Some major problems with this suggestion. Adding a partner won’t help the holding company tax returns. Commercial lenders want to see that the properties are stabilized and can cash flow on their own.
Any partner will have to personally guarantee the loan. Simply buying out the partner at a later date does not take them off the loan nor mitigate their personal responsibility for payment of the loan.
The equity you would have to give up would most likely cost you more than the rate adjustment.
COMMERCIAL FINANCING, Understanding HELP!!! - Posted by OhioBill
Posted by OhioBill on August 15, 2008 at 06:22:11:
I have a couple commercial loans on an arm that are coming due, the interest rate is going up so I have bene doing a little shopping. I have a corporation that the commercial properties are in, now the last two years have not been that great of years for my company and the personal tax returns do not look that great. I have outstanding credit and a lot of equity.
Getting to the point, the banks are telling me that since this residential crunch, they have tightened up and are going strictly by the tax returns, not reality. Is everyone finding that ot be true or have i just gone to the wrong couple banks.
As a commercial mortgage broker I can tell you the credit crunch is for real. An experience specialist will add back many of the items deducted such as depreciation and prepaid interest. Forget about cash income if you want good terms.
Hi Bill, Call Linda at 330-704-0184 tell her John gave you her #. I have used her with my clients for years. With that kind of equity she should be able to help.
I am also located in Dayton and have a private investor that may be interested in doing your loans using his IRA funds depending on the size if the loan.
If you are interested Email me; ktthomas@woh.rr.com.
Banks have always gone off of tax returns to determine whether a property or business cash flows sufficiently. Without seeing the taxes there is no way to know if your have just gone to the wrong banks. There are still stated income programs for commercial, but don’t expect any bargains rate wise.
Re: COMMERCIAL FINANCING, Understanding HELP!!! - Posted by OhioBill
Posted by OhioBill on August 15, 2008 at 08:04:04:
I guess I wasnt clear on that I realize they go on tax returns, but they took in no consideration what the buildings did, they went strictly on my personal returns
not sure what you mean by “what the buildings did”. What type of properties are these? Banks generally look at the cash flow of the buildings per the expenses on taxes and the current rent roll. They will also look at your personal income to make sure that you have financial strength and the income to cover your personal debt.
It’s hard to answer your questions or provide guidance without knowing all of the particulars.
Re: COMMERCIAL FINANCING, Understanding HELP!!! - Posted by OhioBill
Posted by OhioBill on August 15, 2008 at 08:30:54:
I meant the ptoperties being able to cash flow to satisfy the debt, that was no problem at all. All of my proerties cash flow very well, just had a lot of vacancies 65% last year (I am in Dayton,Ohio and we were ranked by Forbes Magazine as the 2nd worst city in th e country economically) and didnt get a salary so the bottom line on my personal tax return doesnt look good
They are retail properties. I am back up and running again with only one vacancy so the future looks good.
I’m sure the soft local market and the 65% vacancies had a lot to do with it. Getting a loan will depend heavily on the strength of the current leases and the lessors. If long term with businesses that have a track record, you should be able to get financing. If these are all new businesses, weak tenants or short term leases, you going to have issues.
To counter the lack of personal financial strength, cosider offering the lender an immediate assignment of rents.
Re: COMMERCIAL FINANCING, Understanding HELP!!! - Posted by jeff rauth
Posted by jeff rauth on August 23, 2008 at 13:55:03:
with 65% vacancy it will be very difficult to get a loan regardless of your personal income. It will be hard for the property to debt service. http://www.cfa-commercial.com
Hi Bill, it’s Mike over in Utah. When I did my loan for my place I was turned down by Citibank on the 11th hour less then a week before closing. This was after 6 weeks of dealing with them. Almost killed the deal. A local credit union then stepped in and approved my loan in 24 hours. I am now talking a refinance with them at 6.75%. Guess what I’m saying is to talk to a local credit union and see if they’ll help out. Hope all is good with you.
Re: COMMERCIAL FINANCING, Understanding HELP!!! - Posted by OhioBill
Posted by OhioBill on August 23, 2008 at 14:12:23:
As we speak I am holding a lease in my hand that puts me back up to 100% full…and how many people can have a 65% vacancy and not be late or skip a beat on a payment on a payment, I dont think there are too many companies that can answer to that.