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coopercash
2834 Posts |
 Posted - 01/30/2008 : 05:38:46 AM
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Over the past 2-3 months I have seen limited if welcome evidence that a number of commercial non-bank lenders are cautiously regaining their appetites for the RIGHT deal.
With regard to NEW commercial project construction, "State, zip code and location" are important keys. An independent Feasibility Study will be usually be requested on retail, office, hospitality and on Assisted Living projects as will an MAI Appraisal from a "Hallmark" provider.
Multi-family housing and student living projects are also of interest.
The game changer is that in today's environment the client needs to have at least 30% and sometimes as much as 40% of TOTAL PROJECT COST available in invest in their project. Mezz and equity "kickers" MAY be available for 5% of total cost.
Many developers are now having to "round up" private investors to come in with any equity deficiency and this has created a need for the developer to create a Private Placement Memorandum which in turn will be the subject of a Private Placement Offering.
One of my associates is a FL based SEC Registered Asset Management Company that can be commissioned to handle both the PPM and the PPO.
Success in commercial lending can be boiled down to three essential components: 1)A viable client; 2) A viable project or collateral; 3)As a broker/lo you need to have "control" over your client.
VIABLE CLIENT: In today's environment your client's personal credit history and ***et strength are vitally important. While a sub 600 mid FICO is not necessarily a major problem a lack of cash liquidity and reserves is a deal killer. In most cases, commercial lenders will be limiting their exposure to somewhere between 60% and 70% of project cost (if new construction or a development)and up to 75% LTV if a purchase or a refi.
VIABLE PROJECT/COLLATERAL: In the present uncertain economy ALL new "ground-up" projects whether a residential subdivision/master planned community, mixed use, commercial, retail, hospitality or resorts will be subject to intensive due diligence and our investment managers will be looking for a very solid Exit Strategy that is based on REALITY.
The prospects for lender support for sub-division and master planned community projects in 2009 will remain bleak until such time as the stringent home buyer mortgage lending guidelines are relaxed and certainly until consumers can regain sure-footed confidence that their jobs/incomes are not at immediate risk.
Once considered a "prime" sector... Senior LifeStyle Communities. The demand potential is there but a growing number of folks are unable to participate because they are unable to sell their present homes or are reconsidering their finances in the wake of major losses in the value of their stocks or 401K investments.
EXIT STRATEGY: This can be considered in one of three ways... 1)Sale of completed "units" (houses, offices, retail spaces etc)which will enable the client to fully pay-off the development/construction loan within an acceptable timeframe; 2) Leasing contracts or pre-lease L o Is for completed construction which will produce an income sufficient to meet all overhead costs and debt service plus an adequate margin; 3)Operating income in cases where the property will occupied by the client at completion as might be the case with a professional/medical center, or an automotive repair facility.
Multi-family projects (new development, purchase or refi of existing property) are evidencing strength given the fact that many victims of foreclosure will be seeking rental accommodation... in addition, to those folks who, 18+ months ago, would have been candidate for a sub-prime mortgage, are now resigning themselves to continue as renters unless they can qualify for a FHA or State Community HOusing Finance Program.
ENERGY related projects that make sense are also of interest provided that the fundamentals are solid and not based on "wishful thinking". In addition, clients need to understand that projects requiring DEBT financing must be backed by at least 20-25% cash invested by client.
In certain circumstances, UP TO 100% Project Financing can be provided for RENEWABLE ENERGY PRODUCTION and "Clean Tech" projects.
CONTROL OVER YOUR CLIENT: Without securing a commited relationship with your client your chances of achieving a successfully closed loan are dramatically reduced. YOU are the professional and you must be able to inspire and convince your client that YOU can secure their financing... ***uming of course that the client and their project is viable.
You need to secure a FEE AGREEMENT with your client BEFORE you start the search for funding. Your Fee needs to be reasonable because you will be seeking cooperation from the lender/investor in making your Fee Agreement a part of closing conditions. Believe me, if the lender is charging 1 - 3 Points you will NOT be able to charge your client 3, 4, or 5+ Pts and expect the lender to go along with that arrangement.
On a loan for $10-million or more be thinking in terms of 0.25% - 0.50% of loan amount!
Lenders do NOT like dealing with broker "daisy chains"! They will only communicate with their authorized "gatekeeper" who is the person ***igned to handle, review and present the initial intake information.
If your most appropriate source of financing is an Investment Bank, a Hedge Funder or a Hard Money Lender you will need to EDUCATE your client with regard to the need for them to pay DUE DILIGENCE fees to the investor.
Normal course of events is that if the investor expresses interest in the opportunity a conference call with the client will go in depth on the project. The investor may well be prepared to issue a provisional Term Sheet and a conditional L o I following that conference call. The L o I is 48-hours time-sensitive and requires that the client sign and return along with wiring their Due Diligence Fee.
Those Due Diligence fees cover the investor's costs for appraisal (or appraisal review), environmental and geologic reports, Title research, and in most cases travel costs because the investor will want to physically "kick the tires" and meet the client.
Those Due Diligence fees are NOT refundable to client if the investor declines the loan as a result of negative discoveries. In some cases the deal may be "saved" if the client agrees to changed loan terms.
Deals can also be considered in Mexico, Costa Rica, Panama, Belize, USVI, Dominican Republic and the Western Caribbean.
HARD MONEY APPRAISED VALUES: While HMLs will advertise lending "Up to 70% LTV" it is absolutely essential that you explain to your client that does NOT mean actual appraised fair market value! The appraisal will be "adjusted" by the HML underwriter to a price that the lender believes a buyer could be found within 90-120 days if the loan goes into foreclosure.
The HML will then base their loan on a percentage of that REDUCED value. Example: Property appraises at $1-million. "90-120 day" sales price 20% LESS = $800,000. 65% LTV = loan amount of $520,000.
I am available to review your deals and I will give you some insights as to which of our investors would have interest. If the client and the deal make sense, we'll get it done!
My contact information provided below.
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crobers78
25 Posts |
Posted - 02/11/2008 : 12:36:35 AM
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Richard,
Can you send me some leads? Chris, 310-806-5016 or chris.roberson@met-west.com |
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VegasLoanz
57 Posts |
Posted - 02/27/2008 : 3:31:09 PM
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I have a developer that needs a private investor or JV partner. All the projects are in California. I have loans ranging from $2 million to $80 million. Please email or call me so we can discuss if any of these will fit your criteria. The borrower has a lot of experience and is realistic when it comes to DD fees and getting these projects funded. He is looking for minimal out of pocket money (other than DD or commitment fees).
Please let me know if you can help me with the financing for his 23 projects.
Thanks
Val |
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coopercash
2834 Posts |
Posted - 02/28/2008 : 04:25:31 AM
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Val please check your email!
For the benefit of those who read this post please note my comments as follows:
The CA market evidences a major real estate contraction which primarily affects the residential sector (homes built for sale). Multi-family construction for rental management is potentially of interest and selective mixed-use, commercial, retail and hospitality projects are also open for review.
In current market conditions the project has to make absolute sense and that means that the Exit Strategy must withstand "extreme" due diligence. If a residential project is being considered in an area that is already saturated with unsold like product that has been on the market for longer than 120 days from completion date then it will be a NON-STARTER.
In addition any developer who is unable or unwilling to invest at least 15%-25% in CASH in their project is wasting his or her time seeking financing unless they can bring in a partner who has the cash to invest.
"But, my client owns their land outright with no debt, can't that be considered as their equity investment?" In today's conditions, we will look at fair market value and then discount to a point where we could attract a buyer within 90-120-days. Based on that discounted value we MAY allow up to 10% of project cost as an equity "credit" for land value.
"But, my client has already invested $XXXs in infrastructure and soft costs!" OK... if those expenditures can be PROVEN and the source of thos funds can also be verified as coming from the client then they may be considered at "full value".
In short... don't waste YOUR time chasing "rainbows" if your client does not have or is not willing to invest hard cash into their projects.
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BrianS
14 Posts |
Posted - 03/20/2008 : 07:05:56 AM
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Richard,
You spoke about securing fee agreements which I always do. In the case where you may help the client obtain equity from an investor how does this work. When do you get paid? Is there a closing on this as well? What should the fee agreement language state around when I would get paid on this type of transaction? Any comments would be helpful.
Thank You
Brian |
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coopercash
2834 Posts |
Posted - 03/20/2008 : 11:59:31 AM
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Brian...your Fee Agreement should include comprehensive description of the types of funding that you may be able to secure for your client. Send me a direct email and I will provide you with just such a format (coopercash@earthlink.net).
A point worth mentioning regarding Fee Agreements secured by Broker from clients on commercial deals. I routinely reject 95% of them for being outrageously "greedy"!
I care less whether the client was bamboozled into signing a 3, 4 or 5 Point Agreement with their Broker. If the loan size is substantial, maybe 1 Pt would be adequate compensation and on deals in excess of $25-million be thinking in terms of 0.50% or even 0.25%.
I have just concluded a $150-million funding brought to me by a referring Broker and we got to split a fee of 0.25%.
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clarenceworley
5207 Posts |
Posted - 04/12/2008 : 05:39:49 AM
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| 165k isn't bad in fees... |
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fcunnane3
139 Posts |
Posted - 06/02/2008 : 4:10:44 PM
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I represent a tax firm that specializes in cost segmentation. This will increase the standard depreciation from 1/39th to 1/5th per year.
These are fortune 500 tax exemptions that are bundled by our firm with tax attorneys & real estate attorneys to enable the individual investor to take advantage of these exemptions.
My firm pays $1,000 per closed referred deal and my firm is not compensated until the deal closes on our end.
Typically we are able to raise cap rates by 20%.
This is an excellent way to keep in contact with commercial clients.
Email me referrals at cpsloans@gmail.com
I strictly am not in the commercial lending business. |
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md21146
25 Posts |
Posted - 06/02/2008 : 4:28:07 PM
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| can you email me info - I have something that may be of interest |
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fcunnane3
139 Posts |
Posted - 06/04/2008 : 8:15:15 PM
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go to http://www.franciscunnane.com to read more about the cost seg.
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fcunnane3
139 Posts |
Posted - 06/09/2008 : 6:15:02 PM
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Sorry for hi-jacking the subject.
Frank. |
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md21146
25 Posts |
Posted - 07/28/2008 : 11:05:25 AM
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| please send your executive summary |
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EMScommercial
5141 Posts |
Posted - 10/07/2008 : 10:14:25 AM
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richard.... how have you been?.... hanging in there i hope....
as normal, well done with your post 'conversation'....
my add to this is to agree with you about the greed.... as a commercial broker, we never charge more than 3 points (and if we are working on it with a business partner ('co broker') then they would recieve half of whatever client paid broker fee we receive.... as the loan gets larger, the smaller fee we charge.... for example.... we have quite a few loans in here right now that are $250K - $5M... they will be charged 3 points.... but we also have a $110M deal.... we are charging 1 point broker fee (and splitting that with the referring broker (our business partner)...
one other point i will add.... we will also charge a refundable at closing (only) small application fee to stop the tire kicking.... this is charged at the time that we present our findings - quote letter, ncnd and broker contract to the borrower.... if they don't pay, we move on..... no hard feelings.... 'next'! |
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AMERICANMOD1
43 Posts |
Posted - 11/04/2008 : 08:20:21 AM
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| LOOKING FOR HARD MONEY LENDERS IN NY TO PARTICIPATE IN A BUSINESS SEMINAR ON LONG ISLAND NY. PLEASE CONTACT TONYA LEWTER AT 516-223-3855 |
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md21146
25 Posts |
Posted - 11/04/2008 : 08:43:34 AM
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Richard, what terms are you typically getting on residential development? Are you a direct lender or broker?
I am working on 3 now
Mary |
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tommybr4
32 Posts |
Posted - 11/04/2008 : 2:53:50 PM
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I actually just got off the phone with mr. woodry. I have quite a few deals that were just put in my lap ranging from 15 million to 155million. I would like to talk more in depth about a few of these projects as you may be a good partner for me to work with and help structure due to the size of thses loans. Please email me at tburnett@bollinmortgagegroup.com when you can so we can setup a time to talk. Thanks so much.
Tom |
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alfreda1
15 Posts |
Posted - 12/12/2008 : 5:16:50 PM
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We sit in sit in a 35,000 sq foot office right across form Angle Stadium. A full staff of dicated to service. Call us
The Firm Group, Inc.
. We have a team of expert Financial Professionals, and seasoned underwriters, that are always available to help you. All we need is a 1003, credit report, appraisal (pictures) and clients proof of ability to make proposed payments. So make the decision to increase your earnings now, and send us all your commercial and hard money business. Let us provide the expertise and do the work, while you make the money. We are very broker friendly, and we are licensed professionals, so call us today and we’ll send you the info needed to take advantage of this great opportunity.
CONTACT INFOMATION
ASK TO SPEAK WITH A FINANCIAL SPECIALIST
DIRECT: 714-735-4064
FAX: 714-260-0994
WWW.THEFIRMGROUPINC.COM
EMAIL ALL SCENARIOS & SUBMISSIONS TO:
SUBMISSIONS@THEFIRMGROUPINC.COM |
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ashley4see
9 Posts |
Posted - 02/20/2009 : 5:24:06 PM
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Are you looking for back-end processing company for loan modification (Residential & Commercial)
Look below for the following futures our company can offer:
• In-house team of lawyers and negotiators
• Process all 50 states
• Pre-Qual Software—used for pre-qual, submission, and real time tracking.
• 1 Loan Modification Web-Site
• Advance Fee Agreement—to get your company approved with the DRE
• Toll Free 1-800#
• Follow up with your clients every week
• Hosted pipeline view and 24/7 customer service
• Private label customer service
• Private label disclosure
• Short sale approval processing
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Ashley Turng
Office: 949.294.1463
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ejortiz
361 Posts |
Posted - 05/28/2009 : 12:43:06 PM
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Hi Richard,
Hope you doing well. Is it possible for me to get a copy of your agreement. Thank you in advance.
EJ Ortiz
Cell: (786) 566-3002
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