123ArticleOnline Logo
Welcome to 123ArticleOnline.com!
ALL >> Real-Estate-and-Foreclosure >> View Article

New Commercial Equity Loan Creates Liquidity

Profile Picture
By Author: John Tang
Total Articles: 512
Comment this article
Facebook ShareTwitter ShareGoogle+ ShareTwitter Share

Commercial building owners have struggled for decades on how to effectively and economically tap their commercial property's equity. This lack of liquidity seems to be one of the biggest complaints in commercial real estate ownership; equity rich, cash poor, as the saying goes.

There are a few new options however for the small commercial property owners (both investors and users) that are turning heads. Historically, accessibility to commercial equity via loan products has been very limited, and for good reason. Second lien position behind a separate financial institution is one of the riskiest positions for a commercial lender to be in.

However, in the past, small local banks have been known to take on these types of loans assuming that the combined loan to value and debt coverage ratios were strong - typically less than 60% LTV and over 1.4 on a DCR. Banks wrote these lines almost like a business loan that happen to be secured by the commercial building. The banks also, wanted a depository "relationship," as bankers always say, with the borrower.

Developer of large sophisticated projects also have had ...
... 2nd lien position loan options, called mezzanine loans. But these types of loans are normally only available to highly experienced and successful developers working on projects over $5,000,000.

Interestingly, a few lenders have recently stepped up and created commercial equity lines aka commercial lines of credit. The result is liquidity never before known for small building owners. Highlights include no upfront fees to close loan (no appraisal, no title, and no environmental fees), combined loan to values up to 75% and relatively low interest rates at Prime plus .75% - 1.25%.

We will see in time how much of an impact these commercial equity lines make on "Main Street" USA, but one thing is for certain: commercial property owners have more loan options now, than ever before.

Total Views: 299Word Count: 305See All articles From Author

Add Comment

Real Estate and Foreclosure Articles

1. Lodha Bella Vita: Your Slice Of Mediterranean Paradise In Pune
Author: Keystone Real Estate

2. Considerations For Buying Property With Smsf - Must Know Facts!
Author: Rick Lopez

3. Top 10 Real Estate Companies In Delhi For 2025 - A Guide For Investors
Author: Kreeva

4. Nri Property Management Services By Sahasra Properties
Author: sahasra

5. Top 5 Emerging Co Working Hotspot Location In Mumbai For 2025
Author: Horizon Consultants

6. Why Real Estate Continues To Thrive: Exploring The Booming Market
Author: Sukunj Realty

7. Best Apartments For Sale In Narsingi
Author: Jhon

8. What Does An Epc Firm Do?
Author: Shubham EPC

9. How Property Investment Events Can Help You Find High-yield Deals
Author: Rick Lopez

10. Peb Manufacturer In Sanand: Delivering High-quality Steel Buildings For Every Industry
Author: faithpeb

11. Essential Skills Every Real Estate Professional Needs To Succeed In 2025
Author: TimHarrison

12. Address Advisors: Your One-stop Solution For Real Estate Brokerage In India
Author: Semlani

13. Brigade Eternia: Elevate Your Lifestyle With Premium Living In Yelahanka, Bangalore
Author: chauhansk

14. Why Home Sellers Prefer Cash Buyers Over Realtors In Today's Market
Author: Rick

15. The Role Of A Property Investment Advisor In Building A High-yield Portfolio
Author: Rick Lopez

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: