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Archive for January, 2010

Commercial Loan Refinance

When is the best time to refinance a commercial loan? Factors such as prepayment penalties goals of the borrower market rates and existing loan terms come in play. Of course theres no exact formula but below are some thoughts on how you might analyze your commercial loan refinance.

The Discounted Cash Flow method is the traditional system used which essentially compares the existing loan vs. the proposed loan on a Net Present Value basis. However we have found that most commercial property owners are really interested in:

1. How the refinance will affect their monthly cash flow?

2. What the closing costs will be?

3. How much of the closing costs will have to come out pockets?

4. If increase in cash flow How many months will it take for the savings to pay back the owners closing costs?

5. What the principal pay down amortization schedule will be compared to existing loan.

Cash Flow

Most borrowers are obviously interested in improving their cash flow situation when refinancing. Theres essentially only 2 ways to do this reduction of interest rate and or increasing the length of the loans amortization schedule. Thats it. Reducing the interest rates is obvious however most borrowers are surprised to learn that by spreading out a loan from say 20 years to 30 years normally reduces the borrowers payment by approximately 20.

Borrowers that are facing a ballooning loan may find out however that their situation will not improve. Their monthly payment may go up as markets rates change loan programs change etc. It is often the case as well that the borrowers books are not as strong as there where when they secured their existing loan and they will not be offered the same program/rates that they previously qualified for.

Closing Costs

Borrowers are always very concerned about closing costs and for good reason. For example with appraisals ranging from 2000 5000 environmental reports from 1800 processing at around 1000 title from 1000 2000 and the bank 1 fee it makes a lot of sense for borrowers to be concerned. On a refinance the borrower can normally roll most of theses costs into the loan amount. In terms of out of pocket costs the borrower should be prepared to pay the appraisal and environmental report fees upfront. In addition sometimes the funding bank will require the processing fee paid upfront as well.

Pay Back

Assuming there is a reduction in monthly payments borrowers like to do a cash flow analysis to see how long it will take for the savings to pay back their closing costs. For example if the new loan monthly payment is 2000 lower and the total closing costs are 10000 it will take 5 months for the borrower to break even.

Principal Pay Down

Principal pay down is obviously another important component of any commercial loan. However for most owners especially those with highly leveraged properties cash flow is more pressing. High debt payments versus net cash after the expenses have been paid make it difficult for the borrower to look at this in any other way.

About the writer:  Jeff Rauth 248 8858797 Commercial Loan Calculator or Commercial Loan Rates OR Commercial real estate loans

Commercial Finance Deals Across America- Is It Possible?

Deals can come from here there and everywhere. Are you getting your share?

Maybe you have deals from here covered. Now what about there and everywhere? Is being in the right place at the right time all it takes for you to be successful in the commercial finance industry? It may not be all it takes but it is certainly where it starts. If a potential client doesn’t know you and doesn’t know that you are the right broker for the job then you will never get the deal. Is this a fair assumption?

No matter how hot the national commercial finance industry may be as a whole hot and cold markets are a fact of life. Working a limited geographic area puts you at the mercy of the local market. If the market happens to be hot you are booming. If it is cold then you are scrambling to make ends meet. By working a national client base you will insulate yourself from the effects of hot and cold markets. The key is to find those hot markets and make sure that investors know that you are the right broker for the job. If the commercial industry is hot in Miami but you live in Dallas you still want to have a shot at getting those deals right?

What are the requirements to work deals on a national level? Some states such as California require a higher level of licensure than most other states. Many states however do not have any limitations for commercial finance brokering. These states provide a wealth of opportunity for a broker with vision commitment and the right partner on their side.

In addition to commercial industry licensing requirements you will need to ensure that you are licensed to do business in the state where the borrower is located. This means that if you are licensed to do business in Virginia and the borrower is located in Virginia you can broker any deal that borrower may have despite the location of the property. In most cases this requires a simple registration with the appropriate state government office. By becoming registered to do business in multiple states you will increase your geographical reach. This translates into a greater potential deal flow and more money for you. The only thing left is to devise a plan or locate a partner that can get you in the right place at the right time.

About the writer:nbsp;nbsp;The VEC Financial Group VEC is dedicated to providing commercial mortgage and business financing to property owners and entrepreneurs across the country. VEC Financial provides these services by connecting the right broker with the right borrower who ultimately finances with the right lender. For more information on how to join VEC Financial Group please visit our website.
http://www.vecfinancial.com

Colorado Has The Right Communities

Looking for the right community to purchase a home in? A place where you can raise a family and work. Perhaps a place that you can really call home? Colorado has consistently been associated with a high quality of living and that is largely due to the dynamic nature of the communities that make up the state. In this article we are going to take a quick look at a few of Colorado’ better known areas and what they have to offer to the average home buyer.

Boulder Boulder is the eighth largest city in Colorado and is located about 35 miles northwest of Denver. This is an expanding city that has become synonymous with higher education in Colorado as it is the home of the states largest university The University Of Colorado at Boulder. This area is also known as the home of the Flatirons the famous rock formations that stand majestically outside of the city. This is a great place to live if you are into arts and culture as the large university population makes for a lively local arts scene. Nestled at the foot of the stunning Rocky Mountains Boulder is simply a great place to live.

Fort Collins About 65 miles north of Denver lies the state largest northern population center. This is the area of the state where the Rocky Mountains merge slowly into the Western Plains and the transformation of scenery is absolutely amazing as the foothills make a beautiful background for this city’s homes and properties. One of the most beautiful aspects of Fort Collins is the 1000 acre Lord State Park which is ideally suited for active outdoor pursuits.

Arvada This beautiful town west of Denver is characterized by it’s well known historic homes and high quality of life. With over 3000 acres of greenbelt lands in this area it is a city that is proud of it’s scenery. This city offers excellent access to Denver via a number of different routes and is an excellent choice for commuters. Arvada is known to be quite a progressive city and is therefore suited to those who like to be actively involved with the development and future of their community.

About the writer:  Lane Hornung the team at Colorado Real Estate are elite real estate agents dealing exclusively with homes properties in Colorado. For the best in real estate service in Colorado contact Lane the team today.