Understanding Large-Scale Commercial Mortgage Financing Part-02

Continuing our discussion from (part 01) of this mini series covering large-scale commercial mortgage financing (If you have not read part one you should do so). It is helpful to have a general idea how mortgage lenders view commercial income producing properties for financing. When considering projects for financing in excess of one million dollars, lenders are not so concerned with the principles initially. Rather, they are more concerned about the operating economics of the property. Lenders (mortgage brokers and mortgage bankers) will want to see a detailed rent-roll (leases), with pro forma projections, income statements and copies of income taxes for the last two years and maybe some pictures of the project. This is enough preliminary information for a lender to pre-qualify the project for further consideration.

Once the determination that operating economics work, the lender will look to the quality of the tenants and the length of the leases. Mortgage banking firms like to see rent rolls having long-term leases (equal to or greater than the term of the proposed financing). Ideally, the project will have at least one or more anchor tenants (Wal-Mart, Target, Kroger, or multiple smaller strong tenants like McDonalds, Radio shack, and the like). The stronger the tenant, the longer the leases, the more likely they will be interested in the financing.

The bottom line to permanent commercial mortgage financing is that grade-A projects with grade-A tenants and grade-A principals will get the most favorable rate and loan terms from life companies for properties requiring financing in excess of a million dollars. While it is possible to get life financing for projects around the million-dollar range, the truth of the matter is Life companies tend to like deals from about 2 million and up.

Once the determination to pursue financing has been preliminarily made, mortgage brokers and bankers will request a host of information from the principal including resumes, financial statements, tax records, etc. If the principal’s are a partnership or corporations the request for information becomes more detailed. In essence, you should be prepared to give a full accounting of your financial picture (audited by a CPA at some point along the spectrum).

Formal loan applications are comprehensive legal documents covering a whole spectrum of concerns to both the borrower and lender and will require you to have legal review before acceptance and signature. The application fees you can expect to pay for the loan are typically around one percent (1%) of the amount of financing you are seeking. Example, if you want to borrow 2.5 million, you can expect to pay around $25,000.00 when you sign the application. From this application fee, an MAI appraisal will be ordered (unless it is a separate fee to the borrower).

Because of the financial and legal details associated with commercial mortgage financing are complex, you are strongly urged to have both legal and financial counsel representing you. Most people who are in this league of financing are already well represented but I set forth this statement for those of you who are relatively new to the game. It’s big league.

This is why I cautioned people in part one of this mini series to avoid paying up-front fees to mortgage brokers. Often times these people are crooked and swindle people out of money and add another layer of fee-costs to an already expensive project. Stay tuned, I will be discussing ways to protect your self when dealing with mortgage brokers in my next article.

To your success!

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Understanding Large-Scale Commercial Mortgage Financing Part 01

If you are looking for a commercial mortgage to support the financing (or refinancing) of large-scale income producing property, you can pretty much forget about banks. While banks will provide construction loans they tend to avoid the permanent mortgage financing in excess of one million dollars because of the risk associated with commercial loans. In fact, a bank will probably not make a construction loan without a formal letter of commitment from a lender guaranteeing the permanent mortgage take-out (a loan designed to cash out the construction loans provided by the bank).

In any case, securing permanent mortgage financing in excess of a million dollars can be tricky business if you are new at this type of activity, have grade B-C credit and marginal cash on hand to support the project. Permanent mortgage lenders want to see a debt coverage ratio at or in excess of 1.2 (debt coverage ratio is the number that results from dividing the net operating income by the sum of annual mortgage payments). Example: Property A generates $120,000.00 per year in net (after expenses) rental income and the total mortgage payment is $100,000.00 then, 120,000/100,000 = 1.2 DCR. The DCR is designed to cover the loan in case of rent vacancies and changes to net operating income. A cushion for the lenders security.

Then you have the task of finding a legitimate lender to provide the permanent mortgage. In a world full of crooked commercial loan brokers and shysters who will take your money and not produce a loan, there are a few quick things to make sure you are headed in the right direction to select a legitimate mortgage broker or banking firm. First, call any commercial bank and speak to the commercial loan officer. They can often provide names of mortgage brokers who specialize in arranging large scale financing and have some track record with the bank. This is not the final acid test but it is a good first place to go for guidance. Attorneys specialized in commercial real estate law are also a good source for referrals and you can find them by contacting your local bar association.

There are primarily two kinds of players in the commercial mortgage business: 1. Commercial mortgage brokers and 2. Commercial mortgage banking firms. A mortgage broker tends to represent mortgage banking firms and mortgage-banking firms tend to represent life insurance companies, who provide the permanent mortgage financing. If you are working with a mortgage broker you want to avoid paying any up front fees to them to “process your loan” which is a common scam amongst unscrupulous operators in the industry. You will pay an application fee at some point in the transaction but it certainly isn’t to the first guy who says he can get you a loan. Rather, it will be when you are dealing with a legitimate mortgage-banking firm that is representing the Life Company. Before this happens, however, there will be (at least) representatives from the mortgage banking firm who will meet with you, walk the property and put their eyes on the project before an application is drafted.

Always ask for references from the financial players who you can call to verify them. Ideally, you want names, telephone numbers and addresses to the properties they have funded. You can also ask the mortgage broker for the names of the banking firms where they will seek financing. In this case, you can expect to be forced to sign non-disclosure/non-circumvention agreements to protect the broker. Mortgage banking firms, on the other hand, represent life companies under contract and you, as an individual, cannot approach a life company directly.

Securing a commercial mortgage is a complicated process if you don’t know what you are doing and it may pay dividends to keep track of these articles in the near future as I intend on creating a mini series about residential and commercial mortgages. Not sure at this point how deeply they will go but they will help you make better decisions.

To your success!

Do you like this tip? You haven’t seen anything yet! Check out our Smart Books Business products by clicking the link below. We have business kits, books and ebooks to help you get smart-fast. Check us out…. We’ll save you a TON of time and money.

Building Boat Models – Tips To Develop A Fun Hobby

If you’re looking to take up an interesting new hobby, have you thought about boat model building’ Boat model building is a wonderful, enjoyable craft that many have been enjoying for years. It’s something you can have fun with while teaching it to your children and grandchildren. Imagine building a boat from scratch, using either a boat kit to guide you or your own design and creativity. You can build a boat model to fill up your time and give yourself a sense of achievement or to give it as a gift to someone you care about. Imagining recreating a famous or legendary boat with your own two hands and then placing its model on your mantle for everyone to see and marvel at.

Make careful arrangements

Before embarking on the process of building a boat model, there are many things you have to consider. First of all, which boat are you looking to build a model of’ There are books available about the subject as well as great sources on the web you can get ideas from. If you’re a person who likes challenges, look up something difficult and complex that can really give your mind a workout. However, if you’re looking for something to share with a child in your family, choose something simple he or she can actively participate in or something with a background story you can enrich the youngster’s brain with while you both work together with your storytelling.

When it comes to the search for the appropriate supplies, you can find a plethora of sources on the web pointing you in the right direction. Choose appropriate supplies from trustworthy manufacturers. Buying the best painting materials, adhesives and such will surely reflect on the quality of the end product and gave you the results you’re wishing for. Take your time and purchase the best equipment you can find to make sure your endeavor into boat model building won’t be a disappointment in the end.

You need to find a proper area to perform your hobby. Avoid cramped or closed spaces. Look for a well-lit, well-aerated and wide enough area to carry out the building process because you need to be able to spread out your supplies in comfort and be able to take care of the little details involved the best way possible. Last but not least, sharing your passion with someone will truly make it more enjoyable, so take that possibility into consideration. Taking up this craft may provide you with an enjoyable hobby that will enrich your day to day life for years to come.

Critical Tips When Building a Small Backyard Chicken Coop

So, you are looking to building a small backyard chicken coop…that’s great! Congratulations! Not only will you save money by building your own coop, but it does not have to be a crazy, elaborate design with all the bells and whistles. You can keep healthy chickens with even the simplest design. I’d like to go over the most important factors to consider when building a chicken coop in general.

Important Factor #1 – They need enough light

When building your coop, make sure there are plenty of windows. These windows should be placed so that the sun can shine in for a few hours a day. In colder climates, sunlight will need to be able to shine through the windows for as long as possible. If the chickens don’t get enough light, or stay warm enough in the winter, and that could spell disaster.

Important Factor #2 – They need to stay warm

Don’t build your coop out of concrete, brick or stone. While they would be more durable and more costly, building constructed using this material are very cold in the winter, which is not good for the chickens. Be safe and build it with wood, on a concrete foundation to prevent the coop from sagging into the ground (Chickens like the bare ground).

Important Factor #3-They need to stay dry

A leaky chicken coop is a disaster waiting to happen. Make sure the construction is tight and the roof is constructed of quality roofing material. It is best to build the roof at a small degree of a slant – higher in the back, while keeping it lower in the front. This will allow the rain water and snow melt to simply slide off the roof.

The Most Important Factor – Proper ventilation

Ventilation is the most vital part of chicken coop construction. Fresh air is more important for chickens then other domestic animals because their body temperature runs several degrees higher. On top of that, in a chicken coop the air is well… unpleasant, so it is important that the odor in the air can dissipate while allowing fresh air in.

Important Tips When Building a Backyard Chicken Coop

Want to build a small backyard chicken coop? Great! Not only can you save a ton of money building your own chicken coop but because you make the choices you can build one specific to your needs. It doesn’t have to be too big, just a basic chicken coop design that will suit both you and your flock of chickens. I’ll outline a few things you should consider when building a chicken coop.

Chickens Need to be Warm – The best material to use when building your coop is good old-fashioned wood. It’s a natural insulator which will keep in the warmth in winter and keep out the heat in summer. Having said that, don’t forget to add some extra insulation when constructing your coop

Chickens Need to Be Dry – Keep your chickens dry by ensuring your coop doesn’t leak in water anywhere. Make sure the roof is watertight and has a slant to keep the water and snow draining off to the back of the coop and not over the door as this will only drip on you and your chickens when entering and leaving the coop.

Chickens Need Light – Chickens need about 14 hours of light per day for optimal laying. This can be provided by windows and doors during the summer months and an electric bulb during the long, dark winter. The bulb will also provide additional warmth too.

Chickens Need Fresh Air – Proper ventilation is essential to keep moisture and ammonia levels low. Too much of either and your chickens will suffer. Leave doors and windows open during the day and a flap open for ventilation at night.

Tips When Purchasing Used Excavators

The construction industry is considerably one of the most thriving business sectors these days because of the increasing number of establishments and houses that are built in almost every part of the world. Because of this, construction company owners know that they need to provide reliable and effective services to their clients in order to cater to their needs and preferences. That is why most construction companies make use of the latest and the most useful equipment like excavators.

Excavators are commonly used in digging the ground to ensure a sturdy foundation for the establishment. This equipment is also used to get rid of items in the work area, making tasks easier for workers. Aside from that, excavators are also good equipment for moving huge items around the work area. With these features, this investment is worth it. However, as for some construction companies, purchasing excavators can be impossible due to its high demand and price. So, in case that you are planning to purchase excavators for your business, it is ideal to opt for used excavators. Listed below are some tips when purchasing one.

Condition – Since you are purchasing used excavators, condition is essential. Make sure that the parts are in good condition and that the moving parts are working properly. In addition, make sure that all gauges are working to avoid certain machine failures and other equipment problems.

Price – Look for excavators that can suit your budget to avoid excessive expenses. With this, owners can be sure that they have sufficient budget to maintain their equipment and improve their services.

Parts – Instead of choosing old model of excavators due to its low price, choose new models. This is essential since you need to be sure that in case of any machine failure or damaged parts, you can easily purchase a replacement part in the nearest service centre or supplier in your area. This can help you improve your performance. Furthermore, some old model excavators have expensive parts due to its model.

Functionality and performance – Make sure that you choose used excavators that work like new ones. Surely, by considering this factor, your services can be improved and workers can do their jobs easily and more efficiently. Workers will also have the opportunity to maximise the equipment’s potential since it can accomplish other tasks in the work area.

Wood Beam and Post Repair Tips – Construction Home Repairs

If you have any problems with wood beams or posts that need to be repaired and these structural framing components are holding up large areas of your home, it wouldn’t be a bad idea to contact a professional instead of repairing them on your own. Just a little something to think about, especially if you don’t know very much, about home construction and framing.

If you have a wood beam or post that is damaged and needs to be repaired and it can be done safely and efficiently, then feel free to tackle the job. However, and I’m stressing this lot in this article, you shouldn’t do any repairs that you don’t know anything about. This would include any types of wood beams or wood posts that are major structural components of your home framing system.

In the past, when I did a lot of work for other general contractors and builders, they would contact me to do some of the more difficult structural beam and post repairs. It wasn’t that these people weren’t capable of doing them, most of them were simply afraid to tackle a project like this.

If professionals in the construction business are afraid to tackle some post and beam repairs, you should be also. Make sure that you don’t ever repair something that you’re not comfortable with and if it’s holding up a large section of your house, you should think twice before proceeding with this type of repair.

Structural post and beam repairs should only be made by professionals who understand house framing and house construction methods.

Six Scaffold Safety Tips Construction Workers Must Know

Scaffold safety may sound difficult to achieve but with the observance of the right practices and the use of appropriate tools it can be accomplished. If you handle a group of workers in a construction site, this article is just right for you to read. Here you will learn measures that can help you secure the lives of your workers from all kinds of danger.

Advocate Training – Never allow anyone to hop on the team without being trained. Certain surveys show deaths of some construction workers are caused by their ignorance of certain procedures related to the projects they are handling. In connection to this, require all your workers to have knowledge and hands-on training about scaffold design and operation. The entire training should include lessons on the types of scaffolding, set-up procedures, proper use of the scaffolds, work safety practices and fall protection measures.

Allot Time For Thorough Inspection – Even before your workers hop onto the tower, take the time to scrutinize its entirety. The latter starts from the very foundation and ends with the highest level of the system. Check the planks and tubes for any crack, dent and other deformities. See to it that the locks, screws and braces are rust free and secured tightly to avoid unwanted dismantling. Ensure that guardrails, ropes and toe boards are in proper positions for support purposes.

Refrain From Using Counterfeits – You read that right. Scaffold safety is far from happening if your pool of workers is using substandard parts for your tower. Invest on materials with ISO certification. They definitely cost higher but the security they bring cannot is unmatchable. As for your workforce, contact only people who are licensed and able to carry out tasks in a professional manner.

Say No To Overloads – Even though your scaffolds are made of the finest materials, there is a certain limit to what they can accommodate. This is especially true about loading or weight limitations. Always advice your workers to bring only with them stuffs they need for work whenever they climb the tower. Remind them also to be cautious about the prescribed number of workers a certain level of the tower can carry all at the same time.

Invest On Maintenance – Let a supervisor inspect the whole tower on a regular basis. This supervisor must be a professional who understands the design and structure of the tower. Its parts would definitely be used round the clock and so they are prone to wear and tear. Pull out damaged parts right away and have them replaced with study ones. You do not have to worry on the money you would be spending since these new parts can be used for other projects.

Proper Storage – Sound materials contribute a lot to scaffold safety. Therefore, every part of the tower must be cleaned and stored properly. If otherwise, rust and other elements of corruption cane eat the best out of your quality parts. When used at work, ensure to free them of waste materials that can damage their make.

Tips To Help You Choose A Vacation Rental

Are you putting together a travel plan? Since there are so many options, it may hard for you to opt for a vacation rental home. In this article, we have given 5 tips to help you choose a vacation rental home with ease. Hope these tips will make your next trip just amazing.

Pay Attention To The Pictures

The importance of taking a look at the pictures of the home can’t be denied. In fact, you should review each picture with great attention. During your review, if you don’t find a lot of clear, well-lit, most recent pictures of house, just keep digging deeper. Keep in mind that a reputable rental property will offer a lot of brilliant photos.

Make sure you can find photos taken from different angles, such as the outside, the inside, and the street view, to name a few.

Consider The Amount of Space

Although square footage is important, this doesn’t tell the whole story about a house. For instance, if a house has high ceilings, the home will look spacious. On the other hand, low ceilings will make a house look confined. Make sure the place is not teaming with lots of unnecessary furniture. But it should have the required furniture. After all, you can’t take chairs and tables with you on your trip.

The Home Should Be Well-stocked

Before you go on a trip, make sure you don’t pack too much stuff. Actually, what you need to do is opt for a vacation rental home that is stocked with all the stuff that tourists usually need. The house should be able to meet your day-to-day household needs.

Apart from the sheets, extra pillows, towels, and the toilet paper, the place should also offer necessary kitchen stuff, such as serving trays, utensils, cups and plates, to name a few. Apart from this, make sure the place provides routinely used appliances, such as microwave, toaster, and office maker.

Reputable vacation rentals also keep their properties stocked with family-friendly stuff, such as magazines, books and board games. Some also provide video game consoles, yard games and football tables.

Family-Friendly Activities

You should look for a place that offers tons of fun activities in the neighborhood. It can be a museum or a zoo, for instance, where you can have fun with your family. If the fun activities are at a walking distance from the rental home, that is even better.

Customer Service

Lastly, it’s important that you search for a vacation rental that offers the top-notch customer service. In fact, the way they will deal with you even before you have chosen them will give you a better idea of their customer service. It will help you find out more about the type of house you are going to rent and the type of experience you will enjoy.

Finding Vacation Rentals

Are you planning to spend your vacation with your friends or family members in a memorable way? You want to spend a week or more. Getting a private accommodation would be more profitable than staying in a hotel room. You can save your extra expenses. However, choosing a right vacation rental is not a cakewalk. It is tough enough. A vast majority of seekers does not know where to find vacation rentals. There are many things to find and consider.

Given below are some important tips:

Google search

Google search is the best way to find vacation rentals. If you follow this method, you will come across many options with an opportunity of filtering these in your own ways. The option to filter the results for vacation rentals will help you reach the right destination. Long before it was reported that Google was testing a vacation-rental filter. We can find this now available in certain cities.

Therefore, the question comes- “how does this work?”

You just type “hotels in London, the UK” in the search bar. It will fetch a Google map along with a list of hotels, amenities and prices. Now you can filter the search for your specific travel dates. There is a drop-down menu under the map to tell you “Accommodation type.” This helps you choose either “any” or “vacation rentals”. Now if you click on vacation rentals, you will get to see a list of options and prices and the map will be changed to show you only rentals.

Dedicated websites

There are many dedicated websites helping you find vacation homes in your desired ways by going directly to those sites. Even you can book a rental if you find anything matching your needs and budgets. Some of these include a brief description of it and the reviews posted by many users.

When you do a Google search to book one, the search engine giant Google redirects you to a travel website offering this booking facility. Sometimes, it links the filter to a website that facilities you to browse photos and read descriptions. Besides, it can tell about the amenities.

Websites offering travel news

There are many websites dedicated to offering travel news. These websites are good. They include many vacation homes along with the latest news and detail analysis of these places along with their pros and cons. These websites are very useful to tell you all in details. It helps you take a better decision and get ready accordingly.