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surveyor
Participantanecdotal
It’s what I’ve heard from commercial lenders and also from a few horror stories.
There are not a lot of “distressed” commercial sellers. They tend to be more savvy than most and will usually not sell into a bad deal. These people are usually able to hold on to a property for a long time.
Being commercial, these guys will not agree to a long term deal. They will usually require that the loan be paid off within a few years (3 years to 5 at most). If you go into this type of deal, there is no guarantee that you will be able to find a new loan within that time frame. As investors, we are always optimistic that someone will give us funding but in commercial it is just too risky. If you are not able to find funding in that time, you will be stuck trying to renegotiate with the owner/seller on worse terms or accepting a last minute deal from a commercial lender with not so favorable terms.
If it cash flows terrific, you should be able to find funding. If it isn’t, then the lenders will not want to give you funding anyways. That’s kind of a sign that maybe the deal you have is not so terrific as you thought.
Just my two cents. It happened to me and I was VERY fortunate to find funding. Understand that I’m kind of an easy going person and very positive, but the owner/seller in my case was a total ass and I would not recommend that experience to anyone. Live and learn.
Participantanecdotal
It’s what I’ve heard from commercial lenders and also from a few horror stories.
There are not a lot of “distressed” commercial sellers. They tend to be more savvy than most and will usually not sell into a bad deal. These people are usually able to hold on to a property for a long time.
Being commercial, these guys will not agree to a long term deal. They will usually require that the loan be paid off within a few years (3 years to 5 at most). If you go into this type of deal, there is no guarantee that you will be able to find a new loan within that time frame. As investors, we are always optimistic that someone will give us funding but in commercial it is just too risky. If you are not able to find funding in that time, you will be stuck trying to renegotiate with the owner/seller on worse terms or accepting a last minute deal from a commercial lender with not so favorable terms.
If it cash flows terrific, you should be able to find funding. If it isn’t, then the lenders will not want to give you funding anyways. That’s kind of a sign that maybe the deal you have is not so terrific as you thought.
Just my two cents. It happened to me and I was VERY fortunate to find funding. Understand that I’m kind of an easy going person and very positive, but the owner/seller in my case was a total ass and I would not recommend that experience to anyone. Live and learn.
Participantanecdotal
It’s what I’ve heard from commercial lenders and also from a few horror stories.
There are not a lot of “distressed” commercial sellers. They tend to be more savvy than most and will usually not sell into a bad deal. These people are usually able to hold on to a property for a long time.
Being commercial, these guys will not agree to a long term deal. They will usually require that the loan be paid off within a few years (3 years to 5 at most). If you go into this type of deal, there is no guarantee that you will be able to find a new loan within that time frame. As investors, we are always optimistic that someone will give us funding but in commercial it is just too risky. If you are not able to find funding in that time, you will be stuck trying to renegotiate with the owner/seller on worse terms or accepting a last minute deal from a commercial lender with not so favorable terms.
If it cash flows terrific, you should be able to find funding. If it isn’t, then the lenders will not want to give you funding anyways. That’s kind of a sign that maybe the deal you have is not so terrific as you thought.
Just my two cents. It happened to me and I was VERY fortunate to find funding. Understand that I’m kind of an easy going person and very positive, but the owner/seller in my case was a total ass and I would not recommend that experience to anyone. Live and learn.
Participantcommercial
Commercial properties are a very difficult investment to work with and you should really tread into it very carefully. I will at least share what I’ve learned (some of it the hard way lol).
Apartments with 5 or more units are considered commercial.
It is VERY difficult to get funding for commercial properties. Because they are not usually financed by the government, they often want you to have an LTV of around 25% or even 40%. Their amortizations are also not 30 year fixes like residential properties. The amortizations they have run around 20 year or so. If you are analyzing a property, put that into your calculations. Interest rates are also much higher and can run up to 10%. Make sure you at least know what loan you can get and what the loan parameters are because if you are using residential loan rates for commercial, you will be in for a rude awakening.
Never never never go into an owner financed loan. If you can’t get funding through a commercial lender, don’t buy the property in the first place.
The value of a commercial property is determined by its income, net income, but do realize that you have to study the income/expenses statement really closely because numbers can be manipulated. There are three forms of appraisal methods, and for commercial, the banks will decide to lend to you using the income/net income method. However, most people try to sell you the property based on comparative value.
Even the vacancy rate can be tampered with, the owner may say that it is 100% occupied, but they may have made deals with the tenants to stay there for free or for a reduced rent.
Repairs, maintenances, and fees for a commercial property are much higher than a residential property and many of them do not show up on the expenses statement often because they are deemed “one-time” only expenses. Property taxes are also a big deal because most municipalities are not as eager to lower the assessment for you as compared to residential. Also, they will try to raise your assessments as often as they can.
For most commercial properties, you will need to hire a property manager. Believe me, you do not want to deal with the stuff yourself. It is more than a full time job.
Utility rates for commercial buildings are also higher than residential. Power, water, trash, sewer, these fees have been going up the past few years at an alarming rate.
There are more but I think this covers the basics. I’ll see if I can remember more (after a huge night of binge drinking).
Participantcommercial
Commercial properties are a very difficult investment to work with and you should really tread into it very carefully. I will at least share what I’ve learned (some of it the hard way lol).
Apartments with 5 or more units are considered commercial.
It is VERY difficult to get funding for commercial properties. Because they are not usually financed by the government, they often want you to have an LTV of around 25% or even 40%. Their amortizations are also not 30 year fixes like residential properties. The amortizations they have run around 20 year or so. If you are analyzing a property, put that into your calculations. Interest rates are also much higher and can run up to 10%. Make sure you at least know what loan you can get and what the loan parameters are because if you are using residential loan rates for commercial, you will be in for a rude awakening.
Never never never go into an owner financed loan. If you can’t get funding through a commercial lender, don’t buy the property in the first place.
The value of a commercial property is determined by its income, net income, but do realize that you have to study the income/expenses statement really closely because numbers can be manipulated. There are three forms of appraisal methods, and for commercial, the banks will decide to lend to you using the income/net income method. However, most people try to sell you the property based on comparative value.
Even the vacancy rate can be tampered with, the owner may say that it is 100% occupied, but they may have made deals with the tenants to stay there for free or for a reduced rent.
Repairs, maintenances, and fees for a commercial property are much higher than a residential property and many of them do not show up on the expenses statement often because they are deemed “one-time” only expenses. Property taxes are also a big deal because most municipalities are not as eager to lower the assessment for you as compared to residential. Also, they will try to raise your assessments as often as they can.
For most commercial properties, you will need to hire a property manager. Believe me, you do not want to deal with the stuff yourself. It is more than a full time job.
Utility rates for commercial buildings are also higher than residential. Power, water, trash, sewer, these fees have been going up the past few years at an alarming rate.
There are more but I think this covers the basics. I’ll see if I can remember more (after a huge night of binge drinking).
Participantcommercial
Commercial properties are a very difficult investment to work with and you should really tread into it very carefully. I will at least share what I’ve learned (some of it the hard way lol).
Apartments with 5 or more units are considered commercial.
It is VERY difficult to get funding for commercial properties. Because they are not usually financed by the government, they often want you to have an LTV of around 25% or even 40%. Their amortizations are also not 30 year fixes like residential properties. The amortizations they have run around 20 year or so. If you are analyzing a property, put that into your calculations. Interest rates are also much higher and can run up to 10%. Make sure you at least know what loan you can get and what the loan parameters are because if you are using residential loan rates for commercial, you will be in for a rude awakening.
Never never never go into an owner financed loan. If you can’t get funding through a commercial lender, don’t buy the property in the first place.
The value of a commercial property is determined by its income, net income, but do realize that you have to study the income/expenses statement really closely because numbers can be manipulated. There are three forms of appraisal methods, and for commercial, the banks will decide to lend to you using the income/net income method. However, most people try to sell you the property based on comparative value.
Even the vacancy rate can be tampered with, the owner may say that it is 100% occupied, but they may have made deals with the tenants to stay there for free or for a reduced rent.
Repairs, maintenances, and fees for a commercial property are much higher than a residential property and many of them do not show up on the expenses statement often because they are deemed “one-time” only expenses. Property taxes are also a big deal because most municipalities are not as eager to lower the assessment for you as compared to residential. Also, they will try to raise your assessments as often as they can.
For most commercial properties, you will need to hire a property manager. Believe me, you do not want to deal with the stuff yourself. It is more than a full time job.
Utility rates for commercial buildings are also higher than residential. Power, water, trash, sewer, these fees have been going up the past few years at an alarming rate.
There are more but I think this covers the basics. I’ll see if I can remember more (after a huge night of binge drinking).
Participantcommercial
Commercial properties are a very difficult investment to work with and you should really tread into it very carefully. I will at least share what I’ve learned (some of it the hard way lol).
Apartments with 5 or more units are considered commercial.
It is VERY difficult to get funding for commercial properties. Because they are not usually financed by the government, they often want you to have an LTV of around 25% or even 40%. Their amortizations are also not 30 year fixes like residential properties. The amortizations they have run around 20 year or so. If you are analyzing a property, put that into your calculations. Interest rates are also much higher and can run up to 10%. Make sure you at least know what loan you can get and what the loan parameters are because if you are using residential loan rates for commercial, you will be in for a rude awakening.
Never never never go into an owner financed loan. If you can’t get funding through a commercial lender, don’t buy the property in the first place.
The value of a commercial property is determined by its income, net income, but do realize that you have to study the income/expenses statement really closely because numbers can be manipulated. There are three forms of appraisal methods, and for commercial, the banks will decide to lend to you using the income/net income method. However, most people try to sell you the property based on comparative value.
Even the vacancy rate can be tampered with, the owner may say that it is 100% occupied, but they may have made deals with the tenants to stay there for free or for a reduced rent.
Repairs, maintenances, and fees for a commercial property are much higher than a residential property and many of them do not show up on the expenses statement often because they are deemed “one-time” only expenses. Property taxes are also a big deal because most municipalities are not as eager to lower the assessment for you as compared to residential. Also, they will try to raise your assessments as often as they can.
For most commercial properties, you will need to hire a property manager. Believe me, you do not want to deal with the stuff yourself. It is more than a full time job.
Utility rates for commercial buildings are also higher than residential. Power, water, trash, sewer, these fees have been going up the past few years at an alarming rate.
There are more but I think this covers the basics. I’ll see if I can remember more (after a huge night of binge drinking).
Participantcommercial
Commercial properties are a very difficult investment to work with and you should really tread into it very carefully. I will at least share what I’ve learned (some of it the hard way lol).
Apartments with 5 or more units are considered commercial.
It is VERY difficult to get funding for commercial properties. Because they are not usually financed by the government, they often want you to have an LTV of around 25% or even 40%. Their amortizations are also not 30 year fixes like residential properties. The amortizations they have run around 20 year or so. If you are analyzing a property, put that into your calculations. Interest rates are also much higher and can run up to 10%. Make sure you at least know what loan you can get and what the loan parameters are because if you are using residential loan rates for commercial, you will be in for a rude awakening.
Never never never go into an owner financed loan. If you can’t get funding through a commercial lender, don’t buy the property in the first place.
The value of a commercial property is determined by its income, net income, but do realize that you have to study the income/expenses statement really closely because numbers can be manipulated. There are three forms of appraisal methods, and for commercial, the banks will decide to lend to you using the income/net income method. However, most people try to sell you the property based on comparative value.
Even the vacancy rate can be tampered with, the owner may say that it is 100% occupied, but they may have made deals with the tenants to stay there for free or for a reduced rent.
Repairs, maintenances, and fees for a commercial property are much higher than a residential property and many of them do not show up on the expenses statement often because they are deemed “one-time” only expenses. Property taxes are also a big deal because most municipalities are not as eager to lower the assessment for you as compared to residential. Also, they will try to raise your assessments as often as they can.
For most commercial properties, you will need to hire a property manager. Believe me, you do not want to deal with the stuff yourself. It is more than a full time job.
Utility rates for commercial buildings are also higher than residential. Power, water, trash, sewer, these fees have been going up the past few years at an alarming rate.
There are more but I think this covers the basics. I’ll see if I can remember more (after a huge night of binge drinking).
Participant[quote=SK in CV]You know surveyor, I agree with you. And that kind of makes my point. And despite Dick Armey’s assertion, the few voices on the right that did step up and criticize the spending never got much traction. They were never in revolt. He wasn’t in revolt. Armey, through his Freedomworks, was a primary organizer of the Tea Party movement,[/quote]
There was a revolt. Why do you think the Democrats were able to get majorities in both houses of Congress? Because the conservatives stayed home instead of voting for the Republicans or going to bat for them. There wasn’t a lot of interest of trying to raise money for Republicans if they weren’t going to listen.
Yes, in a lot of ways, the Tea Party members are taking a different approach, because they not part of Obama’s natural constituency. They know Obama, the Democrats, and even the Republican party are not willing to listen to them. And so they have to make their voices heard more forcefully. They already tried to make their voices heard within the system and that didn’t work.
And for that they are vilified as racists and hate-mongers.
Participant[quote=SK in CV]You know surveyor, I agree with you. And that kind of makes my point. And despite Dick Armey’s assertion, the few voices on the right that did step up and criticize the spending never got much traction. They were never in revolt. He wasn’t in revolt. Armey, through his Freedomworks, was a primary organizer of the Tea Party movement,[/quote]
There was a revolt. Why do you think the Democrats were able to get majorities in both houses of Congress? Because the conservatives stayed home instead of voting for the Republicans or going to bat for them. There wasn’t a lot of interest of trying to raise money for Republicans if they weren’t going to listen.
Yes, in a lot of ways, the Tea Party members are taking a different approach, because they not part of Obama’s natural constituency. They know Obama, the Democrats, and even the Republican party are not willing to listen to them. And so they have to make their voices heard more forcefully. They already tried to make their voices heard within the system and that didn’t work.
And for that they are vilified as racists and hate-mongers.
Participant[quote=SK in CV]You know surveyor, I agree with you. And that kind of makes my point. And despite Dick Armey’s assertion, the few voices on the right that did step up and criticize the spending never got much traction. They were never in revolt. He wasn’t in revolt. Armey, through his Freedomworks, was a primary organizer of the Tea Party movement,[/quote]
There was a revolt. Why do you think the Democrats were able to get majorities in both houses of Congress? Because the conservatives stayed home instead of voting for the Republicans or going to bat for them. There wasn’t a lot of interest of trying to raise money for Republicans if they weren’t going to listen.
Yes, in a lot of ways, the Tea Party members are taking a different approach, because they not part of Obama’s natural constituency. They know Obama, the Democrats, and even the Republican party are not willing to listen to them. And so they have to make their voices heard more forcefully. They already tried to make their voices heard within the system and that didn’t work.
And for that they are vilified as racists and hate-mongers.
Participant[quote=SK in CV]You know surveyor, I agree with you. And that kind of makes my point. And despite Dick Armey’s assertion, the few voices on the right that did step up and criticize the spending never got much traction. They were never in revolt. He wasn’t in revolt. Armey, through his Freedomworks, was a primary organizer of the Tea Party movement,[/quote]
There was a revolt. Why do you think the Democrats were able to get majorities in both houses of Congress? Because the conservatives stayed home instead of voting for the Republicans or going to bat for them. There wasn’t a lot of interest of trying to raise money for Republicans if they weren’t going to listen.
Yes, in a lot of ways, the Tea Party members are taking a different approach, because they not part of Obama’s natural constituency. They know Obama, the Democrats, and even the Republican party are not willing to listen to them. And so they have to make their voices heard more forcefully. They already tried to make their voices heard within the system and that didn’t work.
And for that they are vilified as racists and hate-mongers.
Participant[quote=SK in CV]You know surveyor, I agree with you. And that kind of makes my point. And despite Dick Armey’s assertion, the few voices on the right that did step up and criticize the spending never got much traction. They were never in revolt. He wasn’t in revolt. Armey, through his Freedomworks, was a primary organizer of the Tea Party movement,[/quote]
There was a revolt. Why do you think the Democrats were able to get majorities in both houses of Congress? Because the conservatives stayed home instead of voting for the Republicans or going to bat for them. There wasn’t a lot of interest of trying to raise money for Republicans if they weren’t going to listen.
Yes, in a lot of ways, the Tea Party members are taking a different approach, because they not part of Obama’s natural constituency. They know Obama, the Democrats, and even the Republican party are not willing to listen to them. And so they have to make their voices heard more forcefully. They already tried to make their voices heard within the system and that didn’t work.
And for that they are vilified as racists and hate-mongers.
Participant[quote=afx114]Those are very valid points and I agree with most of them. But please refer back to the graphs I posted on page 2 of this thread. I still haven’t heard anyone explain the logic behind the claim that our taxes are too high. They aren’t — both historically and comparatively speaking. Even if we raised them 5% across the board.[/quote]
Most people think that taxes are high enough. Perhaps they have not been historically high. But do you really want to raise taxes at this time? With the economy in such bad shape? History shows they tried this before and it didn’t work (Smoot-Hawley anyone?). If you raise tax rates 5%, will you be willing to accept the x% rise in unemployment? My answer is no. Perhaps that is the attitude of the Tea Party.
Maybe they are too high NOW because of the economic situation. Maybe they are too high NOW because the government is contemplating raising them. Maybe they are too high NOW because business are reluctant to increase their hiring.
So while a time based graph is nice, you have to recognize the current conditions and place them in proper context. I think you’ll agree with me that things haven’t been this bad in a long time.
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