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Commercial Loan Blog

Cap Rate stands for capitalization rate and is used in commercial property valuations. Cap Rate is simply the net operating income (income minus expenses) divided by the purchase price or appraised value.

“There must be some mistake” Rick, my client said to me. “How can my property only be worth $5.25 Million when the exact same property 4 miles away sold for $5.6 million last year.” In fact, he was right on. He had gotten the blue prints to build his new 36 unit multifamily complex from his brother-in-law who had built and sold the exact same design last year. Rick’s apartment... more

October 17, 2018

DSCR - most important factor for a prospective commercial lender to determine

Why is a DSCR - Debt Service Coverage Ratio needed?

DSCR stands for Debt Service Coverage Ratio and is the most important factor for a commercial lender to analyze the risk level of your business or investment property loan.  It is the DSCR that tells the lender that the net income  is more than adequate to support the loan payments.... more

 

 

Use our Cap Rate Calculator to check your property

 

 

 

DON’T FALL INTO THE CAP RATE TRAP

“Are you kidding me?” my client asked.  “You’re telling me that the property taxes are going up by $19,500 when the county reassess the property I’m buying based on the purchase price after I own it?”

“Yes”, I answered.  “In California they do that.” 

“... more

February 24, 2018

Effective Gross Income is much simpler than it sounds, but also a lot more important than it may sound. It is the actual—and I mean actual—amount of money an investment real estate property has grossed in the past 12 months. Keep in mind that realtors when selling an investment or commercial property may brag that the property is fully rented and show you a pro forma or projection based on the... more

February 19, 2018

So you're applying for a commercial real estate loan and you are told "this is a recourse loan." What is recourse?  Is this good or bad?  Does this matter?  Do you have a choice? Yes, it does matter. Often borrowers do not realize when they apply for an investment property or business loan, that if they default on the loan they can lose more than the real estate or equipment that is... more

February 15, 2018

Commercial real estate loans differ in so many ways from residential loans. It is a different world, or you could say "a different planet.” Here are some differences:

1. On a historical basis, commercial loans have been done with concern to the property first and foremost. And residential loans have been done with concern to the borrower. Since the recession though,... more

February 9, 2018

To finance an apartment building you need to complete 7 tasks: analyze the income of the property, analyize market rents, estimate the appraised value, analyze the condition of the property, analyze your financial strength, research lenders, and apply for the best loan that you qualify for.

 

7 Basic Steps to Finance an Apartment Building/Complex

1. ... more

December 29, 2017

So you're applying for a commercial real estate loan and you are told "this is a Recourse Loan." What is recourse?  Is this good or bad?  Does this matter?  Do you have a choice? Yes, it does matter. Often borrowers do not realize when they apply for an investment property or business loan, that if they default on the loan they can lose more than the real estate or equipment that is... more

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