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Demonstrate the ability to pay the loan and you are halfway toward becoming a commercial investor. Critical is an understanding of the major risks associated with commercial loans from the lenders perspective. Use this as a quick checklist when putting together an offer or evaluating your own potential.
1. Credit Risk. Perhaps the most common type of risk, this simply indicates the ability of the borrower to meet the contractual obligations as outlined in the loan documents…aka, the ability to pay. However, because you are dealing with commercial loans, the credit risk can be impacted by several items including competitive market factors (ie, the inability of the property to lease as expected, increased or decreased demand etc), interest rate sensitivity, rollover of leases (long term leases may be stable but are also more prone to declining values), changes in regulatory environment including zoning and tax laws.
2. Interest Rate Risk. The majority of commercial real estate is financed on a floating rate basis so interest rate risk is a very real threat depending upon the timing of cash flows, yield curves and other economic conditions that may adversely impact the economic climate.
3. Liquidity Risk. Banks must meet obligations the same way that private individuals are required to do so; loss of liquidity means the bank is unable to extend credit or must call loans in order to raise capital. For an investor, liquidity risk is typically isolated to the ability of the bank to loan money in the future should you require it in order to roll-over or refinance a loan.
4. Compliance Risk. Once the domain of elusive economic theory, compliance risk has risen to disproportionate levels thanks in large part to the current crisis as well as outside influences. Examples are broad but range from potential liability of bad debts during the mortgage boom to the current oil spill at BP; a bank may be held responsible for assets held as collateral. High risk assets will be assessed a premium.
Real estate investors seeking entry into the exciting world of commercial real estate should review each property from the perspective of the lender; examine risk levels and potential threats through the eyes of the bank in order to maximize your prospect for success.
Many variation of precast tiles can all be installed anywhere such as tile, precast fire place mantels or precast exterior window and door accents. Precast concrete steps or stairs, for instance are applied such as ceramic tile with thin set adhesives and grout. A masonry diamond grinder or skilsaw blade can cut with ease and prefit into place as a dry run.
Remove any loose or broken surface concrete or stucco to allow your precast concrete to bond as if its all one piece. After window was in place we also added some expanded wire for holding the grout and creating a bond reinforcement that wont crack. These precast stones need to be supported while the thin set dries for 24 hours. This is another fantastic way to accent the exterior finish for a better resale future value return on your investments.
After contact has been established the home owner will have to hand write a “hardship letter” to the mortgage servicer. At this point in time it will be the first chance of getting an idea of what the condition of the home is in. Therefore the time to make the necessary mental judgement’s for any rehab or diy home improvements deemed your ROI, the lender will be best suited for you to hand over an estimate of repairs, included in the pre foreclosure package submitted to the loss mitigation department.
Depending on your team member, the Realtor can aide with a CMA, this will set the bar as to what your exit strategy will be and help you decide, whether or not a new ceramic tile kitchen floor will be applicable or just as well replacing the shabby existing linoleum flooring that needs attention.
There are more loan options available than ever before, your home or home improvement project needing financing [kitchen remodel/tile flooring] in IE, so take advantage of all the choice’s. Look for a lender who offers a wide variety of loan types, from conventional fixed-rate and adjustable-rate to newer ones such as hybrid ARMs and option ARMs. Your lender should be able to match you with a mortgage that’s right for your financial situation and risk tolerance.![real estate investors [no-no]](http://www.my-diy-blog.com/wp-content/uploads/2010/02/thumbnail-22.jpg "real estate investors [no-no]")
Your home will eventually be worth more than you owe on it today, and all the lenders know this almost for certain, the caveat here lies in when and how much time it will take before this economy turns and heads for higher ground. The lenders also are aware of the fact that as long as the ratio of good to bad existing mortgages are out there than they will continue to have what they deem as non performing assets. Some guru’s believe it will still be heading downward through this year and the deals for investors could mean 50 cents on the dollar, that’s not to say in every market, but what it does say is that the time to acquire the tools is running out and no smart entrepreneur is willing to try and catch a falling knife.