Solid Commercial

Solid Commercial

Commercial second mortgages have historically been a very rare financing tool for the reserved for extremely strong borrowers, divided into two major segments.

1. Owners Tenants Owners with the award to be entrepreneurial finance. 2. Large demanding commercial real estate projects with a minimum loan amounts beginning at 5 million U.S. dollars. Typical project size would be plus to $ 15 million.

Both types of loans have is out of reach for the vast majority of commercial real estate investors and users. Owners have no reliable or efficient way to access their equity without refinancing their existing first position of a loan or the acquisition of the "dreaded" Equity Partner had.

Some national lenders have recently begun to second loan with fixed-income transactions, a lot of surprise in the sectors. This loan structure of a dramatic change in the illiquidity complain that so many property owners.

The terms of the loan program with a fixed period of 5 -10 years with amortization schedules between 25 -30 years.

Loan amounts are small, from $ 50,000 – $ 500,000 with a maximum Loan to Value "from 70 to 75% among other details combined. The prices are high for borrowers with excellent credit, to increase sharply even for borrowers with good or decent credit scores. As I write this, would be the lowest rate is 7.31% for borrowers with 720 + credit and a loan of $ 400,000 – $ 500,000.

It is interesting to observe what our customers can use the Commercial Second Mortgage. Too creative scenarios:

2. Use Commercial Loan Proceeds as a down payment on new acquisition.

For example, borrowers could pull out of an existing equity ownership and use that capital as a deposit / Closing costs to purchase a new commercial property. In essence, maximizing the use of all the assets of the owner and the limitation of cash from his pocket.

The acquisition of the second loan would be the existing property and would not negatively impact cash flow and debt coverage ratio, or that the property acquired.

2. Use Commercial Mortgage Capital as Rehab.

Unfortunately, commercial rehabilitation loans are so daunting and cumbersome as the basic-up funding, Adoption and requires extensive reporting. By tapping the equity in any capacity other than a standard fixed-rate second mortgage, the borrower can avoid the "too" of a traditional commercial rehab / construction loan. The borrower in this example would simply receive a lump sum of capital and can spend this money as he sees fit. There are no draws or city permit review / approval.

At the end of the project was the Borrower, the loan to refinance the property renovated and using the revenue for the eradication of the commercial second mortgage loan with a better program to rehabbed buildings bound.

Use Commercial second loan as working capital for ongoing operations.

Many borrowers do not like the Idea of a floating rate line of credit. Many entrepreneurs prefer the security of a fixed-rate loan, which allows them to better predict / manage their capital. Business owners will have virtually no restrictions on the use of the loan. Common uses include, purchasing equipment, launch advertising campaigns, Investments in new technologies, etc.

Regardless of the use or intent of the borrower, this new commercial second mortgage provides a solid option, and a additional financing tool for commercial property owners.

About the Author:

Jeff Rauth is President of Commercial Finance Advisors, Inc out of Bloomfield Hills. He specializes in Commercial Real Estate Loans between $100,000 – $5,000,000. Offers unique loan programs such as Commercial 30 Year Fixed and 90% non SBA financing, Commercial Private Money, Commercial Equity Lines and Commercial Second Mortgages. 248 885-8797 Commercial Second Mortgage or http://www.cfa-commercial.com Commercial Loan Brokers

Article Source: ArticlesBase.com – Commercial Second Mortgage (second Lien Position)

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