looking for private $

[parkerpowersports]

looking to purchase the shop were renting, not having any luck with banks, thinking about private lenders. i know its more costly but think itd be worth it. any input would be appreciated.

 

[RiverDave]

looking to purchase the shop were renting, not having any luck with banks, thinking about private lenders. i know its more costly but think itd be worth it. any input would be appreciated.

There is hard $$ loans in Parker from some of the more wealthy guys around.. I gotta be honest though at 9-10% I really don't think it would be worth it. I'd rent that thing until the roof caved in.. And then when it caved it, I'd call the land lord because it's not your problem. If you buy it, and the roof leaks, caves in, it is exactly your problem.

I've rented houses etc.. my whole life, and never had a single thing go wrong with any of them.. I buy a brand new house, and it seems like it's always f'n something, and it's always costing $$.

RD

 

[Tom Brown]

There is hard $$ loans in Parker from some of the more wealthy guys around.. I gotta be honest though at 9-10% I really don't think it would be worth it.

I think it's worth investigating, Dave. Around here, houses are priced so that a 90%, 25 year loan at 4% would cost about the same as renting the house. Leasing commercial real estate is disproportionately more, as compared to property value. At least, around here.

How much money are we talking about, Nate? It wouldn't surprise me if you could find someone willing to provide a mortgage for you but it would have to be a local Parker resident. It might pencil out. You never know until you have a look at the figures. Depending on how much you put down, it might not even be a hard money loan.

Good for you for having a look at the idea. :cool

 

[copterzach]

Renting is 100% write off. No depreciation. Downside no equity??


Sent from South Texas

 

[troostr]

That makes me curious, what WOULD pencil out better? Renting: depending on the rent $ overhead could be less without building repair costs, property tax, etc. Owning: equity, absolute stability (owner can't terminate lease). Someone smarter on the AZ tax code would be best to put a rough figure on this.

Good Luck Nate!

 

[Tom Brown]

That makes me curious, what WOULD pencil out better? Renting: depending on the rent $ overhead could be less without building repair costs, property tax, etc.

If the cost to rent is lower than the cost to own then you are renting from a philanthropic moron.

 

[ductape1000]

Wow!! This is very cool. From taking the chance by packing your shit and moving out there to a little corner of that building, to taking over the whole place, to looking at buying the place in the matter of a few years.

Congrats on all your hard work Nate! Hopefully you can make some happen here! If I had it, I would loan it to you. Youre a good dude! :thumbup:

sent from a van at the waters edge.

 

[Outdrive1]

What do they want for the building?

 

[Tamalewagon]

I've got to agree with Dave on this one. Commercial loans are quite a bit more expensive (in rate). Hard money loans are incredibly expensive often with rates in the 7-15% range and you will most likely pay 5-10 points for the loan. Hard money loans are only meant to keep for a very short duration of time as the investors will want to move on to the next client quickly to maximize their capital. If you can't go with the conventional commercial route, I would recommend you continue to rent. My .02. I think the best thing you could do at this point is to consult a financial planner or CPA to map out how the purchase could or could not benefit you. Congratulations on your rapid expansion and success. :thumbsup

 

[ChumpChange]

looking to purchase the shop were renting, not having any luck with banks, thinking about private lenders. i know its more costly but think itd be worth it. any input would be appreciated.

Not sure why you're not having problems with the banks but it's probably just because Banks Suck! Surprised nobody has stated that quite yet.

In regards to private money, not only are they more expensive but they're also more conservative loan to value wise. A SBA loan can get you in the building with as low as 10% down. From a private investor standpoint, they're generaally not going to want to finance more than 60% of the appraised value or purchase price, whichever is less. Unless they're a local and will stand behind you, you're going to need a 30%-40% down payment to get into a private money deal. It costs money to foreclose on somebody so they're going to make sure there is an upside if that happens. When you stop paying and the interest starts accruing, they need to protect their investment during that process.

Will private money be more expensive interest wise? Yes. At the same time, many are interest only loans as it's just easier to service so monthly payments might be similar.

You really need to sit down with somebody knowledgable in finance to help you pencil it all out.

CC

 

[Chestah Cheetah]

Will the seller carry the note? Many will consider it and may even offer you close to conventional rates.

 

[Outdrive1]

Will the seller carry the note? Many will consider it and may even offer you close to conventional rates.

X2. This would be the first place I'd start.

 

[H20 Toie]

I did a hard money loan couple years ago because i had to, terrible rates, i wouldn't even think about it for a building purchase. Right now banks want owner occupied businesses so not sure why you are having trouble. did you check with local community bank? they are far better than the big banks.
If that fails then find a building that owner will carry, may cost you a little more but far less than going private.

 

[2Driver]

I do private money lending in AZ.
The going rate (of course you can bargain anything) is around 13% with a 30-50% LTV, first position loan and a very conservative market appraisal.

 

[elcajones]

The absolute best, and probably not possible, hard money loan would look like..
60% loan to value
$10,000 to 4-5 points (% of loan) which ever is more.
a rate of 8% to 13%. Higher might be possible without said points.
There will usually be a prepayment penalty unless the up front points are substantial.
They may require an exit plan in a few years. If you're unable to refi into another loan, you may lose the building.

These loans are not structured for a long term investment.

 

[parkerpowersports]

Thanks guys for the input, ill try to answer all the questions as best as possible. First, current owner wants out, and will not be interested in carrying, we discussed 230k as a selling price. My credit is still hurt from California issues that have been resolved and im guessing the credit inquiries are whats keeping it from rising as i have no current negative issues. my thoughts are that if i could own it in 10-15 years free and clear i could eventually retire instead of paying 2500 a month till i die. another bank lending issue is that being in parker a decent percent of my income is cash, so my proof of income is fuzzy at best. but i show almost 240k in deposits so far this year. and as far as moving shops, no, no, fuck no.. my shop fits my needs well and ive bled on the floor too much to just move.

 

[shintoooo]

a decent percent of my income is cash, so my proof of income is fuzzy at best.

 

[parkerpowersports]

The absolute best, and probably not possible, hard money loan would look like..
60% loan to value
$10,000 to 4-5 points (% of loan) which ever is more.
a rate of 8% to 13%. Higher might be possible without said points.
There will usually be a prepayment penalty unless the up front points are substantial.
They may require an exit plan in a few years. If you're unable to refi into another loan, you may lose the building.

These loans are not structured for a long term investment.

A refi in the future would maybe be possible if in the mean time i can improve my credit and be paying toward principal?

 

[CampbellCarl]

What do they want for the building?

Going out on a limb here...............I'm guessing money.......................................

 

[parkerpowersports]

Going out on a limb here...............I'm guessing money.......................................

est 13500sqft property, 2 lots, prime location, 3 buildings, 4000sqft main building, 2500sqft 2nd building, and 600 sqft lube bay

 

[Tom Brown]

The geometry of your situation looks good to me. If it wasn't Parker, you'd own that place already. Of course, if it wasn't Parker, you wouldn't be able to afford it.

Nate, I'll tell you this: If I had listened to everyone who told me I couldn't do something, I'd be bagging groceries right now. I can't tell you how many people have told me I couldn't do something specific, when they didn't have the first clue about it or maybe didn't even know what I was describing. If you want to make something positive happen for yourself, you have to keep trying no matter how many doors are slammed in your face.

Buying that building would be good for you, although the rent isn't terrible considering the risk the LL is taking on a commercial building in Parker.

Hammer the seller down every three cents you can chip off him. Kick in the door of every lender in the business. Do not stop until you own that building. You can do this.

 

[hiredgun58]

Do you occupy the whole space?

 

[catman-do]

20-30% down depending on the age of the building, zoning, and area its located. 4.5-6 points, and rates around 11-13%. If there are any repairs or renovations that need to be made to the building to accomidate your business, they may need to be placed in an escrow account PTF. Obviously a short term loan.

 

[WATERDOG]

Can we assume it hasn't been appraised. You're gonna need to know.

 

[Guest]

The geometry of your situation looks good to me. If it wasn't Parker, you'd own that place already. Of course, if it wasn't Parker, you wouldn't be able to afford it.

Nate, I'll tell you this: If I had listened to everyone who told me I couldn't do something, I'd be bagging groceries right now. I can't tell you how many people have told me I couldn't do something specific, when they didn't have the first clue about it or maybe didn't even know what I was describing. If you want to make something positive happen for yourself, you have to keep trying no matter how many doors are slammed in your face.

Buying that building would be good for you, although the rent isn't terrible considering the risk the LL is taking on a commercial building in Parker.

Hammer the seller down every three cents you can chip off him. Kick in the door of every lender in the business. Do not stop until you own that building. You can do this.

Reactivating a website seems beyond your grasp, at the moment....

 

[DC-88]

Commercial appraisals can be expensive, so make sure to beat the owner down on price after getting a co-signer/or worst case a partner and a pre-approval. Then at least you will own a good chunk of it and won't miss out on the opportunity to buy in the current market. I hate the thought of anyone borrowing hard money for more than just a short time. I know too many of those lenders who do real well foreclosing on the properties they loaned on..... just my .02

 

[parkerpowersports]

Do you occupy the whole space?

every inch

 

[Tom Brown]

Reactivating a website seems beyond your grasp, at the moment....

Do you mean the web site that has been up for a week?

 

[parkerpowersports]

20-30% down depending on the age of the building, zoning, and area its located. 4.5-6 points, and rates around 11-13%. If there are any repairs or renovations that need to be made to the building to accomidate your business, they may need to be placed in an escrow account PTF. Obviously a short term loan.

i think 10% is more feasable right now, what do points affect? and there are not really any repairs necessary

 

[Guest]

Do you mean the web site that has been up for a week?

A front page, does not a website make, Tom...

 

[Starloans]

You put 10% down.
I can prolly get you 60% ($138,000) at 10.75% interest only for 5 years. That would give you a payment of $1236 a month.
Ask the seller to carry a 2nd of 30% ($69,000) at 12% interest only for 5 years. That you give you a payment of $690 a month.
You would still have tax and insurance on top of that.
You would have 5 years to get your income and credit issues in order and get conventional financing.

This is assuming the property will appraise at $230k.

If the seller wants out bad enough he will have to carry some paper but will get a good chunk of cash up from from the down payment and 1st lien financing. I bet the seller is also aware bank financing is tough right now especially on commercial.

You may have to give the seller a little extra on the purchase price to sweeten the pot.

PM me if you need help.

 

[billet racing]

I see your interest. We did the same here. Bought the building personally, rent back to the business. After 20 years, I own the building, and continue to collect rent.

Chamber of Commerce, if there is one in Parker. They can refer you.
Don't know what business, but check with your suppliers. They may be happy to have a commited,long time customer.
Any local retirement fund managers?
Have you tried the SBA? They can get you in touch with other lenders off the grid.

Jerry

 

[Enen]

Call Jeff Grohs 602 369 3291. He is one of my closest friends, and a commercial lender. His company just closed the loan for the Topoc Marina. They get tricky stuff done. Ask him for the River Dave's discount on fees

 

[thetub]

I see your interest. We did the same here. Bought the building personally, rent back to the business. After 20 years, I own the building, and continue to collect rent.

Chamber of Commerce, if there is one in Parker. They can refer you.
Don't know what business, but check with your suppliers. They may be happy to have a commited,long time customer.
Any local retirement fund managers?
Have you tried the SBA? They can get you in touch with other lenders off the grid.

Jerry

X2 on SBA. They could help out,they did for me. Arizona district number is: (SBA representative 602-745-7200.)

 

[Cole Trickle]

i think 10% is more feasable right now, what do points affect? and there are not really any repairs necessary

Points, sometimes also called a "discount point", are a form of pre-paid interest. One point equals one percent of the loan amount. By charging a borrower points, a lender effectively increases the yield on the loan above the amount of the stated interest rate. Borrowers can offer to pay a lender points as a method to reduce the interest rate on the loan, thus obtaining a lower monthly payment in exchange for this up-front payment. For each point purchased, the loan rate is typically reduced by 1/8% (0.125%).[1]

Paying Points represent a calculated gamble on the part of the buyer. There will be a specific point in the timeline of the loan where the money spent to buy down the interest rate will be equal to the money saved by making reduced loan payments resulting from the lower interest rate on the loan.

Selling the property or refinancing prior to this break-even point will result in a net financial loss for the buyer while keeping the loan for longer than this break-even point will result in a net financial savings for the buyer. The longer you keep the property financed under the loan with purchased points, the more the money spent on the points will pay off. Accordingly, if the intention is to buy and sell the property or refinance in a rapid fashion, buying points is actually going to end up costing more than just paying the loan at the higher interest rate.

Points may also be purchased to reduce the monthly payment for the purpose of qualifying for a loan. Loan qualification based on monthly income versus the monthly loan payment may sometimes only be achievable by reducing the monthly payment through the purchasing of points to buy down the interest rate, thereby reducing the monthly loan payment.

Discount points may be different from origination fee or broker fee. Discount points are always used to buy down the interest rates, while origination fees sometimes are fees the lender charges for the loan or sometimes just another name for buying down the interest rate. Origination fee and discount points are both items listed under lender-charges on the HUD-1 Settlement Statement.

The difference in savings over the life of the loan can make paying points a benefit to the borrower. If you intend to stay in your home for an extended period of time, it may be worthwhile to pay additional points in order to obtain a lower interest rate. Any significant changes in fees should be re-disclosed in the final good faith estimate (GFE).

Also directly related to points is the concept of the 'no closing cost loan'. If points are paid to acquire a loan, it is impossible at the same time for a broker bank or lender to make a premium for a higher rate. When premium is earned by making the note rate higher, this premium is sometimes used to pay the closing costs.

------

Your looking for something that will be very hard if not impossible to find.

Hard $$$ is a short term costly proposition. (you could get a hard $$$ loan on a house knowing that you have a business deal that is going to give you enough cash next year to pay the debt off)

Only a sucker/family member would allow 10% down on a hard $$$ loan. They want that 30-40% down so if you don't pay they can eat your significant cash down payment and then sell the property if things go bad.

Get your finnancials in order and then go standard finnancing...

 

[WATERDOG]

Points, sometimes also called a "discount point", are a form of pre-paid interest. One point equals one percent of the loan amount. By charging a borrower points, a lender effectively increases the yield on the loan above the amount of the stated interest rate. Borrowers can offer to pay a lender points as a method to reduce the interest rate on the loan, thus obtaining a lower monthly payment in exchange for this up-front payment. For each point purchased, the loan rate is typically reduced by 1/8% (0.125%).[1]

Paying Points represent a calculated gamble on the part of the buyer. There will be a specific point in the timeline of the loan where the money spent to buy down the interest rate will be equal to the money saved by making reduced loan payments resulting from the lower interest rate on the loan.

Selling the property or refinancing prior to this break-even point will result in a net financial loss for the buyer while keeping the loan for longer than this break-even point will result in a net financial savings for the buyer. The longer you keep the property financed under the loan with purchased points, the more the money spent on the points will pay off. Accordingly, if the intention is to buy and sell the property or refinance in a rapid fashion, buying points is actually going to end up costing more than just paying the loan at the higher interest rate.

Points may also be purchased to reduce the monthly payment for the purpose of qualifying for a loan. Loan qualification based on monthly income versus the monthly loan payment may sometimes only be achievable by reducing the monthly payment through the purchasing of points to buy down the interest rate, thereby reducing the monthly loan payment.

Discount points may be different from origination fee or broker fee. Discount points are always used to buy down the interest rates, while origination fees sometimes are fees the lender charges for the loan or sometimes just another name for buying down the interest rate. Origination fee and discount points are both items listed under lender-charges on the HUD-1 Settlement Statement.

The difference in savings over the life of the loan can make paying points a benefit to the borrower. If you intend to stay in your home for an extended period of time, it may be worthwhile to pay additional points in order to obtain a lower interest rate. Any significant changes in fees should be re-disclosed in the final good faith estimate (GFE).

Also directly related to points is the concept of the 'no closing cost loan'. If points are paid to acquire a loan, it is impossible at the same time for a broker bank or lender to make a premium for a higher rate. When premium is earned by making the note rate higher, this premium is sometimes used to pay the closing costs.

------

Your looking for something that will be very hard if not impossible to find.

Hard $$$ is a short term costly proposition. (you could get a hard $$$ loan on a house knowing that you have a business deal that is going to give you enough cash next year to pay the debt off)

Only a sucker/family member would allow 10% down on a hard $$$ loan. They want that 30-40% down so if you don't pay they can eat your significant cash down payment and then sell the property if things go bad.

Get your finnancials in order and then go standard finnancing...

Well put.:thumbsup

 

[ChumpChange]

Get your finnancials in order and then go standard finnancing...

Especially being this close to the end of the year........just sayin......:cool Run all that "cash" of yours though you P & L for your 2012 numbers.

Pay tax for one year and have a nice fixed rate for 10. Or you can save on your taxes for the next year and pay a high interest rate forever!

Start working with a financial broker now and plan on buying at the beginning of the year when your financials are finalized.

 

[2Driver]

Start with your own assesment of value. Look around Parker for some comps and average out the Commercial Sq footage sales prices (not the ask prices) to come to your own market value for the property.

Private money loans are completely negotiable as it is just between you and another person. Like buying a used car.

As a private lender I'd be most interested in what you are putting up as collateral for the loan? Is it merely the building with a down? If so, that will be hard to get a private loan for unless your down payment is pretty substantial. PM me if you like. I just had a 5 year loan pay off early today and have some idle cash.

 

[LuauLounge]

Check with the local Credit Unions.....
In CA, they have moved into small business lending, including SBA, and most have no restrictions as to membership.
One big factor, is they are basically a nonprofit. They only have to answer to their members and the board.


Much more personal than the bank route.

 

[elcajones]

i think 10% is more feasable right now, what do points affect? and there are not really any repairs necessary

A point is 1% of the loan amount. These are basically the upfront $$ the lender is charging you for the terms they are providing. The higher the fees are up front will affect the % interest, prepayment penalty, and how long the investor is willing to hold the loan...(Balloon payment).

"I think 10% down would be reasonable"

These lenders will absolutely not lend over 60% (40%down). Based on other posts (for the area) 50% is more likely. This will likely not be negotiable.

Honestly I don't think this is a good way to run a business. If you cannot obtain favorable loan terms you are saddling your shop with a huge burden, and lots of unknowns. You'd be better off letting him sell to someone else, who would have to adhere to the terms of your current lease.