Commercial Loans: the Power of Permits

August 3rd, 2009 at 11:51pm Under Commercial Loan

I’ve had real incentive to consider this week’s topic: How permits affect commercial loan underwriting. Those of you in the business for a while have undoubtedly come across an apartment project, office, or retail project with “un-permitted” additions. To be clear, “un-permitted” work on a property is work that was done without the local city building and safety department knowing about it. Even though it may have been done to the latest code, it was done without the local authority’s blessing.

When you ran into that property with un-permitted work, you may have been initially surprised to learn that lender involved disallowed any income or value attributable to those improvements. I’ll also bet that it didn’t make a lot of sense to you. The tenant was there, the square footage was there, the lights worked, the toilets flushed … why wouldn’t it count?

The theory goes something like this: The city has the right, once it learns about the un-permitted work, to require the owner to provide access to city inspectors to all of the improvements done, whether or not the current owner did the work! This particularly applies to any building safety related work such at plumbing, electrical, and structural. So if the city required that of an owner, it means that walls get broken into, floors get jack hammered, and life around the un-permitted work generally becomes hell.

If there happens to be a tenant … who pays rent … around this work, then it’s not altogether unreasonable to assume that rent might stop and for a potentially long time! It’s possible that the un-permitted work could be disallowed entirely. This would mean less income for the property, potentially putting the lender’s loan in jeopardy. The moral of the story: Before taking on a property with un-permitted improvements, make a stop at the Building and Safety office of the local city to find out what is allowed and what the “re-permitting” process will entail. It could save you thousands of dollars.

For Those Who Currently Work As An Underwriter, What Can You Tell Me About The Job Or Work You Do?

August 3rd, 2009 at 07:41pm Under Commercial Loan

I’m thinking about a career change from an Accountant to an Underwriter, whether commercial or consumer loan underwriter. Just want to know more details about it, and if it’s for me.

How To Become A Finance Broker?

August 3rd, 2009 at 07:15pm Under Commercial Loan

I would like to open a finance brokerage in the UK but don’t know how to go about it. It could be personal loans or commercial. Could someone please suggest how I go about it and also tell me where I can get more information about this business. Also, if you’ve started up such a business, could you share your experiences? Finally, can anyone suggest a niche to focus on in this industry? Thanks!

Seeking A Loan? Asap!?

August 3rd, 2009 at 06:26pm Under Commercial Loan

I wanted to get a loan to pay off some bills that I have. They have summed up due to that I have been unemployed, but now I have a stable job. I was seeing a commercial about a loan company that you take in your car title and based on that, they offer you a loan? How does that work? It says that all I would need is proof of a job and that’s it. What other options would you recommend to me.
Thank you so much!

Office Building Commercial Loan

August 3rd, 2009 at 05:53pm Under Commercial Loan

An office building property is one that has multiple tenants where the primary purpose is to provide a workplace and working environment primarily for administrative and managerial workers. An office building can accommodate as little as one tenant or multiple tenants depending upon the size and building layout. The most common example of an office building would be a property with multiple floors and multiple tenants.

The number and type of tenants in the property can influence how these properties are underwritten. A property with multiple tenants with a long history of occupancy and sufficient remaining lease terms are generally considered a more favorable property than one with a single tenant. An exception to this however would be a single tenant property with a credit rated tenant. A credit rated tenant is generally a publicly traded company that has sufficient credit ratings on their publicly traded debt.

Structure:

Office building commercial loans are generally written with 5, 7, 10, 25 and 30 year terms with or without balloons. In general for a purchase a borrower will be expected to put down a minimum of 20% plus closing costs. We do offer office building commercial loans with as little as 10% down dependent upon the borrower occupying sufficient space in the building as a commercial tenant.

Paperwork:

For this type of loan expect to provide full documentation on the property to include the income and expense statements or property tax returns and property rent roll. If the loan is a refinance you would be expected to provide any available property third party work such as appraisals, environmental reports, title work, or copies of notes.

This type of loan can be taken in the name of the individual or the non person entity such as a corporation however the borrower or individuals that have ownership in the holding company would also be expected to personal guarantee the loan. As such anyone that is personally guaranteeing the loan would also be expected to provide personal tax returns, personal financial statements, and have eligible credit. If the loan size and property qualify it may be possible to do the loan non recourse with simply means that the borrowers do not have to personally guarantee the loan.

Fees

The fees associated with the transaction will include the costs of reports such as appraisals, title work, environmental reports if necessary, and other typical closing costs. Get more information http://www.commercialmortgage.net

My Bank Has Sent Me A Letter About My Credit Scores. I See Names And Coments But Where Isthe Score?

August 3rd, 2009 at 01:41pm Under Commercial Loan

Newbie with no credit card balances and confused during home loan process-first time home owner age mid 50s married with independent business for over 30 years-many commercial and realestate loans involved with the business. Seems the fico is saying I am a bad risk but not sure if I am reading the right numbers. Teh comments all refer to not having any revolving credit and I believe the commercial loans we have. Would seem that a net worth over 1 mil and a d to a under .3 would not be bad.

I Own A 40’ X 60’ X 15’ Concrete Building For Personal Use, To Storage My Rv. I Would Like To Know …?

August 3rd, 2009 at 01:14pm Under Commercial Loan

I own a 40’ X 60’ X 15’ concrete building for personal use, to storage my RV. I would like to know what personal loan programs, including terms and rates, are available if I use this property as collateral? Would the terms and rates be similar if (I were to use my personal residence as collateral? (Equity loan).
I want this loan to be an equity loan, not a commercial loan.
PLEASE I NEED ANSWERS FROM LOAN OFFICERS ONLY.
THANK YOU VERY MUCH
I already talk to some officers, but I want more opinions from other banks

The Amount That A Commercial Bank Can Lend Is Determined By Its?

August 3rd, 2009 at 12:29pm Under Commercial Loan

-required reserves.
-excess reserves.
-outstanding loans.
-outstanding checkable deposits.

Commercial Loan- Get Maximum Benefit Out of It!

August 3rd, 2009 at 11:51am Under Commercial Loan

Fixed Commercial Loan is similar in nature like residential Loan. In residential loan you have to pledge real property as guaranty. When you use such loan for raising fund for business or to buy property, the lender keep hold of interest to that property till loans fully repaid. Repayment period can be your choice, start from short to longer duration.

Principal and interest part of advance recovered by lender throughout life span, on being defaulter, the lender has right to foreclose and take possession of the property that has kept as guaranty. You should aware that interest of loan is tax deductible and income from such advance is considered as non-taxable. But be sure that tax penalty can be severed. You should assure that funds were not used for any qualified business purpose or for any tax saving purpose.

If you take loan for business and not for buying property, lender may re-finance your current borrowed money to level that you are in need, or lend only the difference between current value of business property and amount that you are debt on current loan.

For commercial loans, two types of interest schemes prevailed. Fixed rate business credit, where interest rate that is in place either for life of credit taken or for fixed time duration. If chosen fixed period of time then, converted as variable interest rate after fixed time period expires.

Read carefully contract document about ERC (Early Redemption Charge), as this clause states, if you pay off the note prior to the end of fixed rate period, the lender is entitled to one-time lump fee to offset their loss of expected income. Sometime ERC may be extended to longer period, up to entire term of financed money. Now-a-day competition among lenders, you negotiate about ERC term to drop.

Variable interest rate applicable, based upon rate issued by Bank of England. Lender states that rate consists of published rate and will likely to go up or down over its life span, it may have some pre-determined premium that remains same for full term of advance taken. You must aware how frequently rate is changing and you shall happy with amount charged. You should negotiate about both of these factors to lender.

It is dynamic situation for selection about type of interest. Fixed rate business credit is good choice in situation when interest rates likely to go upwards, if economic indicator point to downtrend, then variable rate is best choice.

For maximum benefit, keep on changing, i.e. if you choose fixed rate and interest rate dropped down, consider for applying re-finance and apply for variable interest rate for lower rate advantage. If situation reversed, then move into fixed rate to protect you.

I’ve Looked Into An It Course With Advent Computer Training But Need To Verify Company Is Genuine/accredited.

August 3rd, 2009 at 07:41am Under Commercial Loan

The problem is I’ve been told I can take out a 1 yr interest free commercial loan with Barclays for £5,000 to pay the IT course fee for Advent Computer Training (see Google). However Barclays Business told me they were unaware of this loan & company so I’m now very dubious. how can I check if company is legit or if this is a scam? Citizens Advice couldn’t help.