A commercial bridge lender will have numerous questions about your deal.Here are a few questions for which we should have answers before approaching a lender:
In what city and state is the property located?
Is the title held by an individual.LLC,corporation,a trust or another entity?
What is the property type?
How much income does the property produce?
What type of lease or leases does the borrower have?Full-service,modified or triple net?
What are the credit issues if any?
If the income on the rent roll is greater than reported on the IRS Schedule E,whats the reason?
Cash out? WHY
David Hitchcock,Business Loan Consultant/Owner
MortgageCerv Financial
Mobile:478-451-9977
david@mortgagecerv.com
www.mortgagecerv.com
Why is hard money so important to commercial real estate investing? There are several reasons. Commercial real estate investing is a cash intensive financial activity. In order to take advantage of ongoing projects,investors often require more operating capitol than conventional banks are prepared to provide on short notice. Commercial hard money lenders can turn on a dime.
Mortgages for commercial real estate investing can take anywhere from two to six months to be completed by conventional banks and lenders. Commercial hard money lenders can generally fund within two weeks once you have all the paperwork in place.More next blog.
David Hitchcock,Owner/Broker
478-451-9977 :Mobile
Cost segregation is an IRS recommended and sanctioned reclassifying procedure which allows real estate investors to take advantage of accelerating depreciation on their property which will reduce their current income tax liability.
Heres how it works.
When an investor purchases or constructs a property the IRS allows them to write off or depreciate the property over time (typically 39 years for commercial property:office buildings,shopping centers,restaurants etc.. and 27.5 years for residential,such as rental houses,duplexes or apartments).This write off is taken equally each year and is used as an income tax deduction.The investor takes the purchased price excluding the land value as the "basis"or beginning value.This is called "straight line" method of depreciation.
How cost segregation benefits an investor.
Instead of taking the entire value and depreciating it equally each year over long life (39 or 27.5 years) a cost segregation study allows the investor to "carve out" components of the building and depreciate them over a shorter period.
Some investors will assume their CPA is already breaking out these components which the CPA generally cannot do themselves.
In order to take advantage of cost segregation the IRS requires the investor to have an engineering study performed (written report) to document the assets and their values using specific guidelines for the correct asset classification.This requires construction engineering and tax expertise.Most major accounting firms ("big four" or large reginal firms) have a cost segregation practice igneous which consists of CPAs and engineers.However,the majority of CPA firms do not have engineers on staff to perform these studies.
David Hitchcock is the Owner/Broker of MortgageCerv Financial.MortgageCerv specializes in small business loans and commercial real estate loans.MortgageCerv has now added cost segregation studies to its financial product line.If we could be of assistance to you or answer any questions,give David Hitchcock a call @ 478-451-9977.
In SBA and commercial finance news,the return of dreaded guarantee fees (up to 3.75% of the guarantee on 7A loans and 50 BP on the senior 504) has been delayed — so the rush is on yet again to get your guarantee, this time by 31 May. The Senate voted to extend the Recovery Act Program through May 31, 2010 and provided $80 million for 7(a) and 504 fee reductions/waivers. It has also extended the 90% guarantee on the 7A through May 31st. It is expected that President Obama will quickly sign this legislation into law.
The first 504 pool should be ready to roll by the end of May — SBA is in last minute talks with Colson, the master servicer. Stay tuned!
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