• A longterm lease on commercial property has or is expected to expire soon . The lease expiration could cause a vacancy and a disruption in rental income . If the master tenant vacates the property , this will disrupt other smaller inline tenants because the master tenant is responsible for the primary draw of foot traffic to the center . Banks will usually not make this loan . This loan is generally a bridge loan until the owner obtains a longterm lease with a creditworthy tenant and manages the center back into stabilization .
• Credit approval is subject to highly sophisticated lease analyses with multiple tenants having different lease terms , including length , lease rate , and lease provisions . Some tenants are on longterm leases , and some are on a monthtomonth tenancy . Lease documents may include godark requirements for the anchor tenant or provide for lease cancellation in the event of excess vacancy or loss of an anchor tenant .
• Some properties require mutual property access easements for ingress / egress or complex usage rights , such as reciprocal parking agreements . Many properties , such as churches and retail shopping centers , sign contracts with multiple property owners to use the entry / exit of the property or the parking in specific ways or at certain times .
• Foreign nationals with and without social security . The borrower must have a U . S . bank account ( s ). The borrower must have a process agent service arranged during loan processing .
• “ Notice of a substandard condition ” or “ notice of property noncompliance ” is recorded on public records by a building department notifying the public that the property is out of conformance or in disrepair for building and zoning codes . The bridge loan funded by private lenders will provide funds to make substantial improvements and modifications to bring the property up to acceptable building , safety , and zoning standards . Institutional lenders will not make these loans .
• Nonconforming property does not comply with current zoning and building standards . As a result , strict limitations exist on repairing or replacing structures in destructive acts such
as fire , flood , windstorm , vandalism , or earthquake . The property may not be able to be rebuilt to an acceptable level after the destructive event occurs .
• Earthquake seismic retrofit . Many older properties require upgrades , such as engineered reinforced steel frames bolted into the existing structure and walls shored up with steel support fasteners to withstand earthquakes .
• Tenant improvements . Commercial building owners must provide funds to install interior or exterior improvements to satisfy the owners ' and prospective tenants ’ leasehold improvements .
• Cannabisrelated properties , manufacturing , and retail facilities : Some states have legalized lending in cannabisrelated operations , and others have not .
In summary , private money loans are collateraldriven , even though the lender must review the borrower ' s financials to prove that the borrower can pay the debts .
If you find value in this article , please forward it to friends and associates .
Thank you
Dan Harkey
Educator & Private Money Finance Consultant www . danharkey . com
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