Five Steps to a Successful Commercial Loan Workout

Obtaining a commercial loan workout can be a very labor-intensive process. Having all of your “ducks in a row” is key to a successful workout. For property owners who can’t refinance, have a balloon payment coming due, defaulted on their mortgage or facing foreclosure, a commercial loan workout can accomplish one or more of the following:

1. Reduce interest and/or principal amount

2. Extend reset period or maturity date to delay balloon payment

3. Defer payments

4. Temporary interest-only payments

5. Avoid foreclosure

Please review the following five steps:

1) Required Paperwork

The required paperwork is gathered from property owners. Documents needed: Rent roll, copies of expenses within the past year, rental agreements, copies of the mortgage note, etc. Not having all of the required documents could delay the whole process.

2) Research Analysis

Before a commercial loan workout is submitted to the lender, a financial snapshot of your situation is needed. The lender is mostly concerned with your ability to pay each month if your loan was restructured to more favorable terms. Determining the current market value, rental rates and recent comparable sales are also important factors to consider. After a review of the note is complete, a workout package is generated.

3) Lend Submittal

Once a confirmation of delivery is received from the lender, the submission package is forwarded to a workout specialist. Not confirming receipt of the workout package by the lender could mean having your file stuck somewhere in the mail room for weeks or “lost in neverland.”

4) Negotiation Process

The workout specialist reviews the package and presents a loan modification offer. Sometimes the property owner or third party workout firm will make counter offers until an agreement is excepted with favorable loan terms. The whole process from start to finish could take between 2 or 3 months to complete. Keep in regular contact with the workout specialist at the lender until a proposal is received.

5) Final Approval

Once the lender approves the newly restructured mortgage loan, a proposal is presented to the property owner for review. The owner can expect the following options: Deferment of payments, lower interest rate, extended maturity date, greater cash flow or reduction of principal. The lender can propose any combination of options. Lastly, the modified loan documents are signed by both parties to make the changes official.

Because so many commercial property owners are not able to meet their mortgage obligations, commercial lenders are now willing to modify their existing mortgage loans to prevent avoid foreclosure. The key to preventing a default is to be proactive by contacting your lender or seek the assistance of a third-party, professional commercial loan workout firm.

Commercial mortgage loans are much more complex than residential mortgage loans. Hiring a professional commercial loan workout firm can help you navigate through the negotiation process with your lender.

Commercial Construction Tips – How to Know If Your Contractor Is Doing a Good Job

Big construction project or little one. An historic renovation in the heart of old downtown or a new retail center. No matter what kind of construction project you are undertaking, you want to feel assured that you have chosen the right contractor for the job. But how do you know that your contractor is doing a good job?

The success or failure of a contractor is often closely linked with you – how effectively you complete your hiring due diligence, how clearly you state your expectations, and how well you and your contractor communicate with each other during all construction phases.

Preparation and Selection

Before you begin your search for a contractor, you should clearly outline the responsibilities for which you will hold your contractor accountable. Those accountabilities should be included in the contract between you/your company and the contractor.

Next, you need to do your due diligence.

• Ask friends and colleagues who have worked with construction projects similar to yours for contractor recommendations. Ask these questions:

o How did the contractor handle the budget and materials?

o Was the project done on or ahead of time? If it was off schedule, why?

o Was the work done according to agreed-upon terms?

o Would your source work with that contractor again?

If their referral did well on each of those points, he or she may be a good contractor on your project as well

• Check ALL references!

Get it in writing

All good business relationships should begin with, “get it in writing!”

• Each contractor candidate should provide a written bid. Red flag: nothing in writing.

• You and your contractor should have a signed contract. Include details on the budget, scope of work, materials, the schedule, and the contractor’s specific responsibilities. Red flag: the contractor who won’t sign a contract.

• Your contractor should take notes during each walkthrough and meeting. Red flag: “I’ll remember… “

On the job

These are some important on-the-job clues that your contractor is doing a good job:

• Communication: you and your contractor communicate frequently and clearly according to your agreed-upon methods (text, fax, email, phone). Red flags: doesn’t return calls, is difficult to reach, provides limited responses to questions, communicates poorly with work crew.

• Subcontractors: contractor hires quality subcontractors with verifiable references. Red flags: conflicts on the job, petty thefts, on-the-job substance abuse, wasted time, etc.

• Safety: contractor diligently observes safety practices and insists that all workers comply with safety rules. Red flags: avoidable injuries, safety issues.

• On the job site: contractor is working at the job site for the majority of the time. The construction crew is busy during all working hours of the week. Red flags: contractor is infrequently on site, workers have too much idle time.

• Security: appropriate security measures are observed at all times. Red flags: equipment and materials not secured or missing, the site is poorly secured during non-working hours, unauthorized people are on site.

Schedule and budget

Ideally, every construction project is completed on budget and on schedule. Realistically, there may be some schedule interruptions and unexpected costs.

Ask yourself some final questions:

• Is my contractor providing me with accurate, up-to-date information on all aspects of the job and construction progress?

• Is he/she managing resources, budget, crew, and materials effectively and appropriately?

• Are crew members working fairly harmoniously with each other?

• Are my objectives for this project being met?

When you can answer yes to these questions, it is most likely that your contractor is, indeed, doing an excellent job for you. Congratulations on your choice, and your new project!

The Various Commercial Insurance Coverage For Business Properties

There are three standard variations on commercial insurance. They are Property, Worker’s Compensation and Liability coverage. A host of other specialized plans may be purchased as needed for specific industries. Machinery, Debris Removal, Builder’s Risk, Business Interruption, Ordinance or Law, Inland Marine, Glass, Crime, Tenants, E&O, Malpractice and Auto insurance policies can all be purchased in the necessary context.

General Property insurance is needed for virtually every company. It covers any facility used by the company from damages and loss of property. The purchaser of these policies must be careful to read the details of coverage closely for items that are not covered within the general premium. Not only will a product that is uncovered not be replaced with the policy, but also if it is responsible for business losses, the general coverage may be nullified.

Liability coverage is similar to Property policy. Every company should have a Liability policy to protect their operations when they are responsible for a third-party injury. Lawsuits are expensive and insurance to cover the settlements is paramount to longevity in any industry. Again, not every circumstance is covered by general considerations. A close reading of the particulars will enlighten business owners to possible extras they may need.

Worker’s Compensation is the final and most important commercial policy to own. Surveys have shown now for decades, that where employees are happy customers will be too. If an employee is disgruntled, they will provide less than the best service. The most foundational way to show employees that an employer cares about them is to provide them with Workers Compensation. Either way, if an employee is hurt on the job, he or she is entitled to medical recompense. One policy covers every employee incident.

The specific details of every add-on policy in commercial insurance can be read and considered at the time of an insurance purchase. Most companies find that they need at least one additional variety of specialized protection. Even if these special add-ons are never used, owners will be happy to possess them since it is one fewer consideration to worry about.

The day-to-day duties of those in charge of purchasing insurance are complicated enough without having to fear an employee or customer injury. Having the building where everyone works and clients are serviced safely shielded from natural disaster and careless repairs, or burst water mains is foundational for those most at risk being able to rest at ease.

5 Handy Commercial Construction Tips

You might have been put in charge of a commercial construction project recently, and though you appreciate your boss’s stamp of approval on the work you are capable of doing, you might not know all of the components that go into the project. Here are some handy tips to keep in mind as the project progresses.

1. Start by hiring a good general contractor and then put together a practical budget for your project. This budget will need to be presented to the project owner, aka your boss or maybe even someone higher up than that, for approval. Be sure it is comprehensive. Your boss will want to know just how feasible the project is when he or she presents it to the board for approval. That budget will also be what the finance team will use to obtain financing for the project. If the budget indicates that the project location needs to be moved or that something needs to be scaled back, now is the time to make those changes.

2. Your boss or the board of directors might have one vision of what they want to see, but it might not actually be practicable. The project owner should be a part of the planning process so he or she is comfortable with the changes that are made. Also, while you are in the planning process, be sure you bring in all of the stakeholders including those who will be using the building when it’s all complete.

3. Once you have the plan in place, it’s time to set up the schedule. If your project owner wants a specific date to open the building included, that should be the place to start and then work the schedule back from that date. Be sure to build in a buffer along the way to compensate for any delays that might happen. Actually, make that will happen. The unexpected is always to be expected. With a schedule in place, your general contractor can keep you appraised of the progress, and also let you know about any delays that were encountered.

4. Don’t be afraid to work within your own limitations. It’s OK to admit what you don’t know, and when it comes to construction, relying on your experts to guide you is not only okay, but a good idea. Your contractor will also know what will be needed in terms of how to best keep you up to date on the project’s progress.

5. Communicate, communicate, communicate. There is no such thing as too much communication. Your contractor will need to provide you with regular updates, and you will need to ask key questions to make sure you and your contractor are staying on task. Open communication reduces problems and generally catches them at a point where they are more easily solved. New apps available particularly for Apple products are great communication resources. From the bid process with SmartBidNet to portable CAD apps that let you do quick drawings on site and send them to anyone by e-mail, apps can help everyone stay on target.

These five tips are some of the main ones that will help you be successful. You can also check out some of our other posts for more information about commercial construction. Happy building!

Starting a Small Business – Insurance Tips

Your Company and those like it is the anchor of this country. Almost all people assume large companies create most of the revenue the United States produces, although they just don’t understand in total Small Businesses hire a lot more people and produce even more income compared to those large companies. When you start your own business there are lots of elements you’ll want to consider within your business strategy plan. An Insurance policy mitigates your risk, small business insurance is just about the most important factors within your strategic business plan. When looking in to Business insurance packages, there are many kinds of insurance you’ll want to check into and now we can look at the various insurance policies. While we will look at insurance coverage’s that are based upon many types of businesses, you might want to speak with an experienced insurance agent with regards to your businesses requirements.

Commercial General Liability

This is the first protection you will want to take into consideration because it is on the list of needed insurance policies it is possible to acquire. The following insurance policy coverage that defends your company for both bodily injury and property damage claims. This means that this protects your company for accidents that your fault, and insures your company for scenarios when an individual or property is broken and / or wounded. Every business enterprise will need to have this particular coverage because this will handle many types of claim instances. This particular policy defends your business for libel and slander as well as slip and fall incidents. This type of coverage does insure you for several claim circumstances, it doesn’t cover them all. The types of insurance not covered under your standard liability policy are; Liquor Liability, Assault & Battery, Commercial Property, Workers Compensation, Professional Liability or Business Auto. The coverage limits for this type of insurance policy goes up to one certain limit and for a limit on top of it, you will need an Excess Insurance Policy. An Umbrella Policy may also go over your Auto Liability as well as your Workers Comp coverage increasing those limits of liability. When deciding just how much Liability Insurance you must consider what amount you have to lose.

Small Business Property Insurance

Now you have a policy coverage which can protect you for both the building you own as well as the property inside of it. Generally, the following coverage plan covers the Building and/or contents for many kinds of incidents such as fire. This coverage doesn’t insure property that leaves the premises, for that you’d need an Inland Marine insurance. An Inland Marine policy can cover small equipment to large construction tools or all kinds of other kinds of Property that would be removed from the businesses premises.

Small Business Auto Insurance

This coverage is auto insurance for your business autos. Typically a small business requires increased coverage limits of auto insurance compared to your own personal auto policy. Your small business auto policy would have increased limits of liability coverage, but the insurance coverage’s are relative. Your typically looking at liability insurance coverage along with the following; Medical Payments, Uninsured Motorists coverage, Comprehensive, Collision, Towing & Rental Coverage. If you ever rent an auto or your have a staff member drive their own personal automotive on an errand, you need to have Hired & Non Owned Auto Liability. Whenever your LLC or Corporation owns the vehicle, then you should make sure the autos are insured on a Commercial Auto Insurance policy.

Workers Compensation

This particular insurance coverage, also known as Employers Liability, would be the coverage which protects the employees and can pay for claims in which any employee was hurt on the job. Yet again, yet another critical coverage considering that Medical Treatment is incredibly costly. Without having insurance you’re self insuring and you will be liable for just about any healthcare expenses or law suit. This coverage does not cover discrimination or sexual harassment claims for that you’d will need an Employment Practices Liability Insurance.

Insurance is an important part of any Organization. It protects your business for various kinds of claims. It’s important for you to understand just what you are getting, in which area’s this insurance will cover you, and just what is not insured within an insurance policy. Make sure to always understand your policy. Insurance are generally complicated knowing that is the reason you really need to buy from an insurance broker that’s versed in Small Business Insurance. Having been providing business owners like you insurance for more than 35 years, we have the experience to help you with all of your Small Business Insurance needs. Contact us for an insurance quote. We write insurance in several states and we can easily help you get the insurance coverage you may need.

Commercial Agents – Marketing Presentation Kit Ideas and Tips

When it comes to selling and leasing commercial or retail property, the marketing presentation kit that you use has to be optimised for your area and your property type. The marketing kit something that travels with you each and every day as you meet with clients and prospects in a variety of situations. This then suggests that the kit itself should be very useful and relevant to help you close on any listings or marketing strategies.

You never really know when the opportunity will arise to present and pitch for a listing. If you sell, lease, and manage commercial property the kit will need to be suitably versatile. If you work on Office Property, Industrial Property, and Retail Property, then the kit will also be comprehensively adjusted to suit these property types.

In your marketing presentation kit, you should have a selection of the following:

  1. Provide samples of advertisements that have been used on the other properties of various types. These should be local properties of a quality nature. When the client sees samples of good advertising with other quality properties they are likely to accept your marketing strategy and recommendation.
  2. Give details of the diversity and depth of your database. The database is a significant opportunity in the listing process providing you explain its relevance to the client. The client is unlikely to discard your agency from the presentation process if you can comprehensively connect them to the relevance of your database in providing the appropriate seller or buyer for the property.
  3. It pays to have a two phase strategy when it comes to marketing campaigns. Given that most of the marketing is focused on the first three or four weeks of the agency, this is what we call the primary marketing time. At least half of your marketing effort should be directed into that primary window of time. Most of the enquiry will typically come to you during this period. The balance of your advertising money and campaign can be directed across the remaining agency period which is the secondary promotion time. Throughout the campaign you should be tracking the results of advertising in the different types of media used. If something appears to be working well then it needs to be encouraged. If another segment of advertising or marketing is not getting any enquiry, then there is a need to adjust your campaign. There is no point in wasting time or money when it comes to marketing property. The vendor is seeking enquiry results and that is what you should be creating.
  4. Email marketing of commercial property through the database is a very effective strategy to attract enquiry. It is low cost and also easily undertaken. Show the clients some samples of email marketing and how they can tap into this opportunity.
  5. The signboard on a property is still one of the most effective tools of promotion. It is relatively cheap, and is usually seen by all the local property owners and business proprietors. Given that most enquiries come from the local area, the signboard is fundamentally important to creating enquiry. Show the client some differences between specially designed signage verses generic signage. Make your recommendations accordingly.
  6. Subject to the property type and the chosen method of sale or lease, you can show the client three levels of campaign as they can apply to a particular property. For example that can be the gold package, the silver package, or the bronze package. You may like to call them something different but the inference is that different levels of advertising commitment are available depending on the appropriate levels of vendor paid marketing. When you use this strategy, the client tends to select the middle package as a suitable solution.

As mentioned earlier, you may be involved with different property types. Because of this, you should carry within the marketing kit photographs of quality properties within the category of property. The client will generally only relate to their particular property type and the location.

Tips To Help You Achieve Success As A Real Estate Investor

If you are looking for a great way of building your net worth, investing in real estate is a great idea. You can make a lot of money if you do it the right way. However, if you don’t follow the right techniques, this venture can cost you a lot of money. Therefore, we have shared a few tips with you that can help you achieve success as a real estate investor.

Opt for a Good Location

Location is the first thing that people consider when they need to buy a residential, vocational or commercial properly. Ideally, the property you are going to buy should be near a workplace and school. Similarly, if it’s close to the marketplace, people can go there without burning a lot of gas or killing a lot of time. Therefore, it’s much better to choose a better location.

Upgrade or Renovate Your Property

It’s better that you upgrade your property features to make it more appealing. For instance, you may add home automation, such as automated lighting. The same is true about commercial real estate as well.

If you offer wheelchair lifts, for instance, it can make your property more useful for people with disabilities. This will attract many more buyers. Actually, it all depends upon how convenient your property is. If your property offers features that can help people make their lives easier, more people will show their interest in what you offer.

Improve Property Conditions

More buyers will contact you if your house or apartment is well maintained. However, make sure you don’t go beyond the limits. In other words, you may not want to spend an arm and a leg just to make your property more beautiful. It won’t increase the value of your property exponentially. Although it may be worth it in certain situations, spending too much is not a good idea.

Let’s take a look at a few tips that can help you make your property well-maintained.

Kitchen: if you do it right, your kitchen can increase the value of your property by up to 80%. Therefore, if you renovate your kitchen by spending $15,000, you can sell your house at 80% higher price.

Plumbing: we all need clean running water. Keep in mind that rusty pipes pose a health hazard in addition to reducing the beauty of your house.

Landscaping: If you maintain your landscape properly, it can add ambience to your house or apartment. In addition, landscaping helps reduce your energy bills.

Do Your Research

Make sure you consider the type of people that you think will be suitable if you want to sell or rent your house. If you want to get the highest return on your investment, make sure you contact the right people. Otherwise, you won’t be able to earn a lot of profit or find good buyers. Opting for the right clients can help you find a great deal.

Conclusion

So, these are a few tips that you can follow if you want to get the most out of your investment. Hopefully, you will find these tips pretty helpful.

Commercial Construction Tips – Facts About Construction Projects

Commercial construction is often an arbiter of changing economic conditions. Construction projects mean both an improving economy and a way to improve the economy of a given area. Read on to learn more interesting facts about it.

This type of construction helps public sector agencies as well as private firms. Big new schools in areas where people are moving give students a chance to learn in state of the art facilities. New office buildings bring jobs to the area, and the upward spiral continues. Not only do the buildings benefit the users, but the building process itself gives workers a solid job for several months, and the expenditures from the construction project go directly into the local economy.

The United States is second in the world in terms of this construction, regardless of where the company doing the building is headquartered. As much as 10% of all commercial construction takes place in the US, and New York is the city with the most commercial construction going on – $8.5 billion (that’s billion with a B) in 2013. A lot of the construction was for residential buildings. Following New York were Houston and Dallas. Those two cities spent $10 billion in 2013 on commercial projects.

One of the biggest trends in commercial construction is green building. Experts from the Environmental Protection Agency expect that by 2017 as much as 48% of new building will be done with green building materials. To put that in financial terms, it could mean as much as $145 billion dollars.

By 2018, 84% of residential construction companies plan to have at least some of their construction projects classified as green. To get an idea of just what kind of impact this has on the overall economy, consider that residential projects total as much as 5% of the current gross domestic product of the US. As more and more firms add green building to their plans, it might mean that as much as 18% of GDP will be based around green construction.

Big commercial office buildings are going green, too. LEED certification is becoming the main standard, and builders are up to 41% green as of 2012. Just how rapidly is this growing? Consider that only 2% of commercial construction, non-residential, projects were green in 2005. It’s no surprise that states like Hawaii and California are leading the way in LEED projects.

It’s not just the US that is interested in green construction, though. LEED certifications around the world are becoming more common. A study released earlier this year showed that as many as 69,000 LEED projects are going on globally in 150 different countries.

This construction is as important to the global economy as it has ever been, and the increases in such projects over the last few years signal a positive change after the worldwide recession of 2008-09 and the soft recovery that followed. With even more green projects being planned than ever before, commercial construction projects will also be kinder to the planet, meaning everyone will benefit for years to come.

Learning How to Do a Sales Pitch or Presentation in a Commercial Real Estate Agency

In commercial real estate today the pressure of presenting and pitching your services can be high. Most opportunities for a listing will involve a few agents all chasing the same listing opportunity. This then says that your presentation process should be finely tuned and very professional.

The ‘generic’ approach to presenting your services to a client today just does not work. In every respect your presentation needs to be of the highest standard. To help you with that I have given you some tips below:

  1. Check out the client’s situation prior to developing any thoughts about the property and how you can take it forward. Find out why the client may be selling or leasing the property today; that information may impact your choices of property promotion. Find out why the client purchased the property in the first place. Also ask them about their impressions of property features and improvements.
  2. Get the facts of the market locally. There will be some competing properties in the general area that will tell you something about prices, rents, enquiry, occupancy and time on market. Get all of those facts together as part of your preparation to meet with and make recommendations to the client.
  3. Walk the streets around the property. As simple as this seems, the process of getting out of your car and walking helps you see and observe many things that you would normally overlook.
  4. Understand the property legally and physically. Most properties will have issues that are of impact to the marketing campaign. Look for the ‘hurdles’ that could affect your choices of marketing and inspecting the property with prospects. It is wise to remove the ‘hurdles’ prior to commencing property marketing.
  5. Know about the precinct and its history. The records of sales and leases should be accessed so you know what has happened in the area over the last few years.
  6. Give information to the client about the best alternatives in marketing and inspecting the property. They like to have choices and understand the logic behind each. In that way they will not be limited or frustrated in the final agent choice or decision.
  7. Show some successes as a local agent. Most clients want to work with the best agents and those that really know the local area. Have some examples handy of relevant property transactions that you have been involved with previously.
  8. Be relevant in your presentation and provide a visual time line to the actions that you will be taking. The client can then see how you will be moving things forward for them in a timely way. If anything, that will give them more confidence when it gets to the final choice of agent.

Presenting and pitching your services as a top real estate agent does not have to be hard. You can make a deliberate choice to be the best agent for the job and give the full facts of the process in moving ahead. Confidence is the key.

Proof of Funds for Commercial Real Estate Investors

Creative Financing

When a Commercial Real Estate Investor is looking to purchase income producing property utilizing any number of creative financing methods, one of the most important keys to their success is that their ability to provide adequate, verifiable proof of funds – P.O.F.- to both the seller and the lender. The verification of funds can enhance the investors credibility with the seller as well as satisfy the lenders requirement to know that the borrower has necessary funds to complete their transaction.

Proof of Funds

There are a few ways acceptable to lenders and sellers to show P.O.F. to close your Commercial Real Estate transaction:

  • Bank Statements or Bank Verification
  • Brokerage Account Statements or Verification
  • Escrow Account Verification

“Bank Verification” This is the most acceptable and widely used method to confirm the investors can complete the proposed deal. As such money must be put into a bank account and confirmed by statements or letter from the banker.¬† This is a “hard” (versus soft) method of verification, because money are deposited in an account in the buyers name to serve as proof the buyer can complete the transaction.

“Brokerage Account Verification” Similar to bank accounts, brokerage accounts show acceptable means to complete a purchase transaction. Likewise, statements or letter from the brokerage house representative will meet the requirement to prove adequate financial strength. This is also a “hard”¬† method.

“Escrow Account Verification” This is the one method that can be hard or soft evidence of necessary assets as the escrow agent simply needs to write a letter of confirmation attesting that the borrower has finances available to complete the transaction. It becomes hard when money is transferred¬† into an escrow waiting for the closing.

Companies

Finally, there are companies whose sole purpose is to provide evidence of the financial ability of Commercial Real Estate Investors to complete their transactions. Many of them provide “Proof of Funds” and Transactional Financing. P.O.F. is necessary at the beginning of the deal and Transactional Financing is for the day of closing only. Both of these methods are a necessary part of an investors arsenal when utilizing creative financing.