Stated Non Conforming Commercial and Investment Real Estate Loans Nationwide

Non Conforming Real Estate Loans

Will lend from $50,000 to $5,000,000 on commercial and investment real estate nationwide at competitive rates and terms. If your project does not qualify for bank financing but you do not want hard money terms this could be the program for you.  Typically to qualify for bank financing there is a minimum loan requirement, a minimum credit score, a minimum debt service coverage ratio, as well as other minimum requirements that you just barely did not meet. With make sense underwriting you can qualify for good rates and terms. This lender deals with commercial mortgage brokers nationwide.

Minimum Loan Amount

The minimum loan amount is $50,000. For commercial real estate this is very aggressive. Most banks have a minimum loan amount of $250,000, $500,000 or even $1,000,000 or more. Many agency programs start at $2,000,000. Therefore, many borrowers looking for small cap commercial funding will have a hard time acquiring the financing they need. With the low minimum requirements this fund is able to finance many borrowers that are otherwise left out. This is a great option for commercial mortgage brokers to add to the programs they offer.

Minimum Credit Score

The minimum credit score is 580. There often is a misconception by borrowers in that they believe that if there credit score meets the minimum they qualify for financing. This is rarely true. Rarely! The minimum credit score is only used to deny a loan, rarely to approve a loan. What is most important is the actual credit profile. A client with a 720 credit score and only one tradeline for $300 that is as an authorized user is not more credit worthy than someone who has a 580 score with ten accounts all maxed out yet they have a perfect payment history for the last 2 years. With that said the the fundability of any project is based on the toatal package. A project where; the loan to value is low (the equity is high), the debt service coverage is high, the property is fully occupied and has been for years with long term leases, and the borrower has substantial experience owning and managing these property types will most assuradely be financed in this program, even if the borrowers score is below 600. Likewise, that same borrower with no management or ownership experience, maximum loan to value project with low debt service coverage will not qualify. Most Commercial mortgage brokers understand the opportunity for their clients with less than perfect credit.

Minimum Debt Service Coverage

1.25% debt service coverage ratio is pretty standard in the industry. This program adheres to that for projects where the borrower has low credit scores. But if the borrower has good credit and experience owning and or managing the property type, the property could be vacant with no immediate debt service coverage and the project could qualify for financing.

Stated Income

Many programs require the borrower to verify their income. These programs often have a “global” debt service coverage ratio. This means tha in addition to the property generating enough income to service its mortage and cover all debts associated with it plus make a profit, the lender will review the income and expenses of the borrower plus all of the prooperties they have financed. The total income and expenses of all the borrower owns will be analyzed to determine if there is suffifient income to cover all expenses plus make a profit. Because this is a steted income program the only thing the underwriter reviews is if the property has an acceptable debt service coverage ratio. No tax returns are required in most cases. In the event they are it is just for post closing loan commitment for the file. Mortgage brokers like this option.

Property Types

Most property types considered. Any properties owned or being purchased for business and investment purposes are considered. This includes non owner occupied residential one to four unit properties, multifamily, mixed use, single and multiuse properties. Hospitality, churches, and funeral homes also are acceptable. Excluded projects are land, fix and flips, gas stations and any property with environmental hazard.

Other Underwriting Considerations

There are many other items that go into an underwriting decision such as down payment amount, cash reserves, borrowers ownership and management experience and property considerations . The good thing about this program is that given the entire picture there is flexibility to make exceptions for compensating factors. An example of this was an individual who was co owner of a home with his son, that he let pay the mortgage but the son was regularly 30 days late and sometimes more. The borrower was in insurance executive who made over $200,000 annually plus had liquid assets that were greater than $3,000,000 and he was looking to borrow $1,000,000.00. We could easily see that the problem was the son as all other debt was paid as agreed. No brainer even with the low credit score.

Finally

If you are a commercial mortgage broker and have a project that you need stated income, non conforming commercial or investment real este financing that offers bankable terms for the un bankable borrower.

Share

Short Sale and Keep Your Income Producing Property

Short Sale Multifamily Property

Your rate is high, you may be facing foreclosure. Your lender will not work out a new plan to reduce your payments. Today there is a way out to reduce your payments make money with positive cash flow and keep your property. It is a short sale!

That does not make sense you may say. If you sell your property for less than you owe your current mortgage company, you no longer own the property. You sold it.

This is true.

Next if you sold it how can you receive a positive cash flow on property you just sold?

Sale Lease Back

There are companies that will buy your home from the bank if the bank is willing to negotiate a reduced price no more than 60% of the market value. The hedge fund will by at from you with the bank accepting less than what is owed to them. This is called a short sale. The company will then allow you to lease back your income producing commercial real estate based on the lower price than they paid for it. This allows you to have lower payments and profit from the increased cash flow. Though you no longer own the property the hedge fund will execute a lease back agreement that gives you the option to purchase the property within 10 years based on the value you originally owed on the property. This is a win – win win proposition.

Win Win Win

The bank wins even though they accepted less money than what was owed to them because they got a non performing asset off of their books. Too many non performing assets reduce the value of the bank and the value of its stock, increases regulatory activities and causes to have more assets in reserve than they would otherwise be required to. There is also no telling the cost to foreclose and maintain the property before it is actually sold.

The hedge fund wins as they purchase an income producing commercial property far  below value. The asset produces enough income to easily provide a good return on its investment. The sale lease back puts free management in place and a promised appreciated return on their investment of at least 60%.

The property owner wins because they are losing the property to foreclosure and the property is currently not generating the income to sustain the current mortgage. Now they can receive a positive cash flow based on much lower financing payments. Otherwise the owner would lose all rights to the property and no income. The sale lease back arrangement allows the property owner to regain ownership in 5 to 10 years.

Finally

This short sale / sale leaseback program for income producing commercial real estate is a good opportunity for real estate investors to keep their property and increase their profitability even after a short sale transaction.

Share