Empower Your Business with Commercial Real Estate CRM Software in Loan Agreements

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[Music] did you know that when business owners and real  estate investors go and apply for financing at   their local lenders that 50 of them are either  denied turned away or not even approved for the   amount of financing that they're seeking in this  video we're going to be going over the different   type of commercial loans that exist the terms  rates and payments you're most likely going to   find with a commercial loan and last but not least  how the process of applying for a commercial loan   is different than getting other types of loans  that you might have applied for in the past i'm   melissa mueller a commercial and residential loan  officer at keystone alliance mortgage and capital   which we are residential and commercial  brokerages that we offer many products and   services that you're not going to find at your  local banks or even single lender retail banks   make sure you hit the subscribe button and the  bell so that you get notified when we release   a video each week and that can help you grow  your business or your real estate portfolio   let's get started by first digging  into a handful of commercial loan types   first we have sba loans and those are loans that  are offered by the small business administration   they're really comparable to in residential  lending fha and va but unlike fha this   small business administration doesn't just buy  back banks when lending money to home buyers   sba actually lends part of the money on an  sba loan that closes next are hud loans where   you can refinance debt and the benefit they  allow higher loan to value ratios then we have   construction loans when you want to develop  land into subdivisions or build a building   next we have bridge loans which are for  short-term financing for commercial projects   they might last say 12 months or 18 months  then hard money loans and this is where you can   have the ability to get some quick cash to closing  on a property that you'll put into a different   loan down the road and sometimes those can close  in as quickly as a week then there's fix and flip   like the loan type sounds it's a line of credit of  sorts that was created to help investors who buy   and then flip the property and then rental loans  for properties that you are buying to rent out   to tenants the list that i just went through  is not all commercial loans but i hope there's   enough there to give you an idea of how many  different types of commercial loans are out there   compared to your traditional residential 30-year  fixed mortgages that most people are used to so   how do commercial loans work if you are used if  you're used to getting a residential mortgage   then you are somewhat aware that you answer a  handful of questions you get your credit pulled   and poof you're either approved or denied for  a mortgage to buy a house based on your income   debt credit score and assets but when it comes  to commercial loans lenders and underwriters are   looking at different things they want to know  your experience with the properties your credit   cash flow of the property and also reserves which  are extra money that you have in an account that   you're not going to be using towards the loan  ultimately they want to make sure that they're   the deal is going to make sense and they're going  to get their money back it's all about risk so   the commercial loan pre-approval process as you  probably are guessing by now is very different   than when you go by your residential home  the biggest difference happens when you start   the process of getting pre qualified you can't  just call a loan officer and expect a pre-approval   later that day much of the qualifying process  happens up front which is why being prepared and   planning ahead is important now i want to talk  about the commercial loan loan to value ratios   unfortunately with commercial financing it takes  a capital or money down to be able to get into   a loan if you're buying say a six to ten unit you  probably are going to need a minimum down payment   of 25 there are strategies to working around  this being your money but when it comes to the   lender they're going to want you to have skin in  the game again remember it's all about risk the   ability to not put money down comes into play when  you're buying a building for your own business and   that's where an sba loan can be used you're going  to be moving in your business into the property   you're going to be occupying and using at least  51 percent of this space and it's going to help   you be able to grow the business because you're  saving money on rent sba is one of the only ways   to purchase a building with less than 20 percent  down we have seen lenders who have will lend to   the right business owners with as little as  10 and maybe even 0 if the deal looks correct   so next i want to talk about the commercial loan  terms or link and that's going to depend on the   type of loan you're applying for and where you  are applying for the loan if you go to a local   lender you're most likely going to be getting a  loan that is amortized over 15 years and has a   five-year arm or balloon payment this means  that the payment is spread out over 15 years   but the rate is only locked in for the first five  for an arm if it has a balloon on year 5 whatever   balance the loan has at that time is due and you  will need to refinance or pay off the balance   this is one of the main reasons why it's  important it's always smart to stay on top   of your commercial loans or go through a broker  who has options that extend longer than 15 years   a commercial broker is going to be able to find  lenders who will amortize amortize your loan over   30 years or even have an interest-only option this  can greatly impact your monthly cash flow so next   let's talk about commercial rates and how they're  determined commercial rates are different than   residential rates commercial interest rates can be  calculated on a variety of ways depending on the   lender's internal cost of funds the most common  way a lender calculates interest rates are by   taking one of the indexes and adding a spread for  things such as loan size credit score and length   of the loan you're requesting indexes used are the  primary index the library rate and the swap rate   but now let's discuss what types of  properties commercial loans will finance   commercial loans will finance everything from a  single family property must be a rental and can't   be owner occupied to a hundred unit apartment  complex land for development a business buyout   auction property mixed use warehouses restaurants  auto dealerships as you can see the list is too   long to name them all the key is that not all  banks will finance everything and finding the   lender who lends in your space for your property  type is going to be successful when you want   to purchase a building and you need to extend  expand your portfolio let us know your questions   on commercial financing in the comments below if  you'd like to learn more about commercial loans   and if you qualify for one of the ones that i  discussed here all you need to do is click on   the link in the description to schedule a time to  discuss options together and also to download the   personal financial statement we will need from  you to start the qualifying process we will be   there to guide you answer questions and point you  in the right direction we hope this video gave you   the insight you're looking for and that you will  join us for more information on next week's video   if you know someone who could benefit from this  information please share the video with them   hit the subscribe button and the bell  to get ner get further notifications   and if i didn't answer one of your questions we  would love to see your feedback in the comments   otherwise continue to check out all the other  videos on residential commercial financing   on our channel and tune in  for next week's video [Music]