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February 8, 2022
If you’re a first-time real estate investor with no credit and cash, or a small business owner looking to refinance all your rental properties into one loan, chances are you’ll have a hard time finding a lender. Real estate mortgages are among the most highly regulated industries, imposing some of the most stringent requirements on borrowers in order to ensure another Great Recession does not occur. As such, real estate investors looking for more flexible and creative financing often have to look outside the box at alternatives. As a group, the alternative loan programs available out there are largely considered portfolio loans, and in this article, we’ll discuss what they are, the different types available for real estate investors, and the benefits and downsides to them. The definition of a Portfolio Loan A portfolio loan is any real estate mortgage […]
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 […]
June 8, 2017
Commercial mortgage lenders look at hundreds of loan applications each month. How can you make sure yours stands out? Many borrowers try to get a loan without first investigating what a lender might want to see on his application before approving the loan. These days, lenders are especially cautious because of the financial regulation environment, and of course, the elephant in the room, heavy losses from the recent recession. What lenders look for There are three things that the the lender looks for in general when evaluating loan scenarios. The first is credit. This can also be looked at as character. How is your credit? Are all your bills paid on time? And more importantly are all your bills related to real estate paid on time? One of the easiest ways to kill a deal is to have a […]
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 22, 2017
New York City is a great place to conduct business. As the most populated city in the United States as well as the most diverse, you are sure to find a wide array of clients looking for what you have to offer. Because space is limited in NYC, many smaller companies are turning to office condos for office space because they’re the more economical option. However, chances are you’ll still need help from a lender to finance one. The process of investing in an office condo in New York City can be complicated, but evaluating all your options and making sure you have everything you need can make it a lot easier. Here are some things you should know about financing an office condo in NYC: Types of loans available The types of loans available to you depend on […]