Financing Commercial Real Estate

Financing sources for commercial real estate include mortgage banking firms, savings and loan institutions, regional banks, insurance companies, and private investors. Commercial real estate financing can take on very different terms, and the way deals are structured is based on a number of factors, including:

* Anticipated use of the property;
* Anticipated returns from the property;
* Geography;
* Type of real estate;
* Size of real estate;
* Perceived risk to lender;
* Market conditions.

Each of these areas must be examined by the business owner prior to seeking commercial real estate financing. Business owners then need to examine the type of loans offered by lenders in accordance with their needs and anticipated growth. Unlike obtaining financing for residential real estate, where the transaction is based on the value of the home at the time of the sale, commercial real estate financing will be based — in part — on the value of the business in the future.

While some lenders specialize in specific types of commercial ventures, such as warehouses, retail operations, or apartment complexes, others provide across-the-board financing to a wide variety of commercial ventures. For the business owner, the key to starting the process is to have the necessary paperwork in order. Despite the many types of financing and types of commercial real estate, lenders remain primarily concerned with the level of risk they'll be taking. Therefore, they must see the following documentation:

* Income and expense statement for the property demonstrating a solid income stream;
* Financial statements on all principals involved as owners of the property;
* Profiles of the management team;
* Property appraisal;
* Financial statements on the borrowing entity;
* Plans, including construction blueprints (if available) for the use of the property.

Unlike most residential real estate transactions, the potential borrower is asked to pay 1 to 2 percent of the terms of the loan (referred to as “standby points”) to show a commitment to the deal. This amount is refunded once the loan is closed. If the lender decides to offer a loan, a
commitment letter is presented with their terms included. The loan agreement will usually include the length of the loan, interest rates (fixed or variable), and what the loan is for (new construction, the purchase of an existing property, refinancing). As the borrower, the business owner needs to see that the terms will allow the business to grow, and not derail such progress. Such a commitment letter or loan agreement will likely also include:

* Closing conditions;
* Owner occupancy requirements;
* Affirmative and negative covenants regarding what the borrower does and does not agree to do;
* Representation and warranties.

Once the lender and borrower have negotiated and come to mutually agreeable terms, the closing process follows, and it is usually more complex than that of a residential mortgage. Issues such as tenants, leases, environmental reports, and even zoning ordinances may all need to be factored into the closing process, which can take up to two or three months, in some cases

The key to commercial real estate financing is to find a lender that will meet the needs of the business, and then allow the business to grow. The right business can increase the value of the real estate it occupies, but only under an agreement that allows it to move forward.

Source

Top 10 Commercial Real Estate Loan Mistakes

It is common for businesses to need commercial loans both at the start-up phase and once the business is up and running for equipment, expansion, or special projects. To make the right impression and secure the loan you need, it is important to be aware of some common mistakes.

1. Not thoroughly researching your options. You want to ensure that you have done your due diligence and reviewed commercial loan terms from different banks and other commercial lenders.

2. Not selecting the best lawyer. You should hire a commercial real estate attorney -- one who is very experienced in negotiating the types of real estate loans you are seeking. This is not the time to go with a friend or sister-in-law who happens to be an attorney.

3. Failing to have a definite plan. Lenders want to see that you have a plan in place for using the money. They also want to see a timeframe in which you anticipate completion of the planned project.

4. Failing to have a business plan. It is always advantageous when seeking a loan, or any type of funding, to have a well-structured business plan that includes all of the necessary operating and financial data. For more information on business plans, see Ten Reasons You Need a Strong Business Plan and the AllBusiness.com Business Plan Center.

5. Not having cash ready to put into the project. Before you apply for a commercial real estate loan, you need to make sure you have some available cash on hand. Commercial lenders want to see that you are investing your own money to cover a percentage of the project.

6. Not reviewing your balance sheet. Before taking out a loan, you should review your balance sheet and analyze your cash flow and liabilities to make sure that while paying off the loan you will still have enough money to run the property properly. For more information, check out The Balance Sheet for Small Businesses.

7. Failing to negotiate the best deal. This ties in closely with number two, regarding a competent real estate attorney who can help you negotiate the fine points when reviewing a commercial real estate loan offer.

8. Going straight to a familiar lender. Yes, it is good to have a rapport with a lender, particularly when you need a loan. However, there are new real estate products offered constantly, and it is worth your time to check out some of the other possibilities before going straight to your favorite lender.

9. Not checking with the SBA. It is always worthwhile to check with the Small Business Administration to see what loans they can help you attain and what advice they may offer.

10. Not having your ducks in a row. Make sure you have all the documentation that the lender would expect, and be prepared to show why the property or project makes fiscal sense.

Source

St Thomas Villas

It’s difficult to even imagine escaping to a world of serenity, privacy and unblemished splendor. Villa Nicoletta is one of the most adored villas in St. Thomas.

St Thomas Villas provides a milieu that doesn’t allow stress and fracas, but offers genuine relaxation, harmony and serenity. However, the refinement and sumptuousness of Villa Nicoletta is unequaled. Imagine going to a St. Thomas villa with the desire to linger longer when it’s time to go home. The vacationer only wants to repeat the process when he/she desires to return the next year. A Caribbean deluxe St. Thomas villa, Villa Nicoletta is undoubtedly above the rest, with unmatched affluence and an appealing Virgin Islands vacation setting, as well as all the amenities and charming beach views from a St. Thomas villa. Vacationing in a comfortable St. Thomas villa can be quite a remarkable experience.



Villa Nicoletta is a 4 bedroom luxury villa and an oasis of rest and rejuvenation in a land of unspoiled tranquility. Nestled atop a 70-foot cliff overlooking the north shore of the Island of St. Thomas and the aquamarine waters of Caret Bay, Villa Nicoletta offers some the finest accommodations in the Caribbean for those seeking a vacation of elegance, serenity and privacy. You’ll love how the sun blankets the landscape and water in shimmering brilliance by day and how the sky twinkles like billions of flawless diamonds at night.


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Caret Bay

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