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htong
515 Posts |
 Posted - 02/08/2008 : 2:47:12 PM
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Okay, this scenario goes out to every commercial lender and broker on the BO. I just had a client walk out of a commercial closing today. It seems he got a call earlier in the week from another broker stating that they can do 100% purchase financing because all the details of the deal was perfect. ?!?!??! Did the wizard from Oz just land on Earth while I went to bed? This borrower is no amateur either. He has purchased 2 other properties thus far and I could not believe he backed out like this. Now, if any one out there can tell me HOW YOU WOULD STRUCTURE A 100% commercial purchase, I will buy the freaking building myself and you can broker it! How about that? I don't think this was a scam and the whole thing involved hard money also. The only thing I could have come up with was the lender JV with the buyer and the lender took 100% of revenue after debt service for xxx months before releasing themselves from title. Any thoughts?
Purchase Price: 9,150,000.00
Income: 723,429
Expense: 242,643
67 Apartments elevatored 6 story building
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KHufford
6019 Posts |
Posted - 02/08/2008 : 3:05:08 PM
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| Thats why you should always charge a small upfront fee! I hate that shiit |
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From Flyover Cou
58 Posts |
Posted - 02/08/2008 : 3:19:41 PM
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| One way or another charge him an extra 1/2 pt. when he comes back. |
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htong
515 Posts |
Posted - 02/08/2008 : 3:19:55 PM
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| Borrower in fact paid over $10,000 for appraisal and other fees and walked away anyway. I'm just going to keep his plate warm until he comes back...unless there is something I missed lately or if there is a new way of doing 100% commercial after all these years. LOL! |
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ComLender
1266 Posts |
Posted - 02/08/2008 : 3:22:16 PM
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| No, no conventional loan structure that really does that. |
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jskolnick
233 Posts |
Posted - 02/08/2008 : 3:50:10 PM
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| Maybe he was able to get the seller to take back a mortgage on the property. That's the only way to do it, assuming the bank will allow that to happen. |
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schultz.fir
892 Posts |
Posted - 02/08/2008 : 8:17:23 PM
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| ha,,,if you find out, lemme know. I got 1 dozen of THOSE deals. |
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ccbank
1321 Posts |
Posted - 02/09/2008 : 10:06:50 AM
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quote:
Originally posted by KHufford
Thats why you should always charge a small upfront fee! I hate that shiit
Most brokers can't charge up front fees. The alternative is to have a fee agreement in place for exactly this scenario. If you had a good strong fee agreement your client would think twice from walking away from the closing. IF he did you would still be entitled to your commission. Just like in real estate. If the realtor brought a willing and able buyer and the seller cancelled then the realtor would be entitled to a commmission. As the broker you brought a willing and able lender and your borrower cancelled without just cause you are entitled to a commission. |
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htong
515 Posts |
Posted - 02/09/2008 : 10:22:37 AM
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| Good point. Hind sight is 20/20! But moving forward, I am getting from concensus that there is NO SUCH ANIMAL! |
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KHufford
6019 Posts |
Posted - 02/09/2008 : 10:25:31 AM
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quote:
Originally posted by ccbank
quote:
Originally posted by KHufford
Thats why you should always charge a small upfront fee! I hate that shiit
Most brokers can't charge up front fees. The alternative is to have a fee agreement in place for exactly this scenario. If you had a good strong fee agreement your client would think twice from walking away from the closing. IF he did you would still be entitled to your commission. Just like in real estate. If the realtor brought a willing and able buyer and the seller cancelled then the realtor would be entitled to a commmission. As the broker you brought a willing and able lender and your borrower cancelled without just cause you are entitled to a commission.
Why can a broker not charge an upfront fee?
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ccbank
1321 Posts |
Posted - 02/09/2008 : 11:31:23 AM
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Sorry, I'll make it a bit clearer. I did not mean they can't in the sense that they restricted by regulatory rules. What I meant is that a broker can if he can get it. Typically those that charge an upfront fee are well experience with many deals under their belt and will also have a reputation in the industry that can demand such fees. Their clientle is derived solely by referrals hence strenghting their position to demand a fee. Many residential brokers doing commercial can't demand a fee but can still protect themselves via a fee agreement.
quote:
Originally posted by KHufford
quote:
Originally posted by ccbank
quote:
Originally posted by KHufford
Thats why you should always charge a small upfront fee! I hate that shiit
Most brokers can't charge up front fees. The alternative is to have a fee agreement in place for exactly this scenario. If you had a good strong fee agreement your client would think twice from walking away from the closing. IF he did you would still be entitled to your commission. Just like in real estate. If the realtor brought a willing and able buyer and the seller cancelled then the realtor would be entitled to a commmission. As the broker you brought a willing and able lender and your borrower cancelled without just cause you are entitled to a commission.
Why can a broker not charge an upfront fee?
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KHufford
6019 Posts |
Posted - 02/09/2008 : 11:43:40 AM
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quote:
Originally posted by ccbank
Sorry, I'll make it a bit clearer. I did not mean they can't in the sense that they restricted by regulatory rules. What I meant is that a broker can if he can get it. Typically those that charge an upfront fee are well experience with many deals under their belt and will also have a reputation in the industry that can demand such fees. Their clientle is derived solely by referrals hence strenghting their position to demand a fee. Many residential brokers doing commercial can't demand a fee but can still protect themselves via a fee agreement.
quote:
Originally posted by KHufford
quote:
Originally posted by ccbank
[quote]Originally posted by KHufford
Thats why you should always charge a small upfront fee! I hate that shiit
Most brokers can't charge up front fees. The alternative is to have a fee agreement in place for exactly this scenario. If you had a good strong fee agreement your client would think twice from walking away from the closing. IF he did you would still be entitled to your commission. Just like in real estate. If the realtor brought a willing and able buyer and the seller cancelled then the realtor would be entitled to a commmission. As the broker you brought a willing and able lender and your borrower cancelled without just cause you are entitled to a commission.
Why can a broker not charge an upfront fee?
Good way to put it, I agree 100% |
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swmsn
4205 Posts |
Posted - 02/10/2008 : 2:37:43 PM
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9M 100% no way.
The only ways this will occur on 9M:
Borrower uses a DP assist program ( like a seller concession ) and adds to the purchase price. ( Equity must be in the property for this to work ) so the new purchase price would be 9,150,000.00 + 20% ( or whatever ltv the bank will allow )
The avg your rent roll is showing is that every unit is renting for $900 a month.
If the loan amount is 9.15M ( 100% ) with a 6.5% 30yr Am loan payments are $60,875. Borrower is making $60,286 a month in rent. This is with no expenses, taxes, insurance, main, etc.. so the property is negative every month.
The DSCR is way under 1.2 ( so will not cash flow ) Even with 20% down the Debt Service is not even 1 based on your numbers. So there is not a bank that will do that. Hard Money guys ( unless they become a major partner ) will not touch such a high ltv either.
Stay in touch with the guy. In fact tell him that you would like to know who he is using because you have a couple of deals that you could use this for. ( Don't be sarcastic ) let him figure this out on his own.
You keep creating value and acting as his consultant. This will come back to you. |
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htong
515 Posts |
Posted - 02/11/2008 : 2:15:13 PM
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| Thanks Shawn. |
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RMorgan
17 Posts |
Posted - 02/11/2008 : 6:47:10 PM
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| Cross collaterization of the buyers other properties to create a $9,000,000 dollar instrument against the new property. Usually this takes 120 days minimum and I've only seen it on properties over $10,000,000. At the end of this he might not even have any debt service on his new property. |
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swmsn
4205 Posts |
Posted - 02/11/2008 : 6:48:58 PM
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| :) |
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KHufford
6019 Posts |
Posted - 02/11/2008 : 6:57:57 PM
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quote:
Originally posted by swmsn
9M 100% no way.
The only ways this will occur on 9M:
Borrower uses a DP assist program ( like a seller concession ) and adds to the purchase price. ( Equity must be in the property for this to work ) so the new purchase price would be 9,150,000.00 + 20% ( or whatever ltv the bank will allow )
The avg your rent roll is showing is that every unit is renting for $900 a month.
If the loan amount is 9.15M ( 100% ) with a 6.5% 30yr Am loan payments are $60,875. Borrower is making $60,286 a month in rent. This is with no expenses, taxes, insurance, main, etc.. so the property is negative every month.
The DSCR is way under 1.2 ( so will not cash flow ) Even with 20% down the Debt Service is not even 1 based on your numbers. So there is not a bank that will do that. Hard Money guys ( unless they become a major partner ) will not touch such a high ltv either.
Stay in touch with the guy. In fact tell him that you would like to know who he is using because you have a couple of deals that you could use this for. ( Don't be sarcastic ) let him figure this out on his own.
You keep creating value and acting as his consultant. This will come back to you.
Thats great advice Shawn. |
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