My New Blog

Where?: Laguna Beach, FL

Type: This was the purchase of an owner-occupied office building.  Borrower occupied 70% of the building with his business, we rolled in costs and did a loan amount for $920,000!  He had been denied elsewhere but of course, we got him done on an SBA 7A loan.  We are experts on SBA loans and can close them much quicker than most lenders out there.  And with fast approvals and terms in writing, we are a great source for these loans.  So if you are tired of denials and long delays with pretenders who do not understand SBA financing, give us a call and let us get you CLOSED!! Call us today at 1-800-557-0682

This is so much better than a margin account!

This is a loan against a persons stock account.  Better than a margin account, these loans have NO CALLS, have fixed rates usually under 5% for 3 years with interest only payments payable quarterly.  There is usually very little qualifying, the stocks are the qualifier.  The stronger the stocks in the portfolio, the better the rate.  These loans can close quick, often in less than a few weeks.  YOU STILL KEEP OWNERSHIP OF THE STOCK, you just allow it to be liened.  This deal was done for a developer who needed the money to keep the project going while his financing came together.  We were able to tap his stock accounts without liquidating them- a win/win for all involved! We also did one for a franchisee needing to have the money for a down payment.

When you need money QUICK-call the experts at Commercial Capital. Our loan officers are ready to get you started. CALL 1-800-557-0682

Brett Swearingen

The Mortgage Bankers Association reports that commercial mortgages were among the best-performing loans and leases held by banks and thrifts in the last three months of 2009.

Commercial and industrial loans had delinquency rates of 4.39 percent, followed by commercial mortgages at 5.06 percent.

Construction loans posted the highest delinquency rate at 18.56 percent, followed by single-family mortgages at 12.49 percent.

Source: Associated Press (03/09/10)

CHARGE THE HILL!!!

I see a troubling trend amongst mortgage people and Realtors and it is one that has no upside, everyone is counting on economic recovery to get their business back. When you do this, you give control of your destiny to something you cannot control-the economy- and that is DANGEROUS!

First off, it is highly unlikely that we will get back to the numbers we saw in 2005/2006. There are more unemployed, people’s credit is generally worse, and credit standards have tightened immeasurably. Foreclosures are still rising, they have not begun to even subside. We have a long way to go to go through that. Those are facts and only the most storied eyed dreamer ignores those facts. That being said, there is a TON of business going on. In fact, there is more business going on in your town and marketplace then you can possibly write up! And everyone else is sitting around waiting for the pickup as well, so the time is ripe to attack.

Deploy those marketing strategies, add new marketing strategies like social media, call old customers and update your database-attack this market. Nothing good ever came from sitting and waiting. This is the best time to gain market share, while everyone is sitting and waiting for things to improve. While they are doing that, you can build a dynamic business.

We have a choice. We can engage, or we can withdraw. Whether in war, in business, or in personal relationships, we can choose to engage, often at risk of physical or emotional harm, or we can withdraw. Withdrawing may allow us to escape momentary pain, and may be our reaction in an attempt at self-preservation. What we often miss in return is adventure, love, victory, freedom, and the richness of life that comes from the willingness to risk. A wise man once said that in order to gain life, we must be willing to lose ourselves. Charge the hill! It is much better to risk defeat then never to have attempted victory.

Brett Swearingen

Baby Boomers mostly, are saying good-bye to a roller coaster stock market and rolling over their retirement plans without tax liabilities into Self-Directed IRA’s, using the money to open their own business or invest in commercial Real Estate. We have 3 Firehouse Subs loans and another deal for the purchase of a convenience store currently in our pipeline, where their down-payment money is coming from their IRA’s.

Although this product exists in the marketplace today, it is usually done by large companies that stay on as custodians limiting your access to the funds and incurring additional fees.  Or, you seek to have your accountant facilitate the transaction but again, not being staffed to handle such requests the process breaks down. Our program increases your flexibility and makes the process seamless.  We have a tax accountant and tax attorney on staff and are staffed up to handle the volume. Here is how it works.

Client faxes in their current retirement statements and we get to work.  There is no cost up front on this program. We handle the creation of the LLC or trust, draft the documents needed to roll over the funds with no tax liability, and prepare the transfer form. The client signs the transfer form and we handle the transfer. Once the monies are in your account, you then have 60 days to deploy the money into a Real Estate investment or business to avoid the tax consequences. The whole process takes no longer then 3 weeks usually. We close one of these almost every week.  And the popularity is exploding.

The uses of this product are incredible. You can roll over your IRA, pay off your primary residence and hold a note in the LLC or trust and pay YOURSELF interest. YOU become your own mortgage owner! You can choose your interest rate and terms and you STILL get to write off the interest on your taxes.  Many people are using this to buy a business combining the money in their IRA with an SBA loan. You can roll it over and put the money into a commercial property like an apartment complex and again, combine it with a normal commercial loan to create maximum leverage. Or, put the money into a hedge fund that securitizes the money against Commercial Real Estate at low LTV’s and GUARANTEES 11% returns (call to dicuss that fund with me).  Try to get a guaranteed return of 11% in the stock market anymore!

To get started it is simple, give us a call at 800-557-0682 to discuss the process and I will help you from there. Fax a few forms, sign a few documents, and you are off and running controlling YOUR retirement from then on with no tax liabilities. WOW! Call us today at 800-557-0682.

This was a restaurant start-up loan for a Firehouse Subs franchisee, business only, no real estate involved. We close at least one of these for Firehouse Subs every single month. We roll in equipment, working capital, tenant improvements and much more. If you are thinking of buying into ANY franchise, Commercial Capital is the number one commercial funder of franchise loans in the country (among commercial brokers), if anyone can get your new business off the ground, we can. 

Call us today at 1-800-557-0682

Brett Swearingen

Where? North Richland Hills, TX

This was for the purchase of a restaurant and we used an SBA 504 loan which gave the borrower excellent rates. From the time the client signed our term sheet to closing was 45 days which is VERY quick for an SBA loan with Real Estate involved. We are not just a broker padding fees, our clients usually get the same bank rates as they would at their local bank. The big difference between our quote and theirs?  We Actually Close!

To get your next loan closed, please call Commercial Capital today at 1-800-557-0682.

Not literally, though a client could have assets in gold. But figuratively, many people disregard the Personal Financial Statement but it is a MINIMUM requirement for me when I am reviewing a loan scenario for a client. The reason goes way beyond the obvious qualification reasons.

The Personal Financial Statement (PFS) states all their assets and liabilities. Not only does it tell me KEY qualifying criteria like cash on hand for this transaction, and almost as critical, reserves on hand, but there is likely other transaction potential in that PFS. Having this document allows me to close more loans than the average Loan Officer, because I can bring a full suite of products to the de al. For example, I have closed 3 loans this year where the down payment money came from a rollover of a Self-Directed IRA (SDIRA). We have an exclusive product that actually allows the borrower to completely control the funds, there is no custodian and he/she can roll the money over into either a Real Estate Transaction or a business purchase with NO tax consequences! We have 3 Firehouse Subs transactions right now for example, where borrowers are getting the money down from this SDIRA product. We probably close about one of these SDIRA’s a week. If you have clients that need cash for business or Real Estate purchase, this is a very hot opportunity.

Call me to go over your options.

Brett Swearingen

800-557-0682

Many business people and investors are getting denied by local banks because they lack collateral. Even though they are buying an ongoing cash flowing business, the banks are still requiring them to show collateral equal to 50-100% of the value of the loan depending on the deal and the bank.

For example, John wants to buy an existing, cash flowing business for $400,000. It is a business only transaction, this business is currently renting the building it is in and there is no real estate involved. The bank is willing to give him up to 80% of the purchase price on an SBA loan ($320,000 loan amount in this example), but they want him to show collateral of $300,000. Let’s say the business has equipment/inventory worth $100,000. They would discount that collateral based on what it is (10% value for restaurant equipment, 50-70% value for Medical, etc). Let’s say this equipment was discounted to 40%. This means he has collateral coverage of $40,000 as part of this purchase. Still, he is short $260,000 from what he needs to show. This shortfall is most typically met by other real estate that John does own. Let’s say John has a primary residence worth $300,000 and he owes $200,000 on it. The lender would look at 80% of the $300,000, or $240,000 and subtract what he owes of $200K to give a collateral amount of $40,000. So, they would lien his house for $40,000 and credit John with $40K of collateral but this would still leave John $220,000 short on collateral(needs $300K, gets $40K from purchase and $40K from house). If John has no other collateral, most banks would deny John’s loan because he does not have enough collateral EVEN though the business appraises for $400,000, cash flows to support the debt and John has experience, great credit and the $80,000 to put down.

Surprised? Let me explain why this is happening. Banks have to loan money to make money BUT they are also being regulated hard by the Government. They are being graded now based on their debt outstanding compared to collateral. If the debt is in default or it is UNSECURED, it goes straight to the “bad” side of the ledger. If the scales tip to much to debt, the FDIC can come in and take over the bank. Many of the banks being taken over every week are actually paying all their bills, but their debt levels have gotten to high. So when a bank does an unsecured loan they have to want that deal a lot, because it will make them look BAD to the government. It is ironic isn’t it? The government is hammering the banks telling them to lend but it is the fear of regulation from the government keeping the banks from lending-the ultimate Catch-22! So are business only transactions dead?

NO! WE HAVE LENDERS WHO WILL LOAN TO 85% ON AN SBA BUSINESS ONLY LOAN NATIONWIDE WITH NO COLLATERAL REQUIREMENTS! You see, the collateral requirement is NOT an SBA requirement, it is a bank requirement. An approved SBA lender CAN write business only loans without the collateral requirement-there are just very few who do. Now, this is on existing businesses only, not start-up. But this loan IS available.
So, next time you have a person wanting to buy a business, give me a call. I will pre-qualify the loan and I have the experience to quickly determine what can be done to get them closed.

Call Brett Swearingen or his team for more information. 800-557-0682

The Next Shoe to Fall-Commercial!

I must have heard this statement about 100 times in the last 6 months….BUT THE PEOPLE SPINNING THAT ARE MISSING THE BOAT!  The shoe has already fallen….commercial loans today are being underwritten almost at their historical average-a 10 CAP Rate. 

You may find some local banks underwriting to an 8.5 CAP but most everyone is getting close to a 10 CAP. A 10 CAP is the historical norm for commercial pricing…loans are being underwritten to this norm by many national lenders at this point-meaning, the drop has already been PRICED IN! For those who are asking, what is a CAP rate and what am I really talking about? Let me explain.

The main determinant of commercial value is the cash flow of the property. If you have a cash flowing property, underwriters will lien heaviest on the cash flow valuation over comparable sales, or cost. You can have two properties in the same town, exact same size, but if one is occupied 100% and is cash flowing at 2 times debt coverage and the other one is cash flowing at 1.2 times debt coverage, the 100% occupied will not only appraise for more-it will sell for more. Comparable sales are not a very good determinant unless the comp property cash flowed similarly to the subject property. So back to CAP Rate. The CAP Rate is the Net Operating Income (NOI) divided by the sales price. A property that has an NOI of $200,000 a year that is sold for $2 Million has a 10% CAP Rate ($200K divided by $2 Million=.10 or 10%). Conversely, if you know the NOI of a property, you can divide it by .10 to get a feel for where a property will worst case get appraised at. The reason I close so many loans is that I crunch the numbers and won’t take deals that won’t close. Now many reps at Banks and lenders do not really get CAP Rates-they just look at DSCR, that is why you will send a loan in that you think will work and the rep likes it but when he takes it to credit committee it gets tanked. Or the appraisal comes in low and the deal dies there. Many lender reps and bank reps have no clue about this. But back to CAP Rates!

In 2007 lenders were underwriting to a 7 CAP rate and in certain markets, like CA, they were even going as low as a 5.5% CAP rate-which was crazy-a true market top. Meaning that same property we mentioned above, with cash flow of $200,000 NOI in 2007 would appraise for $2,850,000 in most areas and as high as $3.6 Million in CA. Today, just $2 Million. The market has already adjusted!  The shoe has already been factored in.  I still see major Commercial Real Estate chains pricing these properties at a 7 CAP on their listing flyers. Only a fool would pay that today. I just got a deal across my desk from one of the strongest investors I have ever seen, $4 Million liquid, well over $100 million in cash flowing property, this was a purchase of an investor commercial property and he was getting a 12 CAP. The property cash flowed at 2 times. It was in Ohio, and he was experienced and knows what to pay, that guy will never lose money on that property unless the government goes insolvent and the whole game gets shut down. Assuming normal markets, that is a very safe play. 

Real Capital Analytics, one of the premier providers of commercial real estate data, just reported that commercial property values have RISEN over the last few months. Kind of confirms what I am saying. We may not have bottomed in commercial, but we are very near it. Probably just as close to the bottom as residential (ask yourself this, in your marketplace, is the average home priced where you could rent it out profitably while carrying a normal mortgage payment? If not, your residential market has not bottomed yet.) QUESTION: But what about all the commercial notes coming due?  Won’t that kill the market? I don’t think so and here is why, there is a HUGE amount of activity in “note buying”. Banks have been dumping commercial paper at huge discounts and there are trillions of dollars sitting there gobbling it all up. IF the FED takes over a bank, they move all the paper in a weekend. There is no shortage of money for buying notes.

USA Today reported on 4/20 that “Nearly $14 billion in loans were modified in the last six months.
Investors also have been aggressively buying commercial mortgage-backed securities (CMBS). Research firm Trepp predicts that $25 billion in CMBS will be issued in 2010.”

This further confirms what I am saying. The biggest threat to commercial is not the notes coming due, it is no more a threat at this point than the foreclosure problem in residential. A problem-yes but one that is working its way through because the banks are willing to modify, and the trillions are sitting there ready to buy the paper. The biggest threat is the economy because the more vacancy, the less cash flow and the worse the property will appraise. So vacancy is really the big fear. If you think that the economy has turned, and there is a lot of evidence to support it, then now is the time to buy commercial property.  Now is the time to get aggressive in commercial. I am telling you from where I sit, there is more business happening than I can write. SBA Loans, Franchise Loans (leasehold only), experienced investors, refinances, it is all happening. Commercial is not about to bottom, commercial already has bottomed and all the experienced people I talk to are slammed with deals. It is a GREAT time to be in commercial!

Brett Swearingen

brett@ccofok.com

P.S.  Did you know we are averaging about one commercial closing a day?  Most of it is getting closed at NORMAL COMMERCIAL RATES through banks and lenders who are still lending.  Yet 80% of the loans I close got shot down somewhere else first.  If you want to get your commercial deal closed, call me or any of our loan officers at 800-557-0682.  There has never been a better time!