A commercial property mortgage loan is often secured by the commercial property such as the office building, land, apartment complex, or warehouse. Usually, the proceeds from the rent of these commercial properties are being used to develop or refinance the said property. There is a big difference with the requirements of a commercial property loan mortgage and from that of a residential home loan mortgage. Take note that a mixed used property may also go either way depending on the deciding factor of the bank or lender such as the amount of space allotted to the residence compared to the amount of space allotted to the business. However, most lending companies make the decision for you when it comes to the type of loan you are going to take and they are going to offer on your mixed used property.Basic requirementsInvestment property loans are more demanding than the residential home mortgage loan. The appraisals are conducted based on the condition of the property, size, location, and accessibility. With this kind of loan, you need to demonstrate a good business and personal credit record. The lenders would want more demonstration of income and asset documentation after checking our credit history to make sure you have the capacity and the asset to pay off your loan in case of a payment default. Sometimes, the lender would want a proof of the profitability of your business. Commercial estate financing is often times partly based on the value of the business in the future, perceived risk, market conditions, and anticipated returns from the property.Large down paymentsLenders often ask for larger amounts as down payment because of the risk involve. The average equity is usually about 30 to 45 percent. The rest of the amount will be provided by the lender. This loan to value ratio is the most common percentage used by lenders in commercial lending. Some relationship managers may offer a financing margin of 80% and a repayment of 30 years for commercial and industrial property financing. You will be given the option for a fixed rate, floating rate, or SIBOR rate packages. The property must show a sufficient debt-payment ratio, which is calculated using Net Operating Income/ Total Annual Debt Burden.What are the other factors to consider?You need to demonstrate a solid income stream.Provide a very good profile of the management team.Provide the building plan and blueprints for the use of the property, if available.In case of a sole tenant, the sole tenant must be able to demonstrate a solid and sound financial strength. Here, tenants are considered as business.The features you need to look in the financial statements are, profit, positive net worth, consistent monthly collections, committed paid up capital, and positive cash flow. With a stable business, it seems logical to buy a commercial property than renting it. Sometimes, the mortgage payments are lower than the rent.
Tag Archives: Investing
Getting Started With Online Investing
As with everything else these days, the stock market has gone online. If you can shop, pay bills, and do your banking online, why not invest too? Investing online is not as big of an ordeal as some people make it out to be. The key is to know what you want before you start.
When opening a new account, investors need to answer the regular questions, such as the type of account they want and how it will be funded. When selecting an account type the kind you choose will depend on whether or not the account is taxable or tax-deferred, and also whether it is for just you or you and someone else.
You will also have to decide whether your account will be “cash” or “margin.” A cash account means you are only able to place trades for investments with money in your account. A margin account gives you a credit line from your brokerage firm. You can also have a “margin account with options,” which means you are purchasing the right to buy and/or sell a stock at a specific price. Options are quite complicated and usually only purchased by traders with experience and large portfolios.
After choosing the type of account money must be deposited. The initial deposit can be sent to the firm by check or an automatic transfer from a bank account. Another option is transferring an account from a different brokerage firm, but the process is quite lengthy and can take months to complete.
If you are trying online investing for the first time, start small. Don’t put every penny of your life savings into an online account. A smaller sum is easier to handle and easier to keep track of. When you feel confident and are ready, then you can expand your online account.
Another good thing to do when investing online is to try and stay diversified, in other words don’t concentrate all of your portfolio on just one thing, instead develop a well-balanced portfolio of stocks, bonds, and cash.
Many brokers will encourage you not to bail out on mutual funds. The main reason most investors are in mutual funds are because they don’t have the experience to make their own calls on stocks. They are also occupied with other things beside just watching the stock market. Keeping your mutual funds can be a wise decision instead of prematurely “playing the market” in individual stocks.
It is important to remember that online brokerage firms add fees and charges that need to be looked at closely. Before buying and selling large scale stocks online, look at what the tax results are of such trading. The average online brokerage costs are lower than full-service brokers, but fees can still add up.
Remember that just because you are investing online, the Internet is not foolproof and you are bound to run into some problems. There will surely be times when you are unable to gain access to your account. You’re connection could be down, the brokerage firm’s server could crash if trading is overly heavy, you could experience a software glitch, or you may be away from your computer when there is a major market move. Always be prepared for these things and keep in mind the available alternative trading options such as phone trading.
When investing online it is your responsibility to say as informed as possible. Don’t just settle for what you hear. Instead do a little research on a company before investing in them. There are services that send you automatic e-mail messages over news about your stock; take advantage of these. Remember in online investing everything is up to you and knowledge is power.