Investment Property Mortgage Loan Applications That Succeed

Your commercial property loan is turned down – Why?? It is particularly tough to get an investment property mortgage loan, and you will often find yourself rejected for no clear reason. This can be frustrating, but it is a learning experience. With each terrible rejection, you get a little wiser.

Well, what if you could skip all of those rejections and learn from others’ mistakes? Let’s look at the most common reasons why investment property mortgage loans get turned down. Then, you will know what to expect when you apply for your financing.

The Type of Business

The most common reason that loan applications are rejected is that the bank simply does not offer financing to certain kinds of businesses. Banks loan money on the basis of possible risk, and some business types are considered riskier than others. If you are trying to get financing for a golf course, restaurant, gas station or church, you might find it tricky to get funding. On the other hand, if you are looking for funding for an apartment complex or office building, it will be much easier.

What is your solution? Look for a lender that specializes in that particular type of business. On the Internet, there are all sorts of financing company options available. Also, look for non-traditional lenders who may be more likely to take on what they consider riskier ventures.

Don’t Ask For Too Much!

A big problem that causes many rejections is that borrowers simply ask for too much money. A bank is always ready to approve a smaller loan before it approves a bigger one, especially with the sub prime catastrophe that we’re seeing today. A bad loan for lots of money is not good for the lender or the borrower.

When you are working out your business plan, be realistic about how much you need, and how much you are able to pay back. It’s nice to have more than enough money to start your business, but it’s not so nice when you are struggling to pay the bills and have that giant debt hanging over your head. Ask for just as much as you need, and don’t aim too high.

The Source of Funding

Most traditional lenders will want to know detailed information about where the funds are coming from to make the down-payment. This is a reasonable request, but it can get those of us seeking a loan into trouble. The reason why this can be problematic is that they may consider the source a high risk. Remember, they’re not as optimistic about your business as you are!

Many businesses finance their down payment by using funds from what is called “subordinated debt.” This basically means some kind of secondary financing, like a seller second. Banks and other traditional lenders don’t like to see this. A non-traditional lender will be much more likely to approve a loan that uses secondary financing as a down payment.

Finally, remember that we all get rejected! Probably everyone you know who has started a small business has been turned down at least once, and most likely many more times than that.

Can Margin Lending Boost Your Investments

Margin lending means that you borrow some of the money that you are going to invest, this means that you will be able to take out larger investments which can add up to larger returns on your investment. When deciding whether you should use margin lending to accelerate your investments though there are a number of things you should consider.

So How Does a Marginal Loan Work?

The way margin lending works is that the loan you take out is secured against the shares or managed funds you invest in. For example, you could put $15,000 of your savings into an investment and then get a marginal loan for a further $15,000 doubling you investment to $30,000. You can invest with dipping into any of your own savings funds if you choose. For example, if you had equity in you home you could use the equity in your home to buy the initial stock and then take out a marginal loan to double your investment.

Who Should Do Margin Lending to Accelerate their Investments?

Margin lending is for those who have more to invest and wish to increase their exposure to the market, but you should also preferably have a high disposable income and be willing to take greater risks. You should also ensure that you have enough to meet any margin calls that may be made on you.

How to Protect Against Risks Involved with Using Margin Lending

Although margin lending can help you to accelerate your investments it also poses greater risks than simply investing your own money. To help cover these risks you should not invest all your available funds and you should spread your risk across a number of different sectors. Due to the increased risk you should also carefully consider how much you are actually going to take in margin lending so that you can accelerate your investments while still remaining reasonably safe.

How to Choose a Margin Loan

If you are new to margin lending and are currently looking for a loan, or if you are looking to renew a margin loan, how do you go about choosing the right loan? You should first look at what you want to invest in, what the loan-to-valuation and buffer margins are, how the margin is operated and what other fees are associated with the loan, and the minimum loan amount. Carefully look at all the information you are given about different margin loans and way these up carefully before deciding which loan you are going to work with.

Margin lending is useful to boost your investments as they allow you to invest more than you currently have available and so get greater returns. There is however greater risks involved with margin lending and steps should be taken to minimize these risks and your margin loan chosen carefully taking into consideration all the information you can get on the loan.

Changes For Business Finance and Working Capital Loan Programs

As business owners develop their small business loan plans for future financing and refinancing throughout the United States, there is an increasing awareness that there have been significant business finance changes that cannot be ignored. Some of these measures are likely to end up being permanent, and even the temporary commercial mortgage loan and working capital loan changes are expected to be in place for an extended time due to the severity of the current financial climate.

A reduction in commercial lenders as well as stricter standards for acquiring commercial loans and commercial mortgages has been the net result from business finance changes. Unfortunately there has also been no shortage of misinformation about the availability of commercial funding.

A significant reduction in business lending activity overall is perhaps the most dramatic change. This has been due to several events occurring almost simultaneously. Several major commercial lenders have gone out of business altogether. Many banks have stopped commercial finance lending while continuing consumer lending. Numerous business lenders have enacted stricter standards for the commercial financing transactions they are still willing to consider.

It remains to be seen how many changes will be permanent or temporary. But from a practical perspective, commercial borrowers are left with no choice but to adapt to the changing business finance environment. Business owners must be prepared to operate within a more complicated climate for commercial mortgage loans and small business loans regardless of how long the changes might be kept in place.

What should borrowers do about this? A primary option that business owners should explore involves looking beyond their local market area for help with commercial loans. To accomplish this, it should be helpful to contact a commercial financing expert operating throughout the United States.

In addition to fewer business lenders to choose from, there are two other significant changes which must be anticipated by business owners before seeking new commercial loans. First, more collateral for virtually all business finance funding is being demanded by many commercial lenders. Second, most lenders have cancelled or are about to eliminate unsecured lines of credit (usually called working capital loans) for many businesses.

One effective commercial financing strategy for overcoming the combined obstacles of more collateral, fewer lenders and reduced unsecured credit lines is to consider business cash advance programs based on future credit card processing transactions. This is proving to be one of the few sources of business funding that has not been adversely impacted by recent events. To learn more, it will be advisable to discuss the potential with a business finance expert who can provide advice about business cash advances as well as other small business financing solutions.

It is increasingly obvious that many banks will continue to modify their business lending programs in response to changing conditions. This means that another key change issue for working capital financing and commercial mortgages is the likelihood that more changes will be forthcoming in the near future.

To adequately prepare for future commercial finance changes that might (or might not) occur is a daunting task for a business owner. A commercial financing expert familiar with Plan B contingency financing for small business loans will prove to be a valuable resource for any borrower wanting to seriously deal with both current and future changes impacting the financial health of their business. By having a candid conversation with a commercial loan expert, business owners should be more capable of implementing an appropriate strategy for the vast changes which have recently occurred or are about to become effective for most business financing and working capital finance funding.

Why Buy a Car With Finance?

Car financing has been around for almost as long as cars have been around. Nearly everyone in the world has to buy a car with finance since few people have enough available capital to buy a car in cash. In most cases however, it is also preferable for even someone who can afford to buy a car to finance the vehicle. There are several advantages which financing gains for someone.

One of the most important advantages of financing a vehicle, especially when an extremely low interest rate is an option, is the money it can save you. There are situations where it will not have any ability to save a person any money, especially if the vehicle is fairly inexpensive or the person is unable to obtain a good interest rate.

For people who are able to obtain a low interest rate, or even no interest rate in some circumstances, financing a car is a great option because it allows them to keep their money for the length of the loan term. If they are able to place their money in any form of interest bearing account or investment which earns a higher APR or annual percentage rate than what they are paying on their vehicle then they actually stand to come out slightly ahead.

Another major advantage of buying a car with finance is related to the dealership. Dealerships are designed to make a profit so they will generally look for any method they can possibly find to make a profit. One area that many dealerships make a profit is on the financing of the vehicle. In most cases the dealership itself is not extending the financing but they usually receive a kickback from the financing company as a reward for selling the financing. This benefits the dealership and also the car buyer.

Typically, a dealership will be relatively unwilling to work with a buyer who is looking to pay for the car in full. This is due to the fact that in most cases very little profit margin is actually built in to the cost of the vehicle so they need to sell it for the ticket price in order to make any form of profit.

When you are looking to buy a vehicle with financing they are often far more willing to work with you on the price of the vehicle, or even the amount they are willing to offer you to buy off your old vehicle. This is due to the fact that they will be able to make profit through the financing instead of strictly through the vehicle. In many cases the amount of money you will pay in interest over the course of the loan will be little, if any, more than the amount of extra money you will pay to buy the vehicle in cash.

There are some limited circumstances where it is not advantageous to buy a car with finance. One of the first, and most important steps you can take when you are considering purchasing a new car is to weight all the different options you have available to you to pay for the vehicle to determine which one will offer you the lowest price over the long run. This will ensure that you receive the best possible deal when buying a car.

Owner Financing – 5 Reasons Sellers Accept Payments on Real Estate

Why would a seller agree to accept payments from a buyer for the purchase of property? Here are five reasons sellers consider owner financing property rather than requiring the buyer to obtain a bank loan:

1. Reduced Marketing Times

What is the first thing real estate agents do when a property is not moving and has been on the market for 60 to 90 days? They reduce the price and add the tag line “price reduced” to all advertising and signs.

Rather than reduce the price, it might be beneficial for the seller to offer financing. Buyers provided with financing can certainly pay full price in exchange for the many benefits they receive with owner financing, including the money they save by not paying expensive loan fees, origination fees, and points.

2. Increased Inventory of Prospective Purchasers

By offering owner financing, the seller increases marketability with a wider group of available purchasers. Statistics show that almost 40 percent of the American population is unable to qualify for traditional bank financing.

While not all of the “unqualified” group would be an acceptable risk for owner financing, it still widens the market of prospective buyers considerably. Anyone who has added the words “Owner Will Finance” or “Easy Terms” to a For Sale ad or Multiple Listing Service (MLS) listing knows the phone will ring off the hook with interested prospects.

3. Reduced Closing Times

Another advantage of offering owner financing is substantially reduced closing times. A closing involving a third-party conventional lender can take six to eight weeks while closing a seller-financed transaction through a reputable title company can take as little as two to three weeks. This is due to the reduced paperwork and less restrictive due diligence process.

4. Investment Strategy for Hard to Finance Properties

There are many properties that encounter financing difficulties including mixed use property, land, mobile and land, non-conforming, low value, and others. Investors realize excellent returns by paying a reduced cash or wholesale price on a hard-to-finance property and then reselling at a higher retail price with easy financing terms.

5. Interest Income

Why let the banks earn all the interest?  Sellers can keep the property-earning income even after they sell by offering owner financing.  For example, a $100,000 mortgage at 9 percent with monthly payments of $804.62 will pay back $289,663.20 over 30 years.  That additional $189,663.20 (over the $100,000 mortgage) is the power of interest income!  

If considering seller financing, be sure to consult with a qualified professional to properly document the transaction.  It also helps to speak with note investors to gain insight on appealing terms and structuring techniques.  This assures top-dollar pricing should you ever want to convert the payments to cash by assigning your note, mortgage, deed of trust, or contract to an investor.