Would be investors are often intimidated by the requirements to complete commercial loan packages and concerned about their lack of experience placing materials in the correct format for a commercial or residential loan application. The bad news is the requirements are significant. The good news is preparation is straight forward. Any thorough and experienced person can work through the process and present a credible complete application with patience and determination.

The elements of the commercial loan package are:

An executive summary that describes your business plan, the investment, the operations plan, marketing and sales objectives, key financial projection facts, and the exit plan. Personal financials for the principals describing personal property, liquid investments, schedule of real estate, partnership ownership, unsecured debt, secured debt, mortgages, child support, alimony, monthly income, other recurring income, and contingent liabilities (personal guarantees and cosignatures). 3 years personal tax returns of the principals. 3 years tax returns of the buying entity. Tax ID certification. Operating Agreement or bylaws of the purchasing entity. Articles of incorporation or equivalent documents. 3 years historical financial of the property or project being purchased. 3 years tax returns of the property or project being purchased. Property tax record for the property. Pro forma financials for the property post purchase. Reserves must account for non-immediate repairs from the property condition report. UCC lien search. Property Condition Report. Capital budget including cash for immediate repair items off the of the Property Condition Report. Environmental study(ies) (Phase I is a minimum). Survey (must be to the lender’s specification), Insurance binder (must meet the lenders specifications and normally includes a liability binder), Title search. Appraisal (should include a land value separate from the property value). The appraisal will include comparable sales and rent comparables. Banking regulations normally require that the appraisal be bank ordered. A good approach is to have a friendly lender order for the appraisal. In this way, if you have to change financing you are still on firm ground. Management agreement. The cost of management should fall in the customary ranges. Purchase and sales contract and any amendments. Certified HUD1 or settlement statement. Capitalization table of investors including percentage ownership and capital investment. Manager / principal biographies. Background on the management company including refereces. While the purchaser has a range of additional items that should be part of their pre purchasing verification, these items constitute the critical items that the lender will require. The prudent investor can use these information sources as a good foundation to their own due diligence items. And, the preparation of these documents will put the project on the right track toward closing.

By: Blake Dale Ratcliff

About the Author:
Blake Ratcliff (US Naval Academy Graduate & Marine Officer, Serial startup entrepreneur, COO/CEO, multifamily / residential investment founder, and property manager).

Blake’s crafted 100+ business plans, prepared and delivered 1000+ investor presentations, and is an expert financial modeler. A deeply experienced real estate business person and startup business expert, Blake hones your Business plans, reports, and presentations.

Visit http://internationalresidentialrealestateinvestorsassociation.org/real-estate-project-services-due-diligence-reports-business-plans

When investors were leaving the stock market in droves, they turned to investing in real estate.
And real estate is an excellent choice compared to stocks. The tax deductions and potential for price appreciation
are enough reasons for burned out stock market investors to make the switch.

But real estate is a wide open field, where should you focus your time and money?

Many people might believe that residential property investing is the best way to go. Just look at all the television
programs that are now on the air, such as “Flip This House” on A&E and “Property Ladder” on TLC. They focus on buying
residential properties as investments. But I think the better solution is investing in commercial properties. Here are 3
reasons to leave residential investing and start investing in commercial properties.

#1 No More Qualifying For Loans

With commercial properties, the properties qualify the loan…not the borrower. Commercial lenders concentrate primarily on the income produced by the property to determine the financing risks. So with a few financial calculations, you can determine if the property will qualify the loan amount requested.

#2 No More Personally Guaranteeing Loans

There is a term that is never heard of in residential financing…non-recourse. Non-recourse financing is a type
of debt in which the borrower is not personally liable. If you default on a non-recourse loan, the lender must recover the amount you owe by foreclosing on the property by which the loan is secured. This won’t affect your personal credit score.

#3 Deal With Professional Tenants

Investing in residential property, you will eventually find yourself in the world of tenant hell. Where excuses and non-payment go hand in hand. And government entitlement programs, such as Section 8 can cause you to lose your mind with bureacracy.

But with commercial property tenants, you will find them to be more professional. They are in a business and treat their leases as such. With commercial leases, they can be long term (5, 10, 15 years) and the they can be written so that
the tenant pays for maintenance, taxes and insurance.

Most investors want to invest in commercial properties but let fear of the unknown stop them. But with proper training
and education, buying commercial properties is not that difficult.

By: Patti Porter

About the Author:
Patti Porter is Commercial Financing Consultant specializing in Apartments/Multi-family and other income-producing commercial properties. If you need financing or help in determining property value, visit http://www.profunders.com.

Do you want to learn more about training on buying commercial properties? Then visit [http://www.broker-commercial-mortgages.com].

KEEP YOUR LOSSES DOWN!

MAKE YOUR PREMISES SAFE FOR YOUR CLIENTS: The most common Commercial Liability claim is the basic “Slip & Fall”. Restaurants see these more often than most other type of businesses, but, if you have clients coming to your place of business, it can happen in your business too,

MAKE YOUR WORKPLACE SAFE FOR EMPLOYEES: Worker’s Compensation cost is sky-rocketing! Be aware of the work environment to which you subject your employees. The more claims you have, the higher your premiums will be — whether we’re talking Liability, Property, or Worker’s Compensation.

MAKE SURE YOUR PROPERTY HAS HAD RECENT UPDATES: Property policy premiums are typically based on the type of construction and condition of the premises. Make sure you do your best to keep everything up to code, and keep in mind that you will most likely be visited by an Insurance Inspector.

KNOW YOUR PREMIUM RATE BASIS!

Look over your policies and pay special attention to your “Declaration” pages. If you don’t know which pages these are, ask your Insurance Agent flag your “dec” pages for you. These pages spell out exactly how your premiums are calculated. For instance, on General Liability policies, it can be based on one or more factors: Cost (of goods sold or Cost of Subcontractors), Number of Employees, Payroll, Square Footage (of leased premises), Gross Receipts, etc.. Worker’s Compensation, on the other hand is based solely on “Payroll”. (See my website for an article defining the difference between and “Employee” and a “Independent Contractor”). Make sure you know what you are paying for, and when it is time to adjust the figures.

HAVE INFORMED KEY EMPLOYEES!

YOUR BOOKKEEPER must have a basic understanding of how your policies are rated, and when, or if, Certificates of Insurance should be obtained from any Sub-contractors. Worker’s Compensation policies are ALWAYS audited, and General Liability policies are now being audited more frequently than ever. Unless you have an informed Accounting staff, get help in this area! QuickBooks is an excellent software program for both small and large size businesses.

YOUR SUPERVISORS should be your eyes and ears. They should make sure your work areas are always ready for an inspection by your Insurance Company and/or OSHA (Occupational Safety and Health Administration).

SHOP AROUND!

Most Commercial Insurance is sold by Independent Insurance Agents, who represent several Insurance Companies. Many times your current agent will simply offer the renewal offer they receive from your current carrier, without shopping for better rates. It pays to shop around with other Independent Agents and get at least three quotes before binding coverage on your policies. When shopping for different quotes, make sure you are comparing “apples to apples” on the rating factors, such as Gross Receipts, # of Employees, Payroll, etc.. Keep in mind that if you wait until after your policies are bound, you will pay a Cancellation Penalty if you want to re-write them.

DON’T HAVE A LAPSE IN COVERAGE!

Many Commercial Insurance policies are financed, or on a payment plan. If you don’t make payments in a timely fashion, your policies will be cancelled! Any lapse in coverage will be looked at closely by company underwriters, when determining your premiums. All Commercial Insurance Applications ask if there has been a lapse in coverage, and you must sign the application indicating that all the information contained on it is correct. It is a reflection, in the Insurance Company’s eyes, of being a responsible business owner.

In summary, the longer you are in business, the better chance you have of getting preferred rates IF you stay on top of things. Do everything you can to avoid claim situations. Keeping a safe work environment makes for happy employees, and therefore, happy clients. Pay your bills on time, and always feel free to pick up the phone and call your agent with any questions or concerns you may have. Running a tight ship really does pay off!

By: Jaye E Thurston

About the Author:
This author has been a Commercial Insurance Agent for the past fifteen years, and currently holds a Resident Agent License in SC, and a Non-Resident Agent License in NC. For more information on Commercial Insurance, please visit my web site: http://www.insurancesmartone.com

I offer Policy Review and Audit Services for a small fee, but all other information on the site is yours to view at will. My goal is to educate you in Business Insurance, so that you can be more comfortable in this area, therefore more pro-active — which ultimately will affect your bottom line!

Jaye Thurston
http://www.insurancesmartone.com