Commercial Loan Blog

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DON’T FALL INTO THE CAP RATE TRAP

By Terry Painter, Mortgage Banker

Member of the Forbes Real Estate Council

“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…

February 24, 2018

By Terry Painter, Mortgage Banker

Member of the Forbes Real Estate Council

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…

February 19, 2018

By Terry Painter, Mortgage Banker

Member of the Forbes Real Estate Council

Author: The Encyclopedia of Commercial Real Estate Advice – a WILEY book – OUT NOW!

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…

February 15, 2018

By Terry Painter, Mortgage Banker

Member of the Forbes Real Estate Council

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…

In Short, it takes these 5 components to finance an Apartment Building: 

1. A Great Property – that has 2 or more of these upsides: a good location, under market rents, already cash flows the loan, or rents can be increased with inexpensive value adds.
2. The Property Value and Income Supports the Loan
3. The Property is in Good Condition
4. The Borrower is Qualified – has good credit, enough cash, and enough net-worth
5. The Borrower has the Best Professionals

…

December 15, 2017

By Terry Painter, Mortgage Banker

Member of the Forbes Real Estate Council

At Apartment Loan Store, some of our funds for permanent and bridge loans for financing apartment buildings come from REITS. These loans have great rates and reasonable terms with one to 10 year fixed rates and usually a 25 – 30 year amortization.   

REIT stands for Real Estate Investment Trust. REITS are companies owning and…

December 12, 2017

By Terry Painter, Mortgage Banker

Member of the Forbes Real Estate Council

What is debt service ratio (DSR)? Well, let us start out by saying that although Debt Service Ratio is used more than half of the time by bankers, mortgage brokers and realtors, the correct term is Debt Service Coverage Ratio (DSCR). When you apply for a commercial mortgage, the DSCR is the most important calculation to the lender. DSCR is the margin of net…

December 6, 2017

By Terry Painter, Mortgage Banker

Member of the Forbes Real Estate Council

Author: The Encyclopedia of Commercial Real Estate Advice – a WILEY book – OUT NOW!

What is Yield Maintenance? Why is it so difficult to get a straight answer on this?

So imagine you are taking out a commercial loan and you’re told that the prepayment penalty is yield…

October 18, 2017

Commercial Real Estate – The Hidden Trap That Turns Your Investment Into a Las Vegas Crapshoot

There is a hidden trap that many commercial real estate investors are not aware of. Not being aware of it will quite possibly cause them to experience big monetary loss.

A substantial number of commercial real estate investors will try to get the biggest loans possible to acquire as much property as they…