STOP! Your Commercial Porperty May Not Be As Valuable As You Thought! - Hyperdunk 2012

A building used for dry cleaning that is three times the size of a typical dry cleaner would be viewed by a lender as less desirable than one that was typically-sized Hyperdunk 2012.Marketability The elements of comparison hold little intrinsic value.

Their real meaning comes from how they influence the marketability of a property Christian Louboutin Sneakers.Remember, if a lender ends up as the owner of a building, it's not by choice, but literally by default.

This means the lender will seek to sell the building in a reasonable period of time cheap jordan shoes. While many lenders want to avoid the losses that can come with a very quick sale, they do not want to own a building over a prolonged period of time, where taxes, maintenance, and unforeseen events can have a material impact on their ability to recover the principal balance of the loan.

Generally speaking the maximum time period which a lender will want to own a building is between six and 12 months foamposites pink.The correlation between marketability and the loan-to-value ratios runs inversely.

That is, the longer it appears it will take to sell a building, the smaller the amount the lender will advance against a building owner's equity. Thus, the commercial lender's focus on elements of comparison and marketability are closely intertwined. Specifically, buildings with unfavorable elements of comparison take the longest to sell, and as a result pose more risk for the lender. The lender cautions this risk with a lower loan-to-value ratio.Who Loves Ya For borrowers that have single purpose commercial properties, the lenders' approaches toward property valuation can prove frustrating. From a lender's point of view, the dedicated purpose of the building does not add value, but rather shrinks it, because there is a smaller pool of buyers, which in turn increases the time that may be required to market the property. Some lenders will not even consider such a property as collateral.Small business borrowers seeking loans backed by owner-occupied commercial real estate may find nontraditional lenders more willing to strike a deal, or seek creative solutions to get a deal done.There are two reasons for this.First, traditional lenders have dramatically increased minimum loan amounts. Many want to provide loans no less than $1 million. This is a difficult proposition for a business owner with $300,000 to $400,000 in equity looking for a $250,000 loan. Second, most bank lenders avoid loans where the underlying property to be used as collateral has a single use, or which may have one or two unfavorable points of comparison. The rigidity of their underwriting process and the size of their existing franchise often precludes them from taking risks they don't have to. Rightly or not, their attitude is often something akin to, 'Why should we'Nontraditional lenders, by comparison are more niche oriented. Whereas banks see the market for small businesses loans of less than $1 million as, well, small, and rife with irregularities, non bank lenders may see more opportunity. Accordingly, they are more willing to consider unique properties and willing take more time to structure a deal which fits the needs of the borrower, yet still mitigates their risk.