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Commercial
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COMMERCIAL/INVESTMENT LOANS FOR EVERY DEAL In addition to paying CA$H NOW™ to buy Seller Financed Notes secured by all types of property, Cash Now Financial can now provides loans for the acquisition, development or rehab of any type of property. Our programs are: 1) Creative Small Loan Program: This is our in house program for the acquisition, refinance or minor rehab of commercial/investment properties or land, in which the Borrower only needs $50,000 to $250,000. (Full details at www.cash4you.net ). WE ARE NOT YOUR TYPICAL LENDER! Our President, Ken Gain, has been active in the Alaska Real Estate Industry since February 1962. During that time he has been involved in real estate brokerage, property management, development, syndication, real estate appraising, and counseling. In addition to surviving over 35 years of self employment in the real estate industry, he has also been an administrator of government real estate programs, as Area Representative for the Federal Housing Administration and as Deputy Executive Director of the Alaska Housing Finance Corporation. He holds nationally recognized professional designation in appraisal (MAI), real estate syndication (SRS), sale and analysis of commercial investment property (CCIM), and real estate counseling (CRE). He has personally borrowed over $75,000,000 to finance Alaska real estate and business projects, so he understands the Borrower's position! CREATIVE COMMERCIAL TRANSACTIONS Following is an example: Assume a commercial building offered for sale for $500,000 that is currently experiencing a 50% vacancy rate and further assume that it will take $100,000 in fix up cost and leasing commissions to get up to full occupancy. Comparison with other buildings indicate that if the building were fully occupied and fixed up it would be worth $750,000, so it is a good opportunity for the creative entrepreneur. The problem is that with 50% occupancy the current income barely covers operating expenses and there is very little available for debt service. As a result conventional lenders will only loan $150,000, which means the buyer/entrepreneur has to come up with $450,000 cash out of pocket. Obviously it will very difficult to make a sale of this property using conventional financing. But, with our lender they will probably finance $300,000 with an additional $50,000 to cover an interest reserve during the first year of the loan. They would allow the owner to carry back a second deed of trust for $200,000, which means that the buyer would only need the $100,000 required to fix up the property and get it turned around. The terms on such a loan would probably be interest only for two years with a final balloon payment at the end of the third year. At that time the property would be worth $750,000, which means that the buyer/entrepreneur could refinance it and borrow $550,000 to payoff the $350,000 loan to our lender and the $200,000 second to the seller. Example 2: Buyer wants to buy a tract of vacant land for $100,000. Unfortunately the seller demands cash and buyer only has $10,000 down. Because buyer also owns a free and clear rental home worth $70,000 he is confident he can borrow $90,000 from the bank so he gives the seller $10,000 earnest money to secure the land purchase. Unfortunately because the buyer's credit isn't quite perfect and because the rental house isn't conventional construction, the bank says "No." By taking a Deed of Trust against both properties we can loan the $90,000 needed to save the deal. Of course creativity does
come at a price. The interest rates on such loans usually
run 12% to 14% and cost 3 to 5 points, plus normal closing
costs. Clearly such a loan would make no sense for the
purchase of a standard performing property, but it can be
quite attractive when there is an opportunity to earn a
large profit by fixing up and turning a property around.
So when you have commercial properties that require
creative solutions, please give us a call! |
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