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Glossary

 

Commercial Mortgage Loans   

* Shopping centers, industrial buildings, office buildings
* Golf courses, resorts, hotels, parking garages, car washes
* Construction loans, ground leases, seconds, wraparounds, etc.

Advanced Capital offers hundreds of programs to best fit your individual needs. Because of our commitment to customer service, we have originated over $65,000,000 in commercial mortgages in the past year. With an experienced professional staff, we provide superior service, state of the art processing and the most competitive rates in the marketplace. Our expert staff will make your commercial mortgage loan process a satisfying and rewarding experience. Service is our first priority.

Some of the types of commercial loans that we offer are:

Capital Type Capital Type Definition
   
Acquisition and Development Raw land infrastructure development (streets, utilities, etc.)
Adjustable Commercial Mortgage Interest moves with a specific index (Prime, T-Bills, etc.)
Construction Mini-Perm Construction with 3 to 5 year loan, usually on income property.
Construction Loan with Takeout Package Construction with pre-arranged takeout loan in place.
Fixed Rate Commercial Mortgage Interest Rate remains constant throughout the term.
Hard Money Loan Loans from private lenders based primarily on the hard asset value (commercial building, vacant land, etc.)
Interim Loan A short term (2 yrs or less), bridge or project type loan.
Joint Venture A financial partner in the development of real estate.
Participating Mortgage Lender receives a kicker for gross income above a preset level.
Real Estate Sale and Leaseback
Lender purchases land and leases back to borrower (generally developer) for a fixed rent plus other considerations. Mortgages are issued on leasehold at market rates. Usually, produces more dollars than a mortgage.
Real Estate Purchase Loan Lending for the purchase of commercial real estate.
Second Mortgage (Commercial) Loan secured by equity behind that of the first lien.
Wraparound Lender makes a second mortgage and assumes the first mortgage.

Acquisition and development financing with an SBA 504 loan.

Acquisition and development financing provides you with long-term, fixed-rate financing for major fixed assets (land, buildings, etc.). The program contributes to community economic development. The SBA "Certified Development Companies" (CDC) works with commercial lenders to provide financing to businesses.
This program includes a loan from a commercial lender that covers 50% percent of the project and a second loan for up to 40% of the project cost from the CDC that is 100% SBA guaranteed for a combined 90% LTV.
Funding from this program can be used for:
* Purchasing land and improvements, including existing buildings
* Grading, street improvements
* Utilities, parking lots and landscaping
* Construction of new facilities
* Modernizing, renovating or converting existing facilities
* Purchasing long-term machinery and equipmentThe loan program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing.
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Adjustable Commercial Mortgage

Adjustable commercial mortgage funding is a real estate loan with an interest rate that changes periodically, according to an index that is selected when the mortgage is issued. With an ARM (Adjustable Rate Mortgage), you might qualify for a larger loan and your ARM could be less expensive than a fixed rate loan over a long period.
There are a variety of programs to choose from:
* Easy in/easy out
* Variable/convertible loan
* Adjustable rate with a future option to increase loan
* Simple interest loans with or without graduated payments
* . . . and moreTo compare one ARM with another or with a fixed rate mortgage, you need to know about indexes, margins, discounts, cap structures, negative amortization and convertibility. Let us guide you through the process of making a well informed decision.
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Construction Loan with Takeout: Construction loan with pre-arranged takeout loan in place.
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Construction mini perm financing for income producing properties
Construction mini perm loan funding is a financing method used primarily for income producing projects that need to establish an operating history prior to applying for long term permanent financing.
They are usually applicable to:
* Shopping centers
* Office buildings
* Industrial properties
* Large apartment complexesConstruction mini perm loan funds are available during the project construction phase and last through the rental stabilization period. Mini perm loans usually carry a term length of 3 to 5 years and, as a result, they are always a short term financing solution. The loan matures with a balloon payment at the end of the term.
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Fixed Rate Commercial Mortgage
Fixed rate commercial mortgage products are mortgages that have a fixed interest rate and payment for the full term of the loan. These loans make it easier to budget, especially over the long term and offer stability across an ever-fluctuating market.
Typical properties include: Multi-family, anchored, unanchored retail, full and limited service hotels, offices, light-industrial, self-storage, and senior housing.
Term: Typically 5 to 20 year maturities.
Rate: Interest rates set at spreads usually ranging from 150 to 275 basis points over corresponding Treasuries, depending on property type and underwriting criteria.
Loan to Value: Subject to underwriting criteria, up to 80% LTV.
Additional features such as:
Prepayment, assumption, liability and amortization will be thoroughly explained once we've reviewed your information and match your needs with the most ideal program.
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Hard Money Loan - Private lenders and fast cash access
Lending Guidelines:
* $500,000 to $10,000,000 per transaction/same project
* Up to 75% loan-to-value improved-marketable structures
* Commercial property acquisition, construction, and refinancing
* Bank workouts, bankruptcies and foreclosures are okay
* Loans on commercial buildings, vacant land, and moreGot a tough multi-million dollar deal?
Tired of hearing "No" to your deal that doesn't fit the conventional box?
Need a short term loan? Are traditional lenders taking forever to close?
With "private lenders" the hard assets are the key.
Quit wasting time, get the "Yes" and the cash your project deserves. Creative transactions such as; interest only payments, partial deed release, and participations are considered.
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Interim loan is commonly utilized in real estate transactions.
Term: These loans range from 6 months to 5 years with the most typical term being 3 years.
Rate: Interest rates most often float over a defined loan index for the term of the loan and adjust or reset at maturity. In some instances the rate can be fixed.
Amortization: These loans are primarily interest only and do not amortize over the loan term.
Prepayment Penalties: Yes, however, some programs will waive fees if converted into permanent financing (which is usually the case).
An interim loan can give you a stronger negotiating position and you can purchase a property without a contingency on the sale of your existing property.
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Joint venture financing for commercial property
Joint venture financing is a means of structuring a mortgage in order to help you, the client, maximize cash flow potential. How? By "teaming" you with a lender as an investor.
Definition of a joint venture: similar to a partnership in that it must be created by agreement between the parties to share in the losses and profits of the venture. It is unlike a partnership in that the venture is for one specific project only, rather than for a continuing business relationship.
In this case, the joint venture concerns commercial real estate and the lender-borrower relationship. Borrowers do not always start out looking for partners, but sometimes recognize the value of sharing equity over "straight" debt-financing.
Structured Joint-Venture Financing can be complicated and is not appropriate for all projects. Fill out our form and we will evaluate your situation to see if joint venturing is a viable means of finance. When it makes sense, we will advise our customers appropriately, and match the right lender/partner to the project.
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Participating mortgage - a creative alternative
Participating mortgage is a loan that contains clauses and conditions under which the lender participates in the revenues of the property. The level of participation may be calculated from the gross receipts, net operating income, net income or net cash flows of the property.
Also known as "kickers", these loans provide:
* The lender with an effective tool to spread, and thus reduce risk
* The lender with additional incentive to make your loan
* The lender with a more flexible means of structuring your loanFinding out which program is right for you is as easy as completing a simple form. Your request will be matched against the best programs. The goal is to make a difficult process easier.
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Real estate purchase loan funds are typically business loans that are collateralized with commercial real estate. Loans to expand or improve your existing business and loans to refinance existing debt. Both conventional and government guaranteed loans are available.
Financing can be secured for virtually any kind of business, including but not limited to:
* Motels
* Apartments
* Shopping centers
* Retail stores
* Office buildings
* Automobile dealerships
* Owner occupied buildings
* Manufacturing facilities
* Health care facilities
and more . . .
Loans can normally be provided with a higher loan to value and longer term than your local bank. If you are looking for lenders that will say yes when your bank says no, and if you need a loan with a 20-30 year amortization to make it work, you have come to the right place.
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Real estate sale and leaseback program
Real estate sale and leaseback financing is when a business sells its commercial property for its fair market value and then immediately leases it back. Most importantly, you retain control of the property.
Here are some of the resulting benefits:
* Free-up capital for re-investment
* Improve the balance sheet
* Defer a substantial portion of the tax liability
* Receive 100% of fair market value
* Low payments with long terms (up to 25 yrs)This has become an increasingly popular means of generating capital for immediate use. A real estate sale and leaseback program unlocks the value in your real estate assets and provides you with immediate working capital.
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Second mortgages - an important commercial real estate tool.
Commercial second mortgages are normally used in conjunction with a new first loan. Typically the second mortgage will have a term of no less than five (5) years with interest only payments. While second mortgages can be critical in some situations, you must carefully consider your ability to service both loans.
There are many clear advantages to this type of creative financing. The most frequent use is a second mortgage that reduces the LTV (loan to value) of the first loan in order to allow you to more easily qualify for the loan. An example would be where the primary lender (first mortgage holder will only lend 70% LTV and you only have a 20% down payment. A second mortgage can be used to make up the difference.
There are a variety of options available to you such as; interest only payments, annual payments, exit fees, etc. that will help keep your immediate payments down and defer the costs of the second mortage. The idea is to give the property time to appreciate and thereby allow you to refinance and consolidate both the first and second mortgages at a later date at a then lower LTV.
 
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Wraparound Mortgage - A creative financial tool
Purchase property without having to qualify for a loan or pay closing costs!
Wraparound mortgage, also called an all inclusive trust deed, is a creative financing tool where a new mortgage is placed in a subordinate (secondary) position to the original mortgage and the new mortgage includes the unpaid balance of first.
Here's how it works:
The seller holds onto the existing mortgage
The seller names the property's selling price
The seller offers the buyer a loan at a higher interest rate than
the existing mortgage
The buyer pays the seller a fixed monthly amount and
The seller uses part of this money towards the existing loan.
*The lender's incentive is to profit from the difference in interest
in the two loans.

Unlike an installment sales contract where the buyer gets title (ownership) of the property at closing and the original mortgage stays in place (not common since most mortgages have a due-on-sale clause), the wraparound mortgage is a creative way to allow a buyer to purchase property without having to qualify for a loan or to pay closing costs. The contract is made between the buyer and seller with seller remaining on the original mortgage and title.

 

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