Posts Tagged 'Financing'

Diana Barlet gives her thoughts on Bill Tan’s Creative Real Estate Financing Techniques and Strategies seminar after completing the class.

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Bruce Norris gives his thoughts on Bill Tan’s Creative Real Estate Financing Techniques and Strategies seminar after completing the class.

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Financing rental properties is always a risky business for your lenders, so it’s only natural that they will take time to evaluate your ability to pay your debts before handing you their money. If you can prove yourself to be trustworthy and reliable, you will definitely be enjoying lower interest rates and better terms on your mortgage loan.

Apart from proving yourself to be a dependable borrower, there are additional strategies that you can use to slash the cost of financing rental properties. Read on to uncover these tried and tested methods:

Take Quick Steps to Brush up Your Credit Score

Your credit score is one of the major factors that lenders will use when determining your eligibility for rental property financing.

A credit score in the mid range of 620 to 750 can land you a decent deal, while a score of 750 or more will get you the lowest interest rates and open your world to a wide selection of willing mortgage lenders.

In general a credit score of less than 620 will banish you to the sub-prime market, making it hard for you to obtain financing. Even if you do manage to get your hands on a mortgage loan, you can expect the interest rates to be unfairly high. If your score is less than 620, it’s important to take steps to improve it before financing rental properties.

There are few quick fixes that can boost your credit score relatively quickly. Firstly keep all your old credit and financial accounts open. The age of your accounts plays a part in your credit score.

Second, always pay up your bills on time. Even a single late payment can have a big impact on your score. Third, avoid opening new accounts right before you apply for rental property financing. Excessive inquiries for your credit report can make you look risky to lenders.

Finally, pay off your balances to 50% or less of your total credit limits on your revolving accounts.

Save up so that You Can Afford a Larger Down Payment

It is highly tempting to pay just 5 percent down payment that has become almost the standard with mortgage loans these days. But a traditional down payment of 20% will save you a lot of money in the long run.

Lenders know that you will be less likely to default if you are investing a significant chunk of your own money into the rental property. Because of this, you will enjoy lower mortgage rates avoid having to pay extra for private mortgage insurance when financing rental properties.

Be Wary of Any “Zero Cost” Rental Property Financing

If you find a lender offering you a mortgage loan with no closing costs, make sure you study the terms carefully.

Most of the time, a mortgage loan will cost you a few thousand dollars out of pocket for agent, legal, transaction and closing costs. However, lenders sometimes try to lure customers with “no cost” financing with the catch being a slightly higher interest rate.

It is enticing to pay less cash out of pocket upfront, but if means having to endure a higher interest rate, you will actually be forking out much more in the long run.

Consider an Offset Mortgage to Lower Your Interest

Another way of slashing your interest when it comes to financing rental properties is to take on an offset mortgage.

Like the name suggests, an ‘offset’ mortgage requires that you open a savings account that is tied to your mortgage balance. In essence, the account in that savings account acts as collateral to offset the balance of your mortgage and you don’t have to pay any interest on the amount held in linked savings.

For example let’s say you have a mortgage of $100,000 and  $20,000 in a linked savings account. You won’t be earning any interest from this $20,000 savings account. Instead you will be only paying interest for $80,000. Since mortgage rates are often higher than saving interest rates, an offset mortgage can often save you a lot of money.

To sum everything up, there are many ways for you to save money when financing rental properties. Showing the lender that you are a trustworthy borrower and making the right financial choices will ensure that you get the best possible terms and rates on your rental property loans.

Teo Zhenjie has been showing landlords how to manage their tenants and rental property effectively on Propertydo http://www.propertydo.com/ – To learn more important tips on financing rental properties, visit his website today for step-by-step real estate guides, free resources and forms.

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If you are hoping to purchase commercial real estate property, then you are most likely going to need financing in order to do this. That is unless you were born fabulously and independently wealthy. There are certain things that lending institutions expect from those they are getting ready to summarily hand large sums of money to. Hopefully, the following tips will help insure that you get the best possible financing for your commercial real estate investment.

1) Make sure you have all the documents you need and that they are accurate and up to date. You need to have a solid business plan in place with facts, figures, estimates, and forecasts. Lenders are making an investment and taking a huge risk when dealing with commercial real estate. If you don’t have a business plan that indicates that you have put a great amount of time, effort, energy, and thought into your business, they are going to be less than enthusiastic about the prospect of taking that risk.

2) Have money of your own to invest in the property. For most commercial real estate investments you will need a down payment, closing costs, earnest money, and points that may be required. Banks want to share the risk not absorb it. By taking some of the risk upon yourself, you are actually lessening their risks while increasing their confidence in your ability to make good on your debt to them.

3) Have paperwork that shows the solidity of this property as an investment. You need to have your business plan, financial records, forecasts and projections, history of income on the property, and the appraisal of the property when you approach lending institutions. This lets the bank know that you take this venture seriously and that you are organized.

4) Come into the deal with a current appraisal of the property. This can make all the difference in the world. Even if the bank requires you to have another appraisal, it is a good idea to have your own appraisal of the property before you even make an offer on the property. An appraisal will provide you with and unbiased estimate of what the property is truly worth and it will help you determine what kind of risk you are really taking before you’ve put money on the table.

5) You will need financial statements for either yourself or your business. This is a no brainer, but you would be surprised by how many are really shocked when they are asked for this information. Banks are lending you a large sum of money they want to be assured that you are fiscally responsible and somewhat solvent.

6) Have an attorney who specializes in real estate investments go over everything with a fine-toothed comb. You need someone who knows the business and will be an aggressive advocate on your behalf.

7) Be absolutely certain that you can afford to keep your business operating and still make the payments on the business. If you can’t do this, or you aren’t certain of your ability to do so, then either now is not the best time for you, or this is not the right investment for you.

Check with your local small business administration and see what services they have available to first time business investors and/or small business owners. They have a wealth of resources available it would be a shame to miss out on a potential grant or low interest loan simply because you neglected to check with them from the start.

9) Negotiate. You do not have to take the first offer you get. Be an aggressive advocate for yourself and your business. Learn this skill early and it will serve you well in your business.

10) Check out several lenders and go with the one that offers you the best deal. Remember this is a hefty investment and an unfavorable loan could increase the burden greatly.

This is your investment in your future; protect it aggressively. These tips should help you get the financing that is so vitally necessary when purchasing commercial real estate.

Apply For A Business or Commercial Real Estate Loan using our FREE Loan Application – compare rates and contact multiple lenders. We have over 300 commercial, business and construction lenders as well as private equity groups waiting to help you. Best of all, GlobalBX is FREE!

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What is the best source for Real Estate Financing Today?

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Over the last few years the real estate market has undergone a serious and consistent downfall. For those who don´t understand this concept, they have been taking a hard hit to their interest. However, in this market of decline, there comes great chances of opportunity. The smart investor that gears themselves towards short sales, REO´s, wholesaling, and subject two type investing are sure to garner some lucrative benefits before the real estate market bounces back.

The best thing one can do for themselves is to have the cash readily available to make deals immediately. Hard money lending used to be where you borrowed and X amount of dollars, usually with no questions asked, and you repaid the money at a high interest rate. Don´t get yourself involved with hard money lending because going through this process you still have to overcome the same hurdles as with your traditional residential lending and you have to wait a long period of time before closing Basically this means that a substantial amount of time will be lost and the real deals will be lost. This process of hard money lending still works, it is just hard finding an honest lender to deal with.

Another option one can opt for to take advantage of the down real estate market is called private money. Private money is similar to old fashioned hard money lending. This process usually only works if you get the right person and the right scenario. For example, you can try and get someone to come off of their retirement account and hand out a large chunk of money and try and work out a deal with them that benefits both parties. However, it usually takes a long time to find someone who will agree to all of your conditions you lay out and who will be willing to hand out a huge sum of cash without wanting to be involved in every aspect of the real estate deal. Again, this is an option one can choose but for the most part, it is more of a hassle to do this then to go for another choice.

One of the most effective ways of attaining a positive position in today´s real estate market is to obtain unsecured lines of business credit. Most people consider this there last option but honestly, it works great. Most individuals that are set up properly can easily obtain cash lines that are one hundred percent theirs to do whatever they want with. This has proven time and time again to be the best way to capture the real estate market as it now stands today.

One does want to be careful going this route however. If things are done incorrectly at the bank, you can be easily denied and your credit score will take a unforgiving hit. In addition, your company can be blackballed for up to a year or in some cases red flagged forever. So do be careful and properly go over all the correct documentation before trying to attain any type of credit line. Using unsecured lines of business credit is one of the best ways to seize and control the current real estate market, you just want to make sure you obtain competent counsel before you attempt trying to get one.

The real estate market is going through a trying time right now. In the wake of this decline, one can easily take advantage of this period. Obtaining the right type of financing will surely help you make a lot of money.

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When obtaining a business opportunity loan, borrowers will discover that many lenders simply do not provide business loans that do not include real estate as part of the business purchase. There are several other important business financing issues to analyze prior to buying a business without commercial property.

Interest in buying business opportunity investments has improved because of serious problems with residential real estate. However, because there are so many critical differences between financing residential real estate and business financing, it is important for potential business owners to educate themselves before proceeding.

In order to buy a business, a commercial borrower is likely to need business financing. If the business includes commercial real estate, the borrower will need a commercial mortgage. If the business purchase does not involve real estate, a business borrower must use a business opportunity loan.

Unfortunately the availability of business opportunity financing is more restricted than commercial real estate financing. There are also some potential limitations and problems unique to a business opportunity loan, and commercial borrowers should make every effort to avoid these business financing difficulties.

Our goal here is to focus on several financing issues that you should anticipate when commercial real estate is not part of the business purchase. Our suggested approach to business opportunity financing is provided below.

Begin your business opportunity investment financing plans by formulating a realistic assessment of cash available for a down payment and desired maximum business purchase price. A down payment of about 25% is suggested for most business financing situations described here. Usually seller financing is permissible for a portion of the down payment, but a potential buyer generally needs to plan on investing at least 10% of the purchase price from their own funds even if the seller is providing 15% or more.

Because Small Business Administration loans are essential for this kind of financing, you should explore whether you will in fact be able to qualify for these specialized business loans. This step is both important and somewhat complicated, and the involvement of an SBA loan expert is strongly advised. Among the issues to explore are whether collateral is available for SBA financing and how important refinancing is to your overall business opportunity financing process.

It is important to consider the lease terms which are possible. As noted previously, business opportunity financing and investing does not involve the purchase of commercial real estate, so arrangements must be made for a long-term lease. A ten-year maximum loan term is likely, and a shorter financing term will probably be required if the length of the lease is for less than ten years. In other words, with a seven-year lease, the commercial loan is likely to be for seven years, and even with a fifteen-year lease, the commercial financing will probably expire in ten years.

When buying a business, inquire about the possibility of including commercial real estate. With the inclusion of commercial property, you can obtain a longer business loan and the interest rate will be lower. Because the absence of a commercial mortgage can actually be an advantage, the improved terms possible by including real estate should not be looked at in isolation.

Before any offers are made to buy a business investment, borrowers should discuss their financing options with an expert for business opportunity loans. These discussions should include issues such as potential purchase price, down payment possibilities, seller financing, buyer credit scores, tax return requirements and collateral options.

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Jack M. Cohen, CEO of Cohen Financial, gives his commentary on the state of the economy and what it means for the coming months for the Commercial Real Estate Industry.

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PremierRealEstateInvesting.com talks about how you can use seller financing to fund your real estate investing deals REGARDLESS of your credit situation.

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