Thursday, April 23, 2015

What's Really Happening In Banking

This was a story that I really wanted to put out back in the beginning of last year that actually happened during the latter part of the year. Things got hectic and it didn't happen. I thought that it was still important enough to share.

On a side note, I saw the most recent bank approval ratings a couple of weeks ago-and it was SHOCKING! The large banks-you know the main ones-are denying 86% of the loans they see-which was up from 83% the prior reporting period. 86% DENIED!!!! Wow.

Below is a testimonial from one of our closed clients. In it she described just how hard it was to get a loan. It is an amazing read. If you or anyone you know is trying to get a commercial loan they are LIKELY struggling, let them know about us. We close more commercial loans than anyone in the country and, we make the process MUCH easier. Check out the real life story below.....
"Thank you for saving us from a nervous breakdown.
Two (2) and a half years ago we attempted our first refinance on our building in San Francisco.
It was a nightmare. I decided to save money and do it myself. After the 4th rejection I began to get nervous, hundreds of pages of paperwork later and after the 8th rejection I was really starting to panic. My time had run out, the second was 3 months past due and my limited options were running out.
We had purchased our building in 2008 before the market crashed and when real estate values were at their highest. The building was a perfect home for my personal studio and to house my new business. We started with 15 students, 3 instructors and have since grown to over 150 students and 12 instructors. It was essential to find a solution to finance our building.
After the 10th rejection I was ready to give up and rent (almost). Finally the 11th bank approved the loan but with so many conditions that I am still weaning myself from their tentacles. One of their requirements was to blood test my business partner and myself for drugs and HIV! Really! The good news was that both tests came back negative. So, when we were ready to refinance again, I knew that I did not want to put ourselves through another grueling process and a friend recommended you, Excel Commercial Capital.
To anyone who needs help: they have so many resources that they too went through many banks and financiers and we did receive rejections but the difference was that they never lost hope so we didn't either. They also took care of the mountains of paperwork for each bank. We gave him one set and maybe once in a while another piece of information but nothing like I went through on my own.
The fee we paid was worth every cent. In the end, they found us an excellent loan, 30 years fixed on a commercial building with great terms, better than we had ever expected. Excel Commercial Capital is a blessing to our prayers and now our business can continue to flourish without the headache and worry of refinancing. Hannah P."

Amazing isn't it. This is real life. Banks have money but are heavily regulated and scared to lend aggressively lest they have to set aside loss reserves. We fill the gap and know the few banks or lenders that are aggressive for each situation and match the borrower strength to the bank that most fits. In the end, it leads to almost an 80% APPROVAL rate.

A big cry from the big boy banks. If you are ready to get a business loan or a commercial property loan at the best terms and with the least hassles, fill out my quick online Commercial Loan Application.

Have a great day! Ed

P.S. There are many more stories and successful closings to share. If you know someone who needs financing, don't keep me a secret out there. We charge nothing to review the deal and see if it qualifies and will give you sound advice on what is available. Call me or email me today at 770-650-7870 Ed@excelccc.com!

Thursday, March 12, 2015

4 Most Common Commercial Mortgage Mistakes Part 2

Continuing our topic from last week, today I will cover the last two of the four most common Commercial Mortgage Mistakes. I want to help ensure that you are doing your research and going with a lender who can help see the deal through from beginning to end. I'm here to answer your questions help you make informed decisions. What is your biggest challenge you are facing? Email or call me today so that I can assist you (770) 650–7870.

Mistake #3: Too little shopping early on, too much shopping later on. Customers decide to refinance or
purchase a property and go down to their local bank where their savings accounts are and apply. They
don’t shop around and compare. Then the bank turns them down.

Remember, on commercial loans even if you are a great borrower you may still get turned down by your local bank. Why? The property may not be good. They may have filled their quota for the month on commercial loans, or they may just not like to loan on the certain type of property you are buying. Don’t take it personally. But you should have applied at different type bank or utilized an experienced commercial lender who can have more flexibility to get the correct program for you.

At Excel Commercial Capital, we will package the deal, and know the right place that has an appetite for a transaction like yours, whether it’s in-house, correspondent or brokerage. This will give you the best chance for success. Our flexibility is key to getting  you what you want.

Almost as bad as just going to one bank and putting all your eggs in that basket is shopping around and
getting a commitment at terms you like that make the deal profitable and meets your goals and then
CONTINUING TO SHOP! You got what you wanted, life is short people, don’t be greedy.

There are numerous reasons for this. One, if rates shoot up, your deal will change. This could limit or even completely erase any profits from the deal. You tried to take the approval and get a rate an 1/8% (or 3/8% for that matter) lower and you end up ½% higher foolish! The old saying goes, “Bulls and bears make money, Pigs get slaughtered”. Second, the lender who approved you could change their terms. They may only have 30 million available for apartment loans and because you would not commit because you were trying to get a lower rate, they filled the commitment with other loans and now no one wants your loan.

At Excel Commercial Capital, the approval we get you has already been through the analysis process and is most likely one of the best deals you are going to get. Don’t be penny wise and pound foolish and lose the deal that would have returned you $500,000 in profits over 5 years just to try to get a payment $400 lower a month. Not smart money management!

HELPFUL TIP: Don’t look a gift horse in the mouth. If you know the profitability you want to achieve and the terms needed to get it and you get approved for that amount then be happy and book it. Don’t lose the whole deal over trying to make an extra $400 a month! Be smart!

Mistake #4: Loving the deal and ignoring common sense. “Pride goes before the fall”. I have seen people try to buy a piece of property, and lender after lender turns it down because the value is not justified or some other major problem exists. Yet, instead of realizing that smart financial people are telling you the deal is bad they persist to keep trying to buy it.

Sometimes even getting hard private money at exorbitant rates that will NEVER TURN A PROFIT for them. An old, wealthy friend of mine told me a saying he has, “People would rather be right then rich” and I see it all the time. Remember, banks and lenders are in the business of lending money. They want to lend money on deals that make sense. If EVERYONE says your deal does not make sense, THEN LISTEN TO THEM.

Get out of the deal or partner with someone who knows how to make it work or something. Don’t fall into ridiculous interest rates because you believe you HAVE to have this property. Again, heed advice and be smart.

HELPFUL TIP: Besides speaking to an expert BEFORE buying put pen to paper and make sure the deal makes sense. Remember what your goals are and what return on investment you are looking for. Then look at the worst case scenario. Can you handle it? If the only people willing to loan you on a property are charging you 14% are you sure you can make it profitable. Get your pride out of the way and get real with the numbers. It is better to eat a little crow and live to invest another day then throw it all away on a deal for ego’s sake. Avoid these 4 common pitfalls and your profitability will soar! At Excel Commercial Capital, we are committed to your profitability.

We offer:
Free up front analysis
A full range of products
Experienced commercial experts that know how to get deals done
Fast answers
Creative financing and best of all, we will analyze your potential transaction for FREE.

I hope this letter has enlightened you and helped you. Give us a call if we can ever be of assistance.
WITH RATES AT HISTORICALLY LOW LEVELS and the ECONOMY POISED FOR IMPROVEMENT there has NEVER been a better time to buy commercial property! I wish you the best.

If you have a commercial transaction you need help with, feel free to call me at 770-650-7870 or request a FREE, no obligation consultation.

Have a great day!

Ed

Thursday, February 19, 2015

The Four Most Common Commercial Mortgage Mistakes (And how to avoid them) Part 1 of 2

As opposed to mortgages on your house, commercial mortgages are all about Return on Investment (ROI). In buying or selling commercial real estate, the financing can make or break the deal. The best Commercial mortgage for you is the one that maximizes your ROI.

It seems obvious, but when it comes to shopping for a commercial mortgage it is stunning how little attention to profitability the average investor makes. In fact, I see the same mistakes over and over and often these mistakes lower, or even wipe out, the entire return on the investment. Below I will look at the first two of the four most common mistakes people make when choosing a commercial mortgage and how to avoid them so that you too, can fully realize the maximum return. Stay tuned, we'll be releasing the second part of this series next Thursday!

Mistake #1: Not having a clear goal for the property.

Incredibly, many people make investment decisions because someone told them about a great idea or opportunity. They never put pen to paper to even figure out if a profit is possible! Others buy property or investments and have no clear cut return they are shooting for or a game plan on how to get it. What is your goal? 20% return a year? How many years? Are you trying to buy a fixer-upper and hoping to renovate it and fully rent it out and sell it? When are you trying to sell it by and at what price? Is that possible based on the area it is in? Are you buying a property to house your business? How long do you plan to be there? These are all questions you need to have ironed out because they will affect your mortgage. If you are looking shorter term, possibly to buy something and flip it, then you will want a different type of loan then if you are buying something for your business that you want to someday turn over to your son or daughter.

HELPFUL TIP: Before you go into contract, run the deal by a commercial mortgage professional.    
That’s right; an ounce of prevention is worth a pound of cure. You seek professional advice in tax matters and law matters and you should seek advice in commercial loan matters you probably never went to school for commercial mortgage loans. Don’t just go on what Billy Jo told Bobby Sue (because Billy Jo is rich). Get expert advice BEFORE you commit! At Excel Commercial Capital, we will crunch the numbers for you and guide you in the optimum way to structure the deal. We can alert you to the pitfalls and even bring creative financing strategies to the deal to maximize your return. And we do it all free of charge!!!!

Mistake #2: Thinking only rate, rate, rate!

The lowest interest rate is NOT necessarily the best deal for commercial property. Amortization is just as important. Amortization is the length of time the payment will be factored over, the longer the amortization, the lower the payment. Depending on your goal, the lower payment yields you better cash flow and more profit per year better ROI. For example, a $500,000 mortgage with a 10 year balloon and a 15 year amortization at 5.5% interest rate yields a payment of
$4,085/month. The same mortgage with a 25 year amortization but a rate of 6% yields a payment of
$3,221/month. Same loan amount, ½ a percent higher rate but because of the longer amortization your

monthly payment is over $800 less per month. If the cash flow on the property was going to net you
$1000 a month at the 5.5% rate, this extra $800 a month on the longer amortization 6% rate yields you an 80% better return!!! And that is PER MONTH! WOW!

HELPFUL TIP: When comparing approvals take a calculator and actually calculate the payment on the different approvals. Don’t just look at rate look at cash flow and profitability and then compare these to your goal for your investment. Also, ask your commercial mortgage professional about unique loan programs like a nonrecourse loan. This is one of today’s hottest products and your local bank does not carry it. (For more info on this incredible product call Ed Beard Jr. at 770-650-7870 or email me at Ed@excelccc.com for a flier that explains the pros and cons of nonrecourse loans).
You may be surprised at what you find when you just crunch the numbers and get good advice!

We offer:

Free up front analysis
A full range of products
Weekly updates every Friday so you know what is going on
Experienced commercial experts that know how to get deals done
Fast answers
Creative financing and best of all

You lose nothing but gain everything!

I hope this letter has enlightened you and helped you. Give us a call or fill out our quick form if we can ever be of assistance. WITH RATES AT HISTORICALLY LOW LEVELS and the ECONOMY POISED FOR IMPROVEMENT there has NEVER been a better time to buy commercial property! I wish you the best.

Wednesday, January 28, 2015

Construction or New Business…

I want to talk about deals where everything is a projection-new business loans or construction loans. Again, to me, this gets down to common sense underwriting. Two scenarios you will come across a lot in commercial, the guy who is starting his own business or wants to develop a commercial piece for the first time and the builder turned developer that wants to build out a community. In both cases, you need their business plan and the plans and the specs for the build-out. When looking at this deal you now need to focus on the assets, track record, and financial standing of the borrower- THIS becomes critical!

Think about it as if you were lending your own money. You have a doctor who wants to start a restaurant chain or a builder who thinks he can develop an entire community. Can they do it? Who knows? It is possible. But should you be the one taking all the risk? No way. It is not your dream, it is theirs. You just need to make sure that what you loan will be paid back because on commercial loans you do NOT want to foreclose.
Well, if the plan does not go according to schedule (and it never does) the only assurance you have that the money will be paid back is the financial wherewithal of the borrower. It is critical! That builder will need deep pockets or to team up with someone with deep pockets because the bank will want to know that they can not only put the 25% down, but make the payments on the loan for one year just in case the plans don’t go according to the rosy business plan. Zoning requests can take a long time.

When you think about it, it really does make sense. You don’t want someone who has never waited tables or worked in a restaurant running a restaurant. You may get the loan done, but only if they bring in a partner or hire someone with experience to run the show and their track record needs to be good also. The reason the rich get richer is that the rich have deep pockets and can leverage bank money and are smart enough to fill their gaps with competent people. If you get someone who is not rich but wants to be you need to turn consultant and explain to them why they need to team up with someone who has the money and experience they lack. When they do, they too can break the chains of mediocrity and realize their dream. Nothing is better than seeing a dream come true. We have the opportunity all around us, we just need to be bold and bring common sense to the transaction.


If you need help assessing your financial assets and what's needed to get funding, give me a call (770) 650–7870 or fill out our quick form to request a free, no obligation consultation.

Friday, November 7, 2014

Mortgages for Office Buildings

If you’re look to purchase an office building to start your own business or rent to other businesses, or you’d like to refinance on your office building, a commercial loan can help you achieve those goals. In order to start to process, though, there will be some basic information that you’ll need to provide the commercial lender to obtain an office building mortgage.
  • Your credit score and credit report. Your credit score and credit report are two of the most important tools for a lender. Lenders use your credit score and report to evaluate whether or not they’d like to do business with you. Many people think because they are using a corporate form of ownership, they don’t have to show their credit. This couldn't be farther from the truth. Even if it’s a non-recourse loan the underwriter wants to know who they are lending to. Because your credit is so important, it’s crucial to know and understand your report. You can authorize a lender to pull your credit, but many borrowers opt to pay a small fee to pull it themselves. Be sure you have a recent credit report, so that the lender has up-to-date information when assessing your situation for the office building mortgage. Be prepared to discuss any financial “bumps” that appear on your report, such as bankruptcies or account delinquencies.
  • Your capacity to pay. It’s very important to any commercial lender that you are able to make your monthly payments on the office building mortgage. Be sure to record relevant financial information about your office building to show your lender that you have the means to make your payments. Filling out a Personal Financial Statement will provide a lender with the information they need to assess your situation.
  • Know your property and your business. Make sure you know the facts about the office building you’re pledging as collateral. How big is the office building? What kind of business or businesses occupies the space? How many people work in the building? All of this information will help your lender to evaluate your circumstances to further qualify you for the office building mortgage.
  • Be prepared to discuss past financial obligations. A commercial lender will want to know how you've handled past business loans and mortgages. If you've had some financial issues in the past, be ready to talk about it with the lender.
  • Be prepared to discuss the use of funds in detail. The commercial lender will want to know how you plan to use the money, whether it’s purchasing an office building to lease space to other businesses or refinancing your mortgage to improve a structure you already own. The more information you give the commercial lender, the easier it will be for them to finance your request for an office building mortgage.
Feel free to call or email Ed Beard, Jr. at 770-650-7870 / Ed@excelccc.com  or visit my website if you have any questions or need some financing for your property.

Wednesday, November 5, 2014

The #1 Rule of Business

All the leadership books are great, all the one-minute manager stuff is great, but none of it matters if you forget the number one rule of business. Please, listen to me Mr. Business Owner or Mr. Real Estate Investor- here it is.

YOUR INFLOW MUST EXCEED YOUR OUTFLOW!

Mind numbingly obvious but so obvious to miss. If your sales are down and your outflow is exceeding your inflow you better right that ship quick. The quicker the better, and don’t hold out hope for the next big thing or deceive yourself into thinking that it is just around the corner. You must get your situation right assuming worst case and then everything else is bonus. I have learned this the hard way.

Well that rule makes commercial lending pretty obvious to me. Listen, most insurance companies will not give you a life insurance policy if you have cancer and banks will not loan commercial money to a business that is sick. Pretty simple.

If you want to know whether you have a good deal, get three years operating statements and see if the business is profitable. If their net income after putting the add-ins back in is 1.25 times higher (generally) than the new proposed payment, then you probably have a deal. If it is not, you better have a lot of strong ‘other’ factors. So if a business shows a net profit-not gross sales but NET income-of $12,000 a year they can qualify for a loan payment of about $800 a month. Not a lot. DOES NOT MATTER WHAT THE PROPERTY IS WORTH.

This messes brokers up because they see a property worth $1,000,000 and the buyer only wants  $500,000 and they think it is a slam dunk. But if the business only shows $12K a year net income you can NOT GET IT BOUGHT CONVENTIONALLY. The guy cannot afford the payment. Foreclosing on  commercial property is not a win for the bank. They may never be able to dump the property. It is not like a residential that is very easy to sell. They must be able to afford the payment.

Now, you can get them done stated or if the LTV is low enough-private money-but realize that the costs involved will be high on these types of programs, even with 700 credit scores! And as a consultant to them, I would not advise them to be paying $4000 a month when they are only making 12,000 a year. Look at the financials if you want to know the deal. You really do not even have a deal if you don’t have their financials. The best thing would to do would be to let us analyze the deal – it’s what we’re here for!  

Call me at 770-650-7870, visit my website or email me at Ed@excelccc.com

Thursday, October 23, 2014

Are Banks Really Loosening Their Lending Guidelines?

Listen to the media spin the tale and, you would think that banks have loosened their guidelines and, businesses are getting money easily again. If you look at the numbers, like the SBA’s statistics on Application approvals vs. denials, you will see that despite healthier banks, lending guidelines have NOT loosened. What gives?

It is true that banks are the healthiest they have been in years. More banks are lending now than a year ago. Businesses are generally a little healthier than a year ago so that also can help improve the approval percentages. Nearly 80% of all applicants STILL are getting denied! To understand why, you need to understand that banks have an entirely new underwriting criterion to worry about called Regulatory Risk. What is “regulatory risk” as it applies to banks and what bearing does it have on loan approval? Let me explain.

Traditionally, when a bank underwrites a loan they look at the risk in the transaction, the property, the cash flow, the borrower credit, cash reserves, etc. When all these factors are weighed, if the loan looks like a safe loan, the bank will move forward with an approval. That is traditional underwriting risk. It is normal and it is healthy. When banks get too loose and, don’t underwrite prudently, that is when they can get into trouble. There is a new risk that banks must deal with called regulatory risk. What this is, in a nutshell, is the risk of the loan being called risky by the regulators during their audit. If the government regulators determine that a loan looks risky, they will make the bank set up loss reserves equal to the potential loss on the deal. So a business only loan with no collateral for $200,000 that is deemed risky by a regulator could force the bank to have to tie up an EXTRA $200K in loss reserves. In other words, it could cost the bank $400,000 in capital to loan the $200K to that business only loan. That is WAY too much risk for a bank-any bank. That is why you see banks key in so much on collateral now; it helps offset the potential loss reserve requirement. If the same loan had $200,000 of discounted real estate collateral, even if the regulator felt the loan was risky, there would be very little loss reserves needed to be set aside since most of the losses could be offset by liquidating collateral.

The Lehman crash and financial meltdown led to a large increase in government regulations of banks and MANY OF THOSE PROVISIONS STILL ARE GETTING PHASED IN. That means that this year and next, the regulations will continue to TIGHTEN, not loosen. With this fact on the horizon, it is easy to see that banks will continue to lend with handcuffs on for at least a couple of more years. So is all lost? Is there any good news in this?

The answer is YES, there is plenty of good news. First, good loans can still get done because banks are healthy and good loans are still getting done. The better news is the options outside of banks are VERY strong, probably the strongest they have been since 2007. Private money funds have trillions of dollars to deploy. The conduits and life companies have plenty of money and aggressively want to deploy it. I am getting a foreign national apartment deal done at 75% LTV and the rate is going to be fixed in the 3’s! WOW! The non-bank sources are really strong, the banks are healthy and are lending, albeit it with caution. Rates are ridiculously low. And businesses in general are doing a little better. Put it all together and it adds up to a good time to get financing for commercial properties or for a loan for a business to expand or purchase. If you or anyone you know needs financing for commercial loans or for a business, give me a call at 770-650-7870 or visit my website to start the application process. We close more loans than anyone, and we have the sources and resources to help you get the money you need. Give me a call today!

Ed

P.S. Did you know we have our own private money fund? We specialize in deals that need to close quickly for a variety of reasons. Note discounts, purchases out of foreclosure or, just for when someone needs to close quickly. We are a GREAT resource up to $1.5 million. We have plenty of capital to deploy right now and are actively lending on all commercial asset classes-we even do golf courses and marinas! Give me a call today to run your next private money deal by us. Up to $1.5 million we can do internally, above that we can partner with lender partners that are very strong and operate with the same speed. So give me a call today at 770-650-7870.