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July 21, 2017
We at Aurum & Sharpe would be nothing without our clients, and your satisfaction with our service means the world to us. We are happy to announce that this year we have been nominated as The Best Mortgage Company in Brooklyn! It is so humbling to know that our hard work is appreciated, enough so to earn this nomination. Now we need your help to win! Here’s how to vote: Go to bestofbk.com and click ‘Vote Now.’ Select the ‘Services’ category on the left Scroll down and select ‘Mortgage Company’ Vote for ‘Bryan Hanley’! Votes are limited to one per category per day. Be sure to keep voting every day until August 4, 2017 to make sure your favorite businesses win the “Best of” title! Mortgage Rates Calculate Your Monthly Payment
July 21, 2017
Many property owners try to buy new property all the time. In most cases, this involves coming up with a hefty down payment. However, you can avoid having to organize hundreds of thousands of dollars in cash by buying a new building using equity in other properties you already have, a process called cross collateralization. The bank or lender would write a loan using both properties or a number of properties as collateral for the new property you’re buying. The lender then places a lien on all the properties being used as collateral, which includes the property you’re buying and the other properties you’re using as equity. Cross collateralization is uncommon, but it can be done. To qualify for this type of loan, you need to have significant equity in your other properties. Lenders that do this generally will allow […]
July 21, 2017
Not all commercial real estate lenders are created equal. Each lender has their own differences and peculiarities. When evaluating your income for loan purposes, some banks will take the debt service coverage ratio (DSCR) of just the property that you are financing. Others however, will take into account all of your other properties to arrive at what it’s called the global debt service coverage ratio. This can be troublesome for some borrowers. If they are just breaking even on one or a few properties, it could negatively affect them on another property they are trying to find. It is useful to get a sense of which lenders use the global debt service coverage ratio and which do not. Aurum & Sharpe has extent extensive experience in navigating the confusing lending environment. We evaluate whether your global debt service coverage ratio […]
July 21, 2017
If you’ve looked to finance a commercial property in the last 3 to 5 years, you know that banks are happier to say no then they are to say yes. In this environment, it is imperative that you know your options. The first and most important step to ensuring that your application will be approved is making sure that your loan officer puts together a winning loan package. The loan package describes who you are to the lenders. It needs to put your best foot forward as it explains your challenges in the most honest and accurate way. Banks and lenders will deny your loan on the slightest pretense of instability. Provided that you are qualified, as long as you follow the steps in this outline, your loan application should be successful. Step 1: Gather all your financial documentation and […]
July 21, 2017
Many business owners looking to finance multiple properties will do so with a cross-collateralization loan, which involves taking out a new loan using equity in properties they already have. Cross-collateralization loans are most commonly made by private lenders, and are enough to finance at least two properties at once. You can do the same thing with a bridge loan, which you may have heard of, however cross-collateralization loans don’t involve a balloon payment that needs to be paid back in 18 months like bridge loans do, making them an ideal choice for people who don’t want the extra pressure. Just as with any important financial decision, it is important to consider the benefits and drawbacks of a cross-collateralization loan before you decide to apply for one. This type of loan appeals to business owners who want a consistent, reliable source […]
July 21, 2017
The capitalization rate, or cap rate for short, is the rate of return on an investment property based on the amount of income it’s expected to generate in the present year. By calculating the cap rate of a property, you can see the potential rate of return on an investment. Compare the cap rates of multiple properties to see which one is the wisest investment. Calculating the cap rate The equation to manually calculate a cap rate is fairly simple. All you have to do is calculate the investment property’s net operating income (NOI) by subtracting the total operating expenses from the total operating revenue. Then, you divide the result by the value of the property. total operating revenue – total operating expenses = Net Operating Income (NOI) Net Operating Income (NOI) / value of property= Cap Rate Let’s […]
June 8, 2017
The internal rate of return (IRR) is a metric used by real estate professionals to determine the net money you’ve made on an investment by considering the timing and magnitude of the return. However, its main use is to compare investments. By calculating the IRR of many potential investments, you can see which one is wiser. The calculated IRRs must be higher than the company’s cost of capital, and whichever one is highest is the wiser investment (provided they have equal risk). The manual calculation for IRR is highly complex, and can only be solved through tedious trial and error. This equation is as complicated as it looks, and it’s only a three-year calculation. To solve it, you would have to keep testing potential IRRs until you get an NPV equal to zero. Your result would be the […]
May 31, 2017
If you’re looking to obtain a loan to finance commercial property, one important metric you’ll need to provide your lender with is the DSCR, or debt service coverage ratio. The DSCR shows how well you will be able to repay the loan, and helps your lender determine the size of the loan. You can calculate it by dividing your business’s net operating income (NOI) by the total debt service. Debt Service Coverage Ratio (DSCR) = Net Operating Income (NOI) / total debt service A DSCR of 1.0 means that you’ll be able to pay back your loan with no wiggle room. Obviously, this is not ideal. The DSCR requirement varies by lender, loan type, and property type, but it will always be above 1.0 to provide a cushion in case something goes wrong. Calculating your NOI Your NOI is defined […]
May 31, 2017
Office condos are buildings with individual units that companies can purchase as office space. Though they are relatively new in the United States, they’re becoming increasingly common in big cities with limited space, such as New York City. Here is a quick breakdown of the office condo market in NYC. Who is investing? Nonprofit organizations are the largest classification of office condo buyers in New York City, making up 24% of buyers. For the approximately 25,000 nonprofits based in NYC, office condos are the ideal choice for office space because they’re the ideal size, and they’re economical. Nonprofit organizations benefit more from owning their office condos instead of leasing. Owning protects them from being forced to leave due to expensive rent. In addition, in the United States, nonprofit organizations are exempt from property taxes if they buy their office […]
May 24, 2017
An office condo is a great investment for small business owners looking for affordable office space in a great location. However, before you obtain an office condo, it’s important to be aware of all the potential fees you may incur along the way. Closing costs on commercial real estate are generally much higher than those of residential property, and can run into the tens of thousands of dollars. Below is a quick breakdown of some of the buyer’s closing costs on office condos in New York City. Attorney The first fee you may run into in the process of purchasing an office condo is the attorney fee. It is highly recommended you get a commercial real estate lawyer to help you negotiate the transaction and complete any complicated paperwork. This can cost approximately $5,000. Origination fees Origination fees, […]