Analysis:

The type of building being refinance has a major impact on what financial options are available. For example, there’s a huge difference in what a restaurant would qualify for vs. an apartment building. Market value, market rent, appearance, location, accessibility, local market conditions, as well as other factors play a major role into what refinance options will be available.

Credit Worthiness:

The personal credit worthiness of the borrower will be heavily scrutinized as this is an important component. A 680 credit score is the threshold for the best finance options. For smaller mortgages, credit scores play a bigger role in the underwriting decision and interest rates are heavily influenced by the borrower’s credit score.

Winston Rowe & Associates has a core focus on building long-term relationships, delivering exceptional and individualized customer service, and positioning financial products that best achieve their client’s goals.

Winston Rowe & Associates has no upfront free commercial real estate financing solutions and 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

Commercial Loan Underwriting and Due Diligence Winston Rowe and Associates

Winston Rowe & Associates offer expert due diligence, underwriting and funding solutions for apartment loans, office, hotel, industrial or retail property loans, with no upfront or advance fees.

Whether you are a seasoned investor or new to the market, Winston Rowe & Associates is there to help you explore your best options for commercial financing.

They can be contacted at 248-246-2243 or visit them on line at http://www.winstonrowe.com

Professional Underwriting & Due Diligence:

With almost a decade of experience in structuring commercial real estate deals, they have direct relationships with private equity, private capital. agencies, life companies, conduits, and “out-of-the-box” regional and national commercial lenders.

It’s important to work with a partner who understands your industry and can structure the right program to help you achieve your goals.

In addition to permanent debt financing, Winston Rowe & Associates regularly structures transactions using high-leverage bridge loans, mezzanine debt, construction loans and straight equity.

At Winston Rowe & Associates, their primary objective is to provide the most reliable and efficient means of sourcing both debt and equity for your commercial real estate loans. Recognizing that people and relationships drive this business, they are staffed with some of the industry’s most committed professionals.

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

How To Finance Special Purpose Properties Winston Rowe & Associates

Unique properties are not easily understood by traditional lenders. Winston Rowe & Associates, a national no upfront fee commercial finance firm has solutions for non-traditional financing for funeral home financing as well as commercial financing for other special purpose properties.

Prospective clients can contact Winston Rowe & Associates at 248-246-2243 or visit them on line at http://www.winstonrowe.com

Funeral homes, assisted living facilities, campgrounds and other special purpose properties represent one of the most difficult commercial loan situations which will be confronted by a business owner

Why Are Special Purpose Commercial Properties So Hard To Finance?

By definition special purpose properties are not similar to other commercial properties. This makes many lenders uncomfortable due to the likely difficulty of finding another owner for a unique commercial property should it be necessary due to a loan default.

For funeral homes and many other special purpose commercial properties, most of the business value is represented by non-real estate assets. With traditional commercial lenders that focus on commercial real estate loans, it is almost impossible to get a loan based on the real estate value and the business value.

For example, it is not uncommon to have a situation in which the real estate for a funeral home is valued at less than one million dollars while the overall business value is in excess of three million dollars.

Because commercial financing is so difficult to arrange for special purpose properties such as funeral homes, assisted living facilities and campgrounds, sellers of such properties are generally willing to provide substantial seller financing to assist the buyer in acquiring the business.

However, many traditional lenders do not recognize or accept seller financing as a means of reducing down payment requirements for special purpose properties.

Many lenders simply do not understand the business complexities associated with a special purpose property. As a result, it is not uncommon for these lenders to attach onerous and expensive requirements such as business plans and environmental reviews.

In most cases such lenders do not even want to make the business loan but will use undesirable loan requirements as a means of appearing to approve a loan when in fact they have disapproved the loan by adding commercial loan terms that they do not expect a commercial borrower to accept.

Winston Rowe & Associates Commercial Loan Solutions:

For a business borrower facing the situation described above, the highest priority should be to locate a non-traditional commercial finance firm like Winston Rowe & Associates that engages in the following commercial loan practices:

Does not charge upfront fees to process or underwrite you loan
Openly welcomes special purpose properties and routinely finances such properties
Provides commercial financing for both the business and real estate
Accepts substantial seller financing

Winston Rowe & Associates has an excellent knowledge based investor resource for commercial real estate valuation and market analysis located at:

http://www.winstonrowe.com/Free_Real_Estate_Resources.html

Their professional staff is dedicated to streamlining the loan process and providing unsurpassed lines of communication.

Winston Rowe & Associates
31408 Harper Ave
Suite 147
Saint Clair Shores MI 48082
248-246-2243

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, MaineMaryland, 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

What Is Private Equity Winston Rowe & Associates

Winston Rowe & Associates, a no advance fee international commercial business financial advisory firm. They have developed this article to assist their prospective clients with the fundamentals of Private Equity.

For additional information concerning Winston Rowe & Associates financing solutions, they can be contacted at 248-246-2243 or visit them on line at http://www.winstonrowe.com

Overview:

Private equity investors (also called financial sponsors or buy-out firms) invest in non-public companies and typically hold their investments with the intent of realizing a return within 3 to 7 years. Generally, investments are realized through an initial public offering, sale, merger or recapitalization.

While venture capital firms tend to invest in earlier stage growth companies, private equity groups tend to focus on more mature businesses, often contributing both equity and debt (or some hybrid) to the transaction.

What Private Equity Firms Look For:

Strong management team.
Ability to generate cash.
Significant growth potential.
Ability to create value.
A clearly defined exit strategy.

The Value Proposition:

While private equity firms employ various strategies to create value in their investments (such as the consolidation of a fragmented industry), a common strategy is to acquire a “platform” company and grow the platform through further “add-on” acquisitions. Add-on acquisitions are typically smaller in size, but complementary to, the platform investment. Ideally, the synergies of the combined entity create a more efficient whole, both operationally and financially.

Leverage & Cash Flow:

Private equity groups typically use leverage (debt) to increase the return on the firm’s invested capital. The amount of leverage employed is normally determined by the target’s ability to service the debt with cash generated through operations.

The ability to generate cash allows the private equity investor to contribute more debt to the transaction. Because of the aggressive use of leverage, often, the cash flow a business generates in the early years following the acquisition is almost entirely consumed by the debt service. Furthermore, if the strategy is to grow the business, and it usually is, growth also consumes cash. For this reason, private equity investors are keenly focused on the cash flow of the business.

Because cash flow is the basis for valuation, the ability to improve operations to generate increased cash flow will also yield a greater return on investment upon exit.

Exit Strategy:

Private equity groups make money from both the cash flow of the acquired business and from the proceeds generated upon exiting the business. The exit provides the investor a mechanism to monetize the firm’s equity. This is also referred to as “a liquidity event”. The exit provides the financial sponsor with a finalization of the investment and an opportunity to distribute profits. In fact, a significant component of a private equity professional’s compensation is based on this profit distribution, called “carried interest”, or just “carry”. Profits upon exit go to back into the cash account to fund new acquisitions.

Winston Rowe & Associates has an excellent knowledge based investor resource for commercial real estate valuation and market analysis located at:

http://www.winstonrowe.com/Free_Real_Estate_Resources.html

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.

Winston Rowe & Associates
31408 Harper Ave
Suite 147
Saint Clair Shores MI 48082
248-246-2243

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

What Is Private Equity Winston Rowe & Associates

Winston Rowe & Associates, a no advance fee international commercial business financial advisory firm. They have developed this article to assist their prospective clients with the fundamentals of Private Equity.

For additional information concerning Winston Rowe & Associates financing solutions, they can be contacted at 248-246-2243 or visit them on line at http://www.winstonrowe.com

Overview:

Private equity investors (also called financial sponsors or buy-out firms) invest in non-public companies and typically hold their investments with the intent of realizing a return within 3 to 7 years. Generally, investments are realized through an initial public offering, sale, merger or recapitalization.

While venture capital firms tend to invest in earlier stage growth companies, private equity groups tend to focus on more mature businesses, often contributing both equity and debt (or some hybrid) to the transaction.

What Private Equity Firms Look For:

Strong management team.
Ability to generate cash.
Significant growth potential.
Ability to create value.
A clearly defined exit strategy.

The Value Proposition:

While private equity firms employ various strategies to create value in their investments (such as the consolidation of a fragmented industry), a common strategy is to acquire a “platform” company and grow the platform through further “add-on” acquisitions. Add-on acquisitions are typically smaller in size, but complementary to, the platform investment. Ideally, the synergies of the combined entity create a more efficient whole, both operationally and financially.

Leverage & Cash Flow:

Private equity groups typically use leverage (debt) to increase the return on the firm’s invested capital. The amount of leverage employed is normally determined by the target’s ability to service the debt with cash generated through operations.

The ability to generate cash allows the private equity investor to contribute more debt to the transaction. Because of the aggressive use of leverage, often, the cash flow a business generates in the early years following the acquisition is almost entirely consumed by the debt service. Furthermore, if the strategy is to grow the business, and it usually is, growth also consumes cash. For this reason, private equity investors are keenly focused on the cash flow of the business.

Because cash flow is the basis for valuation, the ability to improve operations to generate increased cash flow will also yield a greater return on investment upon exit.

Exit Strategy:

Private equity groups make money from both the cash flow of the acquired business and from the proceeds generated upon exiting the business. The exit provides the investor a mechanism to monetize the firm’s equity. This is also referred to as “a liquidity event”. The exit provides the financial sponsor with a finalization of the investment and an opportunity to distribute profits. In fact, a significant component of a private equity professional’s compensation is based on this profit distribution, called “carried interest”, or just “carry”. Profits upon exit go to back into the cash account to fund new acquisitions.

Winston Rowe & Associates has an excellent knowledge based investor resource for commercial real estate valuation and market analysis located at:

http://www.winstonrowe.com/Free_Real_Estate_Resources.html

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.

Winston Rowe & Associates
31408 Harper Ave
Suite 147
Saint Clair Shores MI 48082
248-246-2243

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

http://www.prlog.org/11900564-what-is-private-equity-winston-rowe-associates.html

Nationwide Commercial Real Estate Loans

Nationwide Commercial Loans

Winston Rowe & Associates is a commercial real estate finance firm with a core focus on loans from $500,000. up to $50 Million, without upfront or advance fees.

They provide a diversified mix of national commercial real estate financing products, and a state of the art online commercial lending platform, with a staff of experienced professionals.

Savvy commercial real estate investors choose to work with Winston Rowe & Associates because they can often provide better terms than their local banks provide; such as longer fixed periods, longer amortization schedules, lower rates and or they need more aggressive underwriting standards than they have been able to find locally.

Winston Rowe & Associates Considers The Following Property Types:

Motels
Hotels
Apartments
Mixed Use
Resorts
Nursing Homes
Senior Apartments
Assisted Living Facilities
Hospitals
Shopping Centers
Truck Stops
Office Buildings
Automobile Dealerships
C-Stores
Manufacturing Facilities

They have the knowledge, relationships and experience to make sure that clients not only receive the financing that best fits their needs, but also that the clients complete the transaction with minimal headaches and in a timely manner.

 

 

Commercial Real Estate Listings & Investing

Commercial Real Estate Listings & Investing

Winston Rowe & Associates, a no upfront fee commercial property financing firm has scoured the Internet to find the best sources for free commercial real estate listings and investment analysis.

If your looking for real estate properties for commercial investing or need background information on a asset?

Description of The Free Resource Links:

National Real Estate Investor.com

This is the leading authority on commercial real estate trends. The magazine’s readers represent a cross-section of disciplines — brokerage, construction, owner/development, finance/investment, property management, corporate real estate, and real estate services. No other publication provides as much independent research on a variety of topics that pertain to the office, industrial, retail, hotel and multifamily markets as National Real Estate Investor. We also produce webinars, white papers, research, custom publishing, reprints and custom conferences for our clients.

Cityfeet.com

This is the leading online commercial real estate network, connecting commercial real estate property owners and brokers to tenants, brokers and investors. Cityfeet offers commercial real estate products and services catering to the national and local needs of the commercial real estate industry. Cityfeet specializes in all commercial real estate property categories including office space, executive suites, commercial land, industrial property, retail space and businesses for sale. Cityfeet is the #1 source of free commercial real estate information for commercial real estate professionals and powers the commercial real estate area of many of the country’s most popular websites.

CIMLS.com

They provide real estate brokers and investors with a centralized online commercial multiple listing service (MLS). With over 250,000 registered members and $47 billion dollars worth of commercial property listings ranging from farms for sale to office buildings for lease CIMLS.com offers the largest free commercial real estate information service online today. Our partners attract a strong community of investors, commercial real estate brokers, appraisers, lenders and other real estate professionals. By working together, the CIMLS.com community offers you a full-service free commercial mls to buy, sell, or lease your investment properties. Join the commercial realty professionals at Century 21, CBRE, Coldwell Banker, Grubb & Ellis, Prudential and ReMax.

Commercial IQ

They are the most powerful commercial real estate search online, drawing commercial property listings from local brokerages and associations nationwide.

SHOWCASE.com

This search engine is for business professionals and investors looking for their next commercial property to lease or buy. Search from over one million properties across all asset classes, including: office space for lease, office space for sale, industrial property for lease, warehouses for sale, retail properties for lease, retail property for sale, multifamily apartments and land investments.

Zillow.com

They are one of the largest real estate Web sites in the U.S. and has become the premier destination for buyers, sellers, renters, homeowners, landlords, and real estate professionals.

Trulia.com

It’s an all-in-one real estate site that’s jam-packed with the most useful and timely information on homes for sale, apartments for rent, neighborhoods, markets and trends to help you figure out exactly what, where and when to buy. And you can get advice and opinions from local experts on Trulia Voices, your online real estate community.

LoopNet.com

They are the largest commercial real estate listing service online. Search commercial properties for sale or lease.

SBA Loans For Hotels, Shopping Centers, Office & Apartment Buildings, Gas Stations

SBA Loans

Getting an SBA loan is a new experience for many entrepreneurs and fledgling business owners. At present the SBA has some of the best financing available for businesses, such as gas stations, hotels, apartment complexes, office buildings and shopping centers.

It is extremely important that business owners do their homework before applying for an SBA loan.

A great place to start is Winston Rowe & Associates, they are a national no upfront fee commercial real estate finance consultant.

Getting an SBA loan requires a lot of preparation and effort, with prospective applicants getting only one bite at the apple. That’s why it’s important to do your home work on the commercial property type that you are trying to finance and work with an experienced financing firm.

What is the Small Business Administration (SBA):

The SBA stands for the Small Business Administration and was created to help small businesses in the United States.

While there are other programs that the SBA offers besides financing, their loan program is one of the most well-known because it guaranteed by the US. Government and has favorable rates and terms, especially in today’s economic environment.

It is important to note the the SBA DOES NOT make loans, but rather, guarantees loans made through private banks. The actual payments you make will be to a regular commercial bank, not the US government.

The SBA creates the program and guarantees most of the loan against default. It is important to remember that if you have access to other low-cost business capital you will NOT be approved for an SBA loan.

The program is intended for those businesses that do not have access to low-cost capital elsewhere

What do you need to apply?

This is an open-ended question depending on what type of business you are trying to finance. However, the rule of thumb here should be you will need a large amount of documentation for any SBA loan.

The reason why is that business loans are inherently risky given that most small business fail within 5 years of inception.

Because the government is guaranteeing most of the loan, they set the documentation requirements to help mitigate this risk.

Count on having to provide a detailed business plan, personal character essays/references, as well as detailed financial statements and projections. It is not uncommon for an SBA loan application to have in excess of 180 pages.

However, the upside is that it could make the difference between success and failure for you business.

What types of loans are available?

The SBA has several different loans designed for various business needs. The first is known as the SBA 7a loan. This loan is designed for small business and has the flexibility to meet the needs of most businesses.

Loans are made through commercial banks, with a portion guaranteed by the SBA. Loan purposes include working capital, business renovations, equipment, furniture and fixtures, land acquisition and new construction as debt refinancing under certain circumstances.

Duration of the repayment term can vary, depending on loan purpose between 10 and 25 years.

The SBA 504 & SBA 7a Loans:

This loan is designed more for businesses that may be part of a larger development or redevelopment within a community of city. This type of loan is typically just one of many used in a “financing package”, unlike the SBA 7A loan, which usually will “stand alone” as the primary financing vehicle.

In an SBA 504 loan type scenario, a private bank will provide up to 50% of the financing, with SBA 504 loan picking up an additional 40% while the business borrower will contribute their own funds of 10%.

It is important to remember that these types of loans are obtained also with the help of a CDC, or certified development company that is a non-profit corporation set up expressly for community economic development.

Getting an SBA loan may be the best decision you can make as a business person. The key is to allow you the adequate amount of time to get acquainted with multiple requirements and “hoops” you need to go through to get this type of advantageous financing.

While an SBA loan is the best option, it will never be a quick path to funding, so take the time to do your homework, and it will be time well spent.

Winston Rowe & Associates success is measured by our clients’ success, and their mission is to be your source for the most appropriate – and advantageous – hotel financing solution that helps you achieve your goals.

Their experienced and enthusiastic SBA professional team has the expertise needed to make the loan process as easy as possible for their clients.

 

Apartment Buildings & Complex Investment Loans No Upfront Fees

Real Estate Investing

Apartment Buildings & Complex Investment Loans No Upfront Fees

There are many investments out there that can create wealth and security. People invest in stocks, bonds, and single-family homes, but multifamily and apartment properties, make the best sense.

Savvy investors are turning to Winston Rowe & Associates, a no upfront fee national commercial finance specialist for apartment and multifamily investors.

Why consider apartment buildings instead of single family homes? Well – many other real estate investments have some of the following attributes, but only apartments and multifamily properties have all five.

Income:

Multifamily properties produce income. Unless you receive dividends, most stocks don’t give you income, and although single-family rentals might bring a little cash flow, the income is usually not substantial unless you’ve held the property for many years. Receiving regular income from your investment frees you up to do other things.

Depreciation:

Although multifamily properties increase in value over time, for tax purposes they depreciate. The tax benefits of depreciation are substantial, and many investment vehicles lack this significant attribute. Stocks and bonds bring zero depreciation. You can use depreciation when flipping single-family homes, but because the transaction is temporary, the tax benefits will not be as great.

Equity:

The property will increase in its equity value every month just from paying the mortgage. The rent your tenants pay you goes toward the mortgage every month, so your equity increases as others pay your mortgage. Real estate investments have the advantage over stock-related investments when it comes to equity.

Appreciation:

Over time, real estate investments appreciate, meaning they are worth more now than they were in previous years. The land beneath your property becomes more valuable over time as the city around it grows. In addition, you can increase appreciation by raising rents and cutting costs. Single-family homes appreciate as well as multifamily properties, but the scale is larger with multifamily properties, and there is more room with multifamily properties to raise rents and cut costs.

Leverage:

Multifamily properties can be bought without any of your own money. When you sell a property, the equity you’ve gained in it can be applied five-fold to purchase a bigger, more expensive property.

Generally, you need 20% down on properties, so $100,000 in equity on one property means you can leverage that equity to acquire a $500,000 property. Every time you sell a property your leverage becomes greater.

Investors seeking apartment building financing should turn to Winston Rowe & Associates because or their efficient, end-to-end commercial real estate financing solutions that provide commercial mortgage capital to owners of all commercial property types, nationwide.

With flexibility and speed of execution, they are able to offer a broad range of financing capabilities. In most cases they can close your loan within 30 days.

You can review Winston Rowe and Associates by clicking this link.

 

Winston Rowe & Associates

Winston Rowe and Associates Private Money For Commercial Property

Winston Rowe & Associates works directly with privately funded national private money commercial lenders. They specialize in conventional and non conventional commercial loans.

Winston Rowe & Associates is fundamentally different from other firms. Most of their competitor’s charge non-refundable deposits up front for due-diligence; these fees can run upwards of thousands of dollars. Winston Rowe & Associates does not charge any upfront or advance fees.

Why Choose Winston Rowe & Associates?

No upfront fees
All commercial real estate property types considered
They work Nationwide
Receive an honest answer quickly
Quick closings
There minimum loan amount is $2,000,000.

Structure loans to fit the uniqueness of each transaction

Winston Rowe & Associates has been one of the most trusted and respected private capital firms in the country.

 

 

Winston Rowe & Associates In The News

Winston Rowe & Associates Web Site

Winston Rowe & Associates a nationwide consulting firm, providing financing for commercial real estate, with no upfront fees.

Apply online or call us directly, we can have a response to your loan request within 24 hours and can close in 30 days or less.

Call us if you are having trouble getting your loan closed or if you have a unique situation. Winston Rowe & Associates typically has the lowest rates and the best service in the business.

 

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, MaineMaryland, 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

 

Winston Rowe And Associates No Advance Fee Commercial Loans

Winston Rowe & Associates

Winston Rowe & Associates In The News

Winston Rowe & Associates a nationwide consulting firm, providing financing for commercial real estate, with no upfront fees.

Apply online or call us directly, we can have a response to your loan request within 24 hours and can close in 30 days or less.

Call us if you are having trouble getting your loan closed or if you have a unique situation. Winston Rowe & Associates typically has the lowest rates and the best service in the business.

Program Highlights:

  • No Upfront Fees
  • United States Only
  • Close In 30 Days Or Less
  • Minimum Loan Amount $2,000,000. With No Limit
  • All Commercial Property Types Considered
  • Purchase, Refinance

processing@winstonrowe.com