Want to try your hand at investing in non-residential properties, but wondering where you can turn to get commercial real estate financing for your new business venture? While finding this type of financing isn’t always easy for the beginning investor, once you know the steps to take, getting financing for your commercial investments becomes a lot easier.

Before you get your hopes up too high, though, you should be aware that the majority of those plans to get make a million overnight by grabbing up commercial real estate for no money down are nothing but scams dreamed up by people trying to sell you something. Getting some serious financing to help you in your plans is absolutely possible, but your chances of becoming a commercial real estate investor for free are slim to none.

In this field, the next best thing to a free lunch is owner financing. This is where the seller keeps up a second mortgage so you won’t have to invest any of your own money. As you might have guessed, though, getting this type of financing is extremely rare. We’re talking unicorns and hen’s teeth, here. Even in cases where you can get a deal like this, the seller is ultimately getting a better deal and making a profit off you.

So what’s the most realistic option? If you need financing for commercial real estate purchase, your best bet is to go through a mortgage lender. The average commercial bank just won’t take the risk of lending money to commercial real estate investors, but mortgage lenders are a little more used to high risk loans. In particular, look for a lender that specifically mentions its willingness to work with unconventional borrowers or those with bad credit. This will help you find those lenders that are open to taking on a little risk.

Don’t be fooled into thinking you can easily get a loan to cover all your expenses, though. For one thing, most commercial real estate financing loans won’t cover more than 75% of the property’s appraised value. The rest of the money you’ll have to come up with yourself. You’ll also need to put a fair amount of effort into proving that the property has enough debt-repayment potential.

If you don’t think a commercial mortgage lender is for you, you can always look for a private mortgage lender. These individuals, often called angel investors, offer financing for property with a good chance of high returns despite a high risk. Unfortunately, they’re not too easy to find. First talk to a commercial mortgage lender about your chances of obtaining financing and while you’re there, ask if they can connect with any private mortgage lenders.

Obtaining commercial real estate financing isn’t so easy to get if you just jump in and expect someone to throw your dreams a “no money down” life preserver. If, however, you’re skilled at choosing investment properties with low risks, but the potential for high returns, you shouldn’t have much trouble getting financing through a mortgage lender.

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The world of commercial real estate is an entirely different from the world of residential real estate. Commercial real estate comes with a higher price tag and a high mortgage payment. The potential for the investment may not be realized for years, especially with a new business startup. This leaves the buyer with the problem of financing the purchase. While some investors have a large sum of money saved for the purchase of the commercial real estate, others simply have a great idea and want to run with that idea. These investors need backing and partners to make that dream a reality.

The financial backing need to ensure the purchase of a piece of commercial real estate can come in the form of a business partner or co financier. A business partner holds with it, the fact that the original investor may have to give up some of the freedoms surrounding the business plan and commercial property ideas. When another business person is involved in the purchase of the real estate and it is their money being spent, they will inevitably retain some of the purchase and business power.

In order to avoid this from happening, simply have a financial contract drawn up between you and the financier. This contract will simply state that the financier will only have the business authority to make decisions, in conjunction with the investor, in regards to the property. All other decisions, be them creative or business plan related, will be made solely by the original investor. The investor must remember that the financier will have the right to refuse such a contract and may pull out of the deal when approached with the idea of signing away the ability to make decisions about their own money.

If this is not an option, the financier may need to become a business partner in order to remain on the same business page as the investor. A business partner hold one half of the decision making power. They also hold one half of the risk if the business were to fail and one half of the monetary responsibility. Being a partner means literally taking half of the business away from the investor. This half of the business will include all profits and future sales and needs to be entered into only after much thought.

Commercial real estate is a high priced, high stressed decision. When choosing to purchase real estate for a business or commercial setting, finding that little bit of extra financial help can mean giving up half of he business. If this is worth it for you to make your dream a reality, then grab a partner and jump!

If you are not in the market to give away the rights to your investment hopes, saving is the only other option. Saving money to ensure you have enough backing for the first five years of the business can mean the difference in new business success and failure after the first few years.

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Many financial institutions continue to rely on commercial finance as a profitable service area despite a recent slump in residential sales. Commercial real estate loans are seen as a safer investment for companies with large capital reserves. The commercial market is growing even as single family homes sales are plummeting.

To better understand how commercial real estate loans work, it is important to differentiate between commercial financing and residential financing. Residential financing deals with single family homes or small apartment houses with between 2 and 4 units, with loans being usually under several hundred thousand dollars. Commercial real estate loans and financing covers much larger amounts of money and can include office buildings and condominium complexes.

Although a bank or investment company may be putting more money into an investment, commercial lending is seen as a safe investment. The criteria for loans are very stringent, with borrowing companies required to provide sufficient collateral and accountant verified assets and income statements. This allows the lender to make a informed decision on a borrower’s credit worthiness.

Commercial lending has additional benefits in that there is a greater range of products and opportunities available. Though the housing market tends to be cyclical, many commercial projects will take place even during market down times. Residential growth that has already taken place will continue to fuel further commercial business construction even when residential housing is on a slow down. Thus, commercial real estate loans are a desirable product for all lending institutions.

Since residential loans are smaller, there are naturally more institutions able to compete in the market. But commercial products usually mean very large amounts of money, so many small institutions can’t keep up. This shrinks the number of competitors and means less competition in the market, and a better deal for you. Stockholders and management can benefit from taking advantage of this natural working of capitalism.

As with any investment, there is risk of loss of capital. A project could suffer damage or a company might not make good on payment once the project is complete. But with adequate insurance and a careful examination of financial records, large banks and lending institutions can profit from commercial real estate loans. This is beneficial for the lending institution, the expanding business and the economy at large.

For the best commercial financing and commercial real estate lending see East Coast Commercial Finance. Howard Brule provides professional article writing [http://www.sbo-linknet.com] services.

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For nearly 30 years, I have represented borrowers and lenders in commercial real estate transactions. During this time it has become apparent that many Buyers do not have a clear understanding of what is required to document a commercial real estate loan. Unless the basics are understood, the likelihood of success in closing a commercial real estate transaction is greatly reduced.

Throughout the process of negotiating the sale contract, all parties must keep their eye on what the Buyer’s lender will reasonably require as a condition to financing the purchase. This may not be what the parties want to focus on, but if this aspect of the transaction is ignored, the deal may not close at all.

Sellers and their agents often express the attitude that the Buyer’s financing is the Buyer’s problem, not theirs. Perhaps, but facilitating Buyer’s financing should certainly be of interest to Sellers. How many sale transactions will close if the Buyer cannot get financing?

This is not to suggest that Sellers should intrude upon the relationship between the Buyer and its lender, or become actively involved in obtaining Buyer’s financing. It does mean, however, that the Seller should understand what information concerning the property the Buyer will need to produce to its lender to obtain financing, and that Seller should be prepared to fully cooperate with the Buyer in all reasonable respects to produce that information.

Basic Lending Criteria

Lenders actively involved in making loans secured by commercial real estate typically have the same or similar documentation requirements. Unless these requirements can be satisfied, the loan will not be funded. If the loan is not funded, the sale transaction will not likely close.

For Lenders, the object, always, is to establish two basic lending criteria:

1. The ability of the borrower to repay the loan ; and

2. The ability of the lender to recover the full amount of the loan, including outstanding principal, accrued and unpaid interest, and all reasonable costs of collection, in the event the borrower fails to repay the loan.

In nearly every loan of every type, these two lending criteria form the basis of the lender’s willingness to make the loan. Virtually all documentation in the loan closing process points to satisfying these two criteria. There are other legal requirements and regulations requiring lender compliance, but these two basic lending criteria represent, for the lender, what the loan closing process seeks to establish. They are also a primary focus of bank regulators, such as the FDIC, in verifying that the lender is following safe and sound lending practices.

Few lenders engaged in commercial real estate lending are interested in making loans without collateral sufficient to assure repayment of the entire loan, including outstanding principal, accrued and unpaid interest, and all reasonable costs of collection, even where the borrower’s independent ability to repay is substantial. As we have seen time and again, changes in economic conditions, whether occurring from ordinary economic cycles, changes in technology, natural disasters, divorce, death, and even terrorist attack or war, can change the “ability” of a borrower to pay. Prudent lending practices require adequate security for any loan of substance.

Documenting The Loan

There is no magic to documenting a commercial real estate loan. There are issues to resolve and documents to draft, but all can be managed efficiently and effectively if all parties to the transaction recognize the legitimate needs of the lender and plan the transaction and the contract requirements with a view toward satisfying those needs within the framework of the sale transaction.

While the credit decision to issue a loan commitment focuses primarily on the ability of the borrower to repay the loan; the loan closing process focuses primarily on verification and documentation of the second stated criteria: confirmation that the collateral is sufficient to assure repayment of the loan, including all principal, accrued and unpaid interest, late fees, attorneys fees and other costs of collection, in the event the borrower fails to voluntarily repay the loan.

With this in mind, most commercial real estate lenders approach commercial real estate closings by viewing themselves as potential “back-up buyers”. They are always testing their collateral position against the possibility that the Buyer/Borrower will default, with the lender being forced to foreclose and become the owner of the property. Their documentation requirements are designed to place the lender, after foreclosure, in as good a position as they would require at closing if they were a sophisticated direct buyer of the property; with the expectation that the lender may need to sell the property to a future sophisticated buyer to recover repayment of their loan.

Top 10 Lender Deliveries

In documenting a commercial real estate loan, the parties must recognize that virtually all commercial real estate lenders will require, among other things, delivery of the following “property documents”:

1. Operating Statements for the past 3 years reflecting income and expenses of operations, including cost and timing of scheduled capital improvements;

2. Certified copies of all Leases;

3. A Certified Rent Roll as of the date of the Purchase Contract, and again as of a date within 2 or 3 days prior to closing;

4. Estoppel Certificates signed by each tenant (or, typically, tenants representing 90% of the leased GLA in the project) dated within 15 days prior to closing;

5. Subordination, Non-Disturbance and Attornment (“SNDA”) Agreements signed by each tenant;

6. An ALTA lender’s title insurance policy with required endorsements, including, among others, an ALTA 3.1 Zoning Endorsement (modified to include parking), ALTA Endorsement No. 4 (Contiguity Endorsement insuring the mortgaged property constitutes a single parcel with no gaps or gores), and an Access Endorsement (insuring that the mortgaged property has access to public streets and ways for vehicular and pedestrian traffic);

7. Copies of all documents of record which are to remain as encumbrances following closing, including all easements, restrictions, party wall agreements and other similar items;

8. A current Plat of Survey prepared in accordance with 2005 Minimum Standard Detail for ALTA/ACSM Land Title Surveys, certified to the lender, Buyer and the title insurer, including items 1 through 4, 6, 7(a), 7(b)(1), 8 through 11(a) and 14 from the Surveyor’s “Optional Survey Responsibilities and Specifications” referred to as “Table A”;

9. A satisfactory Environmental Site Evaluation Report (Phase I Audit) and, if appropriate under the circumstances, a Phase 2 Audit, to demonstrate the property is not burdened with any recognized environmental defect; and

10. A Site Improvements Inspection Report to evaluate the structural integrity of improvements.

To be sure, there will be other requirements and deliveries the Buyer will be expected to satisfy as a condition to obtaining funding of the purchase money loan, but the items listed above are virtually universal. If the parties do not draft the purchase contract to accommodate timely delivery of these items to lender, the chances of closing the transaction are greatly reduced.

Planning for Closing Costs

The closing process for commercial real estate transactions can be expensive. In addition to drafting the Purchase Contract to accommodate the documentary requirements of the Buyer’s lender, the Buyer and his advisors need to consider and adequately plan for the high cost of bringing a commercial real estate transaction from contract to closing.

If competent Buyer’s counsel and competent lender’s counsel work together, each understanding what is required to be done to get the transaction closed, the cost of closing can be kept to a minimum, though it will undoubtedly remain substantial. It is not unusual for closing costs for a commercial real estate transaction with even typical closing issues to run thousands of dollars. Buyers must understand this and be prepared to accept it as a cost of doing business.

Sophisticated Buyers understand the costs involved in documenting and closing a commercial real estate transaction and factor them into the overall cost of the transaction, just as they do costs such as the agreed upon purchase price, real estate brokerage commissions, loan brokerage fees, loan commitment fees and the like.

Closing costs can constitute significant transaction expenses and must be factored into the Buyer’s business decision-making process in determining whether to proceed with a commercial real estate transaction. They are inescapable expenditures that add to Buyer’s cost of acquiring commercial real estate. They must be taken into account to determine the “true purchase price” to be paid by the Buyer to acquire any given project and to accurately calculate the anticipated yield on investment.

Some closing costs may be shifted to the Seller through custom or effective contract negotiation, but many will unavoidably fall on the Buyer. These can easily total tens of thousands of dollars in an even moderately sized commercial real estate transaction in the $1,000,000 to $5,000,000 price range.

Costs often overlooked, but ever present, include title insurance with required lender endorsements, an ALTA Survey, environmental audit(s), a Site Improvements Inspection Report and, somewhat surprisingly, Buyers attorney’s fees.

For reasons that escape me, inexperienced Buyers of commercial real estate, and even some experienced Buyers, nearly always underestimate attorneys fees required in any given transaction. This is not because they are unpredictable, since the combined fees a Buyer must pay to its own attorney and to the Lender’s attorney typically aggregate around 1% of the Purchase Price . Perhaps it stems from wishful thinking associated with the customarily low attorneys fees charged by attorneys handling residential real estate closings. In reality, the level of sophistication and the amount of specialized work required to fully investigate and document a transaction for a Buyer of commercial real estate makes comparisons with residential real estate transactions inappropriate. Sophisticated commercial real estate investors understand this. Less sophisticated commercial real estate buyers must learn how to properly budget this cost.

Conclusion

Concluding negotiations for the sale/purchase of a substantial commercial real estate project is a thrilling experience but, until the transaction closes, it is only ink on paper. To get to closing, the contract must anticipate the documentation the Buyer will be required to deliver to its lender to obtain purchase money financing. The Buyer must also be aware of the substantial costs to be incurred in preparing for closing so that Buyer may reasonably plan its cash requirements for closing. With a clear understanding of what is required, and advanced planning to satisfy those requirements, the likelihood of successfully closing will be greatly enhanced.

R. Kymn Harp is a seasoned attorney based in Chicago, Illinois with 30 years experience representing commercial real estate investors, lenders and developers. He is a frequent speaker at continuing education seminars, and is a widely published author on commercial and industrial real estate topics including due diligence, entitlements, commercial real estate financing, and Brownfield development and financing.

R. Kymn Harp can be contacted at:

Robbins, Salomon & Patt, Ltd
25 E. Washington Street Suite 100
Chicago, IL 60602
Dir. Ph: 312-456-0378
Email: rkharp@rsplaw.com

For more information go to: http://www.realestate-law.com

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For small business owners, commercial real estate investment is the hottest new retirement asset. If your mind has already jumped to “REITs” — or shares in Real Estate Investment Trusts — think again. I’m referring to the ownership of the commercial facilities small business owners currently lease, or new commercial facilities they can buy or develop.

Small business owners can thank the U.S. Small Business Administration for this rather substantial opportunity.

The SBA sponsors a specialty lending program designed to assist successful small business owners who want to acquire or develop their own facilities. The SBA did not design the program as a vehicle for creating superior retirement assets, but it doesn’t take a financial genius to connect the dots — and the business owners who have done so already are profiting enormously from their decision.

It’s called the SBA 504 program and it’s been around, though not well promoted, for nearly twenty years. If a banker failed to mention it as an alternative, don’t be too dismayed. Traditional lending institutions prefer conventional financial instruments because they offer traditional lending institutions greater profit margins. The SBA 504 program is clearly intended to benefit small business owners, not necessarily the financial community.

Here’s what SBA 504 loans offer qualified small business owners: below market fixed interest rates, longer terms and with a cash investment as low as 10 percent of the total project cost. Typically, small business owners can reduce real estate expenses by up to 40 percent while building an asset that benefits them long after they’ve sold or shuttered their business. As an investment, this type of financing offers the highest cash-on-cash return available for commercial real estate, which means not only does their capital work harder for them, but they keep more of it to grow their business too. You can’t find a traditional lending product that can beat this.

Next to home ownership, being your own boss is the number one American Dream. That’s why most small business owners started (or acquired) their own business. And their success is almost entirely dependent on their drive, ambition, innovation and attention to detail. Eventually, however, they’ll sell their business or pass it along to their children or shut it down (very few small businesses go public). With SBA 504 financing, they can turn that drive and ambition into another long-term asset that offers immediate and significant tax advantages, as well as makes great sense for long-term financial planning.

It’s important to take an innovative approach to commercial real estate ownership. For most clients, it is beneficial to establish a separate real estate holding company to own the real estate asset — it separates their operating company – the one they may eventually sell or pass on to their children — from this new and important real estate asset.

The result is that, in 10 years or 25, when a small business owner sells their business or gift it to their children or shutters it, the real estate asset will retain important appreciated value in a separate holding company.

They will also have been paying themselves rent instead of some faceless landlord, effectively growing their real estate asset, building their equity and benefiting from the tax advantages all at the same time.

And once they sell their business, they’ll still have an income-generating asset that is one of the soundest long-term investments anyone can make.

Small business owners can continue to be landlords in their retirement, or they can sell the asset — typically at a rather significantly appreciated value.

Even if they gift the business to their children, the new owners will have to continue paying rent. Who would make a better landlord their children than themselves?

The value of the SBA 504 lending program is clear. Most business owners that are educated about this financial planning strategy adopt it.

For successful small business owners, this is almost a no-brainer. If they haven’t already done so, it’s time to stop paying rent to someone else and consider owning for all the right reasons.

* * *

By Christopher Hurn

(Ed. Note? Hurn is president and chief executive officer at Mercantile Commercial Capital based in Altamonte Springs. His company handles commercial loans and specializes in 90% financing for small business owners who want to acquire or develop their own facilities. The company, in business for 19 months, has closed some $30 million in loans already and opened offices in Miami, Tampa and Chicago.)

Applying for commercial real estate financing is a big step. It’s not easy to get commercial property loans, especially if you are a first-time borrower. Before you apply, there are some things you should think about in order to be fully prepared.

Commercial real estate financing is different from residential real estate in a big way, according to the lender. With residential real estate, they are looking at how much the property is worth, and not overly concerned with how much it will make in the future. Residential property generally appreciates over time. With commercial real estate, however, they’ll be looking at future profits.

This means that they will be concerned less with the current worth, and more with the possible worth. As a result of this, they will be very concerned with what sort of profits the venture will generate. This is why it is very important for you to sit down and do the math. How much do you think it will make?

This means also that you should be clear on how you will use the property. What kind of business will this be? Is it going to be all for one business, or are you going to rent out units? These will be major considerations for the lender, so make sure you have a detailed plan all set out.

The actual geography of the property will also be a factor in determining whether you get your loan or not. Look at the location of the property and how that will effect the business. You will have more trouble getting financing for a place located way out in the sticks than a place on a highway off-ramp.

The size and type of the property will also be factors. You will want to look at the history of the place and make sure there aren’t any minor details that might cause trouble, like environmental problems.

Risk is the most important consideration to lenders. They will be looking at the future of the venture and, in particular, at possible things that could go wrong with the business.

A big part of this is the condition of the overall market. You can save yourself trouble later with your commercial real estate financing by studying the market and understanding its current trends. This is what your potential lender will be looking at, so it’s good for you to understand it as well. If the future is uncertain for the type of property you are trying to buy, they may be worried about making back the loan.

Before the deal closes, they will send you a “commitment letter.” This is a notification from the lender letting you know officially that you have been approved. More importantly for the lender, the commitment letter will have the terms and conditions of the loan. In other words, these are the rules.

It will tell you details about the closing conditions, rules for what you can and can’t do with the property, as well as a summary of all the terms you agreed on, making it official. Take a good look at this and make sure that it will not prohibit you from doing the things you intended when you requested the financing.

Finding commercial real estate financing is a long and drawn-out process, but if you can consider a few things before you apply, you can save yourself the headache of dealing with something unexpected later.

Getting a lender to approve your commercial real estate financing can be a difficult process at best. It helps if you are prepared for the questions they will ask and if you know exactly what your business plan is. KISCL can offer you materials to make this task easier. http://www.kiscl.com

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Now is one of the best times to purchase commercial real estate in the history of the United States. You may be a little surprised or even skeptical to hear this, after all the economy and financing is still problematic. We are going to explain why despite these challenges that now, really is a once in a life time opportunity to purchase commercial real estate.

Financing Purchase Transactions

First of all, financing purchase transactions for owner occupant (meaning for your business) type loan requests is viable, and much more so than other types of commercial mortgages. The government has stepped up, to back these programs, which have allowed these loans to remain viable. Terms on these loan programs are strong with 90% financing, and low, long term fixed rates.

Secondly, the secondary market, where commercial mortgages are sold, for these government backed loan programs, is very healthy and the demand for these loans is strong. This enables banks to fund your loan than turn around and sell it for a good profit – and get their capital back. Than they can go out and finance another loan; because they have enough liquidity on hand to do so.

Please keep in mind that other commercial mortgage programs, such a conventional, investor, etc remain difficult. Refinance transaction also remain problematic because 1. Property values have dropped substantially and 2. Loan to value requirement have also dropped substantially. These two components have created an almost perfect storm to make refinances difficult to finance.

Owner occupant purchase transactions are the main exception to the credit crisis. With a purchase, you are not trying to justify the value – your are establishing the value with the agreed upon purchase price. So, if your business is cash flow positive, and you have 10% in cash to invest, you should be able to get your commercial real estate purchase financed.

Property Values at Historic Lows

Property values have dropped 30 -40% in the last 3 years. Historically, after a down cycle, such as after the Savings and Loans Crisis, property values came back up rapidly, after the banking environment stabilized. We believe that the same dynamic will take place here. After the Commercial Mortgage Backed Securities (CMBS) market, for conventional investor deals is fixed, money via Wall Street will rush back into the market allowing for eased underwriting standards and more aggressive funding for all loan requests. In turn, property values will increase.

Keep in mind that in 2010 we have already seen a doubling of transactions (issuances) on the CMBS market compared to 2009. Sure you may say that the aggregate amount in 2010 is far less than what occurred in 2006 or 2007, but it IS coming back. And, never bet against the creativity and greed of Wall Street. Most importantly the investor demand is there – the challenge has been finding loan request that fit their current underwriting standards.

Many business owners will be kicking themselves in a few years that they didn’t take advantage of one of the best opportunities to purchase commercial real estate since the Great Depression or at a minimum since the S&L Crisis.

Jeff Rauth is President of Commercial Finance Advisors, Inc. Are you considering purchasing commercial real estate for your business? Have you talked to some of your local banks that were not as optimistic as we are? If so, contact Jeff Rauth, President of Jeff Rauth is President of Commercial Finance Advisors, Inc, a national commercial mortgage firm. He specializes in commercial mortgages between $400,000 – $10,000,000, nationwide – commercial real estate loan.

Purchase commercial real estate

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Home financing and commercial financing are two different ball games. If you want to secure a commercial real estate financing from a lending institution, you must take into account the following points

Initial steps

Before you apply for a commercial real estate financing, you must lay the ground work for it. You must posses a complete business plan before you visit your lender. Its almost impossible to secure a commercial financing facility unless you can provide the lender with a viable business plan

What the lender is looking for

Your credit rating is the first thing that the lender will look for before even thinking about giving you a loan. It’s a simple rule: the higher the credit rating, the more chance of you getting a loan. If you have a high credit rating it reflects your ability to pay off the debt.

He will calculate your ability to pay back the loan after taking into account your incomes and expenditures and the current debt burden.

The lender will calculate the cash generation capacity of your proposed plan. If you are buying the property in order to rent it, he will calculate your future monthly rentals, subtract your projected expenses and then conclude whether the remaining amount will be enough to pay your monthly installments.

In other words, the current value of the property will not be as important to the lender as its future worth and profit making capacity. So you must be very clear about that: the major concern of the lender is that he must get back his money in due course of time. If you can assure him of that, there is no doubt that he will lend you money

The Risk factor

The lender will explore every possibility of your failure since it is his job to gauge you from every aspect. He will try to see loopholes in your project. Don’t be discouraged. He is just doing his job. The lender will not be analyzing your loan as an isolated deal. Rather he will be considering the overall scenario of the property market and then adjust your proposal to the prevailing market trends. If you have already done this before submitting your proposal, it could score a plus point for you.

The Lending process

The lender will communicate his consent to offer you the loan facility through a document know as a “commitment letter”. This is an official communication that the loan you applied for has been approved. All the terms and conditions governing the deal will be included in the commitment letter. It is very important for you to read and understand the commitment letter word by word. If it contains certain clauses that restrain you from doing your desired business in the future, you must get it changed now.

Securing a real-estate financing is not at all easy but if you can see the whole financing process form the lender’s perspective- and prepare for it in advance, there is no reason why you won’t be able to get your required financing.

I invite you to learn more about Real Estate Investing and become a member of our FREE weekly tele-seminar class where we teach tips and strategy on how to grow your real estate investing business and how to raise Private Money by going to http://www.realestatewealthtoday.com/TuesdayTipsSignUp.html.

Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to Real Estate Investing Blog.

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Commercial property loans are used by many sectors of the business world to finance future investments and expansion efforts to grow a business.

With the recent collapse of the U.S. sub-prime mortgage market, credit is increasingly difficult for consumers to come by. Lenders are reducing their exposure to high-risk ventures. Lingering uncertainty about the credit market as well as the stability of the international money market causes widespread reluctance to finance ventures.

Fortunately for investors seeking commercial real estate financing, the commercial sector is not directly affected by these developments. Although riskier ventures will still be more difficult to finance with credit, the current economic climate has not stalled lenders.

With the recent developments in both the U.S., and across the international credit market, debt is becoming a well known concept.

While economic uncertainty would demand that all investors be prudent about entering into debt, most Organization for Economic Co-operation and Development countries are not in recession. In fact, they have actually experienced record growth and prosperity over the past decade. This lends some robustness to the major western economies.

Most business expansion is financed using commercial loans, so provided debt is entered into for purposes of investment, building, and expansion of the business (rather than a fundamental cash-flow problem). Debt is not in itself a negative thing. It is the return on that debt that is the problem.

Commercial real estate financing can be secured to fund the purchase of land for infrastructure and services development. Power plants, streets, utilities, shopping complexes, office or apartment buildings, parking facilities, parks, resorts, and golf courses, and even medical clinics or private hospitals are just a few such real estate investments.

Frequently, commercial property loans are sought as a means of refinancing existing debt to increase the total value of the investment. It is possible for private investors and companies to make a career in the reiterative process of reinvestment. Financing the cost of expansion against the projected profits of the venture can be quite lucrative.

It is true that there is still some volatility and uncertainty about the stability of the western economies. Consequently, investors should be as vigilant as ever about entering into unprofitable arrangements. Such factors influencing profitability include cost blowouts, too little potential return, or inherently risky ventures.

Investment consultants have made a market for themselves in advising smaller scale investors on commercial real estate financing, and providing them with the means of determining which projects are worth entering into, based on the available information. This includes taking into account the possible blowouts, and considering what might go wrong with any given project.

By applying basic rules of thumb, and not investing beyond certain thresholds, investors can increase their chances of sticking to projects that are within their means.

With the use of specialized software, this process can be further streamlined, allowing financiers to quickly weed out which projects are potentially unprofitable. Based on the available data and taking into account uncertainties and potential threats to the project, financiers can make smarter lending decisions.

Taking advantage of commercial real estate financing in the current market can be lucrative for you. If you are looking for a way to grow your business, investing in property is a potential solution. The professionals at KISCL offer software to make the task easier. http://www.kiscl.com

Are you seeking to raise capital for your real estate transaction? Try one of our Real Estate Private Placements

Well, this weekend marked the official end of the 2008 NFL season with the NFC defeating the AFC in the Pro Bowl in Hawaii. NOW what am I going to do on Sundays??? I guess I’ll have to find some useful things to occupy my time … like tennis, martial arts, biking, skiing … It is going to be HARD until the end of summer, but I’ll think of SOMETHING. I can always fund some commercial loans, which is our specialty! I’ve heard that even Fannie Mae and Freddie Mac are limiting cash out now … to ZERO dollars. Which make sense, since they are losing money faster than the Fed can print it. We still have some portfolio sources for multifamily. If you have a scenario, give us a call!

Commercial Financing Tip

Who Controls The Third Party Reports? In light of recent “events” in the mortgage markets, it comes as no surprise that lenders are changing how they handle third party reports. After the S&L meltdown in the late 1980s, FDIC insured lenders were required to order appraisals and not accept borrower or broker provided ones. Eventually, most lenders followed suit.

Now that requirement has been extended to all third party reports, particularly Environmental Phase 1 & 2 reports. New EPA guidelines and rules are making it harder to avoid liability in environmentally “challenged” properties where it can be shown that the lender did not exercise proper “due diligence” with regard to its environmental investigation. Save your money for third party reports until you have applied for a loan, otherwise you will be ordering your reports twice.

WANT TO USE THIS ARTICLE IN YOUR E-ZINE OR WEB SITE? You can, as long as you include this complete statement with it: “The Investment Property Insider” is published by Craig S. Higdon, a veteran commercial mortgage banker. He publishes the e-zine and blog, http://www.InvestmentPropertyInsider.com, for commercial real estate investors, developers, and industry professionals. Visit the blog and get this free report: “The 7 Biggest Loan Mistakes Real Estate Investors Make And How To Avoid Them.”

Are you seeking to raise capital for your real estate transaction? Try one of our Real Estate Private Placements