Commercial Mortgages Everything You Need

Commercial Mortgages 101: Everything You Need to Know to Create a Winning Loan Request Package

With real estate prices at their lowest in years and the economy poised for a rebound, it’s an opportune time to invest in commercial real estate. But credit and financing issues can still pose challenges that prospective borrowers must overcome in order to get the money and mortgage terms they need. Commercial Mortgages 101 is a step-by-step guide for both real estate investors and mortgage brokers, offering insight, practical tools and a thorough overview of commercial mortgage underwriting

List Price: $ 21.95

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Commercial Mortgages 101: Everything You Need to Know to Create a Winning Loan Request Package

With real estate prices at their lowest in years and the economy poised for a rebound, it’s an opportune time to invest in commercial real estate. But credit and financing issues can still pose challenges that prospective borrowers must overcome in order to get the money and mortgage terms they need. Commercial Mortgages 101 is a step-by-step guide for both real estate investors and mortgage brokers, offering insight, practical tools and a thorough overview of commercial mortgage underwriting a

List Price: $ 21.95

Price: $ 21.95

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Commercial Land Loans Problems

by Gold Beach Real Estate

Commercial Land Loans – Problems and How To Avoid Them

Article by Elaine Berry

Commercial Land Loans – Problems and How To Avoid Them – Finance

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Commercial land loans – that is, financing of land for commercial development – are often quite a lot harder to get than other kinds of land loan, or other types of real estate financing. Requests for commercial land loans are often treated with considerable caution by banks and other financial institutions. The main reasons for this are:

1. The question of security – the bank only has “dirt” to secure its loan. Land does not in itself make income and so cannot in itself service a loan.2. There are considerable political and economic risks involved in raw land that has not yet been approved by regulatory agencies.3. Commercial land developments are by definition financed at the beginning of the project life cycle, making them the most speculative and thus the most risky.

In actual fact, developing land from its raw state into something on which you can site a commercial project is the most exciting and potentially profitable real estate activity in which you can be involved. So it’s worth finding ways to manage the risks. Here are some suggestions as to how to maximize the financing.

Take as much time over closing the deal as the seller and/or the market will allow. Ideally you want to complete the entitlement work before you close. In practice, it is seldom possible to do this, but the closer you can be to being fully entitled and permit-ready, the more leverage you can generate for your financing. Do all you can to avoid bringing in third-party equity. You should endeavor to retain 100 percent ownership of the project at the initial stages. This way you avoid diluting the profitability of the project and increase its leverage potential. Commercial land loans are usually completed very efficiently. Nevertheless you need to ensure you allow adequate time for the period of application. If you are in a hurry for instant cash initially, raise it by taking out a hard money land loan. This enables you to take your time and negotiate the best deal. Explore the possibility of getting funds set aside in a land loan for pre-development costs. If you can use this to transform the land from “raw” land to “entitled” land, you will greatly enhance your ability to raise finance. It should also increase the LTV (loan-to-value) ratio you can attract. For completely raw land you will be fortunate to get 50 percent LTV and it can often be as little as 35 percent.

Commercial land loans are the only type of real estate financing for which the options have not increased in recent years. For most other types, there are far more sources you can look to for your loan. Nevertheless, if you have a well-thought-out project, you will certainly find lenders keen to accommodate you. Just adopt every means you can to make your project as attractive as possible to potential lenders.

About the Author

If you are looking for a commercial land loan and are worried about the credit crunch, visit http://www.bizwrite.co.uk/realestate/lending.html to find out how you can access the biggest selection of lenders in the country and get instant multiple loan offers from qualified lenders.

Use and distribution of this article is subject to our Publisher Guidelines
whereby the original author’s information and copyright must be included.

Elaine Berry

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Related Commercial Land Articles

Ontario Commercial List User’s Committee

by Gold Beach Real Estate

Ontario Commercial List User’s Committee – Best Practices

Article by Martin Rosenbaum, Lawyer

Ontario Commercial List User’s Committee – Best Practices – Law

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The Commercial List is a specialized Commercial Court within the Ontario Superior Court of Justice in Toronto restricted to commercial and insolvency matters. The Commercial List Users’ Committee is a committee made up of members of the bench who sit on the Commercial List from time to time, members of the bar who practice regularly before that court nominated by relevant Bar organizations and representatives of the Court administration. The Commercial List Users’ Committee meets regularly to consider improvements to the operations and organization of this specialized court. The Users’ Committee makes recommendations to the Regional Senior Justice and the Chief Justice of the Ontario Superior Court of Justice.

The Commercial List Users’ Committee established a Best Practices Subcommittee in the fall of 2004 to collect good ideas from the users of that court to improve systems and processes in commercial and insolvency cases. The Best Practices Subcommittee has made it possible to bring forward non-controversial changes to improve practice and procedures on the Commercial List for the benefit of the stakeholders represented by those who practice in that Court.

The work of the Subcommittee is a continuing process which we hope will lead eventually to a relatively complete set of Best Practices that would be formulated for the assistance of users of the Commercial List. Initially, the recommendations of the Subcommittee, as adopted by the Commercial List Users’ Committee, do not have the force of the Rules or the Practice Direction but they improve the systems and procedures used by the Court. However, some recommendations might eventually evolve into a future generation of the Practice Direction.

The Subcommittee regularly requests and obtains input from various users and constituents of the system, including, the judiciary, registrars, court administration and members of the bar. Before any suggestions are accepted, the Subcommittee circulates them to all members of the Users’ Committee for comment. The members of the Users’ Committee in turn circulate the suggestions to their constituents for comment. The comments are then accumulated, reviewed and distilled by the Subcommittee for further refinement, acceptance or rejection by the Users’ Committee. Participation by all constituents in the process is encouraged. Many ideas come from experience in other Courts in Ontario and elsewhere. The Subcommittee is an available forum for all constituents to present ideas and suggestions to improve the workings of the Commercial List.

RECOMMENDATIONS ADOPTED

The Best Practices Subcommittee has recommended the following practices that have been adopted by the Commercial List Users Committee and which have been implemented by the Court:

1) Bulk Sales Applications: Bulk Sales applications can now proceed on the Commercial List.

2) Substantive Franchise Disputes: Matters under the Arthur Wishart Act (Franchise Disclosure), 2000 and disputes relating to compliance with or termination of franchise Agreements, other than collection matters can now proceed on the Commercial List.

3) Application and Counter-Application Materials: In contested applications where there are counter- applications, the Court office assigns a fresh court file numbers to the counter-applications. However, the same affidavit material is generally used for both the main application and the counter-application. In fact, both are usually heard together. The court office had been requiring the parties to duplicate the affidavit material for filing in both court files. In complex matters this results in voluminous duplicative material being filed. The Commercial List office has allowed the parties to file one set of affidavits for use in both the main application and in the counter-application.

4) Standby Times: Where appropriate, matters may be scheduled to be heard on a standby basis for a particular date. If you are scheduling something on a standby basis you must prepare materials and serve them on the other side sufficiently in advance of the standby date to comply with the notice requirements in the Rules. You should notify the other side that the matter is on standby and that counsel should be prepared to proceed on short notice in the event that the standby date is confirmed by the Court. Counsel should contact the Commercial List office regularly to determine whether the matter is confirmed to proceed. If counsel check early and often enough they may discover that the standby date is confirmed earlier than originally expected.

CURRENT INITIATIVES

E-filing has been used in several large CCAA matters recently. However, this has been on a case by case basis using primarily e-mails and PDF documents. There has not been a centralized service to manage or co-ordinate e-filing system or to create a formal Internet based system. CourtCanada.Com demonstrated a revolutionary high tech Internet e-court file system to the Users’ Committee. The system development is near completion. This was a preliminary demonstration of the system at work. No decision has yet to be made by the Users’ Committee or the Court administration. We hope to hear more about this exciting new development soon.

Late cancellations and last minute adjournments continue to cause scheduling challenges to the Commercial List. This issue has been raised by the Users’ Committee, the bench and the bar. Late cancellations and last minute adjournments result in wasted Court resources. The Subcommittee is in the process of giving detailed consideration to framing “Best Practices” for this issue and would appreciate input from all users of the system. Members of the Subcommittee are in the process of looking into various other electronic initiatives to improve, serve and facilitate the work of the bar, including, case and document indexing, and a more sophisticated standby booking system.

FURTHER SUGGESTIONS

If you have any questions or comments on the Commercial List, contact Martin Rosenbaum at 416-364-1919, e-mail mzr@rosenbaum.com or visit http://www.rosenbaum.com.

*Martin Rosenbaum, Partner, Fogler, Rubinoff LLP, representative of the Toronto Lawyers Association on the Commercial List Users’ Committee.

About the Author

Martin Rosenbaum practices commercial law representing many large and medium size corporations. He is a partner with Fogler, Rubinoff LLP in Toronto. Martin obtained his B.Com. in accounting and finance from McGill University in 1982 and attended McGill Law School graduating in 1986 with both B.C.L. and LL.B degrees. Martin was called to the Ontario Bar in 1988.

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Martin Rosenbaum, Lawyer

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More Commercial Listings Articles

Us Commercial Mortgage Basics

by find eric

US Commercial Mortgage Basics

Article by Commercial Lifeline

Commercial mortgage loans are used when purchasing structures such as office buildings, apartment complexes, health care facilities and retail outlets. Whether its a hi-rise tower or a family-owned restaurant, buyers typically need additional funding to complete the transaction. Commercial mortgages are what they pursue.Similar in many ways to residential loans, commercial mortgages require far more paperwork. Both types of loan require that the properties being purchased undergo a thorough appraisal. Both require collateral to secure the loan and protect the lender against default. Like residential mortgages, commercial mortgages can be refinanced to take advantage of more favorable terms, or they can be re-mortgaged to establish a line of credit to use for running the business. And like residential mortgages, the lender will hold the deed to the property until such time that the loan is repaid in full. During that time, the lender makes money off the interest on the loan. If the borrower fails to make payments on the commercial loan, the lender has the right to initiate foreclosure proceedings and take the property. Remember, the property likely is what will be used as collateral. The interest paid on the commercial mortgage usually is tax deductible; just be sure to consult with a professional first.When you apply for a commercial mortgage, you will typically be offered two different types of loans: fixed rate loans and variable rate loans. These work the same as they do for residential mortgages. On a fixed rate commercial mortgage, the interest rate that is negotiated and agreed to remains in effect until the loan is fully amortized. If youre obtaining a commercial mortgage and interest rates are heading higher, a fixed rate likely is a better option. You can always refinance your mortgage should interest rates go lower than your fixed rate.With a variable rate commercial mortgage, the interest rate will fluctuate during the payback period. Interest rates are determined by the US Federal government. Make sure you understand how variable rates are determined. Also, find out from the lender how often the rate on a variable rate mortgage will change. Its fine as long as the interest rate is decreasing; its the increases that you need to worry about. Make sure, too, that should the interest rates increase, you can still afford the monthly payments. With some variable rate loans, the rate is fixed for the first few years, and then converts to a variable rate loan.When applying for a commercial mortgage, also ask about the Early Redemption Charge (ERC). Remember, lenders make money off the interest on the loan. When the loan is repaid in full sooner than anticipated, the lender loses money. To avoid losing money, lenders often include an ERC which can amount to a substantial, one-time sum. If you discover an ERC in the fine print, try to negotiate it away. If youre not successful, take your business elsewhere. Applying for a commercial mortgage means that youre about to make a serious investment. Be sure you know exactly what youre signing before you sign the documents. You have a right to ask questions, renegotiate more favorable terms and do whatever else you feel is necessary. Its your money and your future. Good luck!