Avatar's Blog

Avatar Financial Group offers interest only payments on commercial bridge loans with terms of 1 - 3 yrs. Points are wrapped into the loan and are payable at the completion of the loan along with the loan principal.

Balloon mortgages with interest only payments offer borrowers the lowest possible monthly payments. This enables the borrower to prepare as quickly as possible for conventional refinancing.

For further information about a balloon mortgage for a purchase or refinance of commercial real estate property, please contact the company at 888-886-0097.

Sometimes even short forms can be daunting. Here are some tips for filling out Avatar Financial Group's short commercial loan form:

• If you are refinancing a property - tell us when you bought the property and how much you paid for it.
• Tell us when the last appraisal was completed and what the value was at that time
• Tell us what you have added to the structure in terms of cash, work, filling leased spaces, etc. Tell us about any improvements in the neighborhood, increases in rents, etc., etc.

When we have a full idea of the reasons you believe the value of your property to be what you say it is, we will better be able to take a serious look at your loan request with a favorable eye.

Avatar Financial Group can make an initial expression of interest in a loan is as little as 24 hours (even less during business days). The initial expression is called a Letter of Intent and/or Term Sheet.

To get a Letter of Intent, have the following ready to email / fax:

• purchase and sale agreement
• photos of the property, inside, out and the neighborhood
• income statements for the property or business that occupies it, if owner occupied
• financial net worth statement for the borrower

Providing a complete loan package will get you faster answers.

Many commercial borrowers are surprised to find that they must pay for the costs of due diligence before closing the loan. Residential lenders pay for those costs and many are unaccustomed to the commercial lending practices. Residential mortgage lending is a highly regulated field of finance in the US. Comnmercial lenders have more leeway to charge the fees they wish when they wish to.

Some hard money lenders charge up front fees to review a loan package. This write counsels against paying such fees. Nearly all hard money lenders do ask the borrower to make a down payment toward the costs of due diligence when they issue a Letter of Intent and/or Term Sheet. These costs include:

• appraisal(s)
• inspection(s)
• site visit by the lender
• financial document review
• document preparation
• escrow
• misc

The advantage of hard money loans is the speed with which they can be completed. If you have your paperwork in order, you can get a hard money loan in two weeks or less. Whether you are purchasing or refinancing commercial or investment resdiential properties, this can be very helpful.

It is important to note that if you refinance a property using hard money, the hard money lender must be in the first lien position. This means that any outstanding loans  / liens on the property must be paid off with the proceeds or subordinated to the first lien position loan. In general hard money lenders will fund up to 65% LTV. You can have an additinal loan outstanding for up to 15% of the balance, but it must be subordinated to the hard money loan. If the original loan was given by a conventional bank, this might be hard to accomlish. Check with the original lenders beforehand.

Gas Stations, truck stops, and auto service stations can be difficult to obtain loans for purchase or refinnacing. Conventional lenders won't touch them and many hard money or commercial bridge lenders also shy away from the liabilities.

Some tips for getting funding for these properties. Since only a few lenders will fund such projects, be clear about your property type in the initial communciation. Save time and effort by knowing immediately whether you are speaking with the right lender.

Clean the place up. A messy, dirty looking place photographs badly and even those lenders who will fund such properties will back away from the loan if it looks like the owner is not a careful housekeeper.

Make sure the books are in order. When things are dicey to begin with, you need all your paperwork to be squeaky clean. Show clear indications of the sources of income - show all of it! Indicate the expenses by type and show a reasonable net profit to prove that you are able to make the loan payments.

Avatar Financial Group works with both brokers and borrowers directly. If a broker brings a loan to Avatar, we can collect the broker's fee (generally 1-3 points) at the time of closing and wrap those points into the loan. This helps to reduce the out of pocket expenses at closing.

We can also accept loans directly from borrowers. In this event, Avatar will assist the borrower in gathering the documents required to close the loan. Working directly with Avatar can save a borrower money. However, the value of having assistance in the development of an initial loan package and knowing which lenders to present the loan request to can be significant.

If you are unsure as to how to package your loan request, work with a reputable broker. If you are confident that your financial documents are in order and are ready to go it alone, use Avatar's borrower loan form at: /borrower-qualification.php to get started.

Avatar Financial Group fields over 200 loan requests per week. Most requests do not meet Avatar's lending criteria. Whether we can fund or not, we try our best to steer borrowers and brokers in the right direction to find a lender who can fund their specific type of project.

Here is the lending criteria for Avatar Financial Group:

• Our minimum loan is $500,000
• The maximum LTV (loan to value) is 65%
• This means that the minimum vlaue for a property must be $770,00 to yield the minimum $500,000 loan amount.
• If you are purchasing a property, "value" is equal to the lesser of the purchase price or Avatar's opinion of the appraised value.
• If you are refinancing a property, "value" is equal to Avatar's opinion of the appraised value.
• "Avatar's opinion of the appraised value" means that Avatar will order the appraisal from a local, respected appraiser and the appraisal will be made to Avatar Financial Group. Do not order an appraisal yourself - you will only have to pay twice, as hard money lenders must order their own.

For questions about lending criteria, email: gillian@avatarfinancial.com

Commercial real estate lenders want to see P&Ls for income producing properties before deciding whether to fund a loan. Submit your loan request with a simple, clear P&L for your rental properties, including:

• Gross rents received
• Less Expenses
• Current mortgage payments
• Taxes
• Utilities
• Maintenance
• Advertising
• Legal / secretarial / accounting / other services
• Misc
• Net income

Keep the accounting simple and clear. Lenders like to know you have a handle on your money, but don't like to see that you making things so complex that there is an impression you are trying to snowball someone about where the money goes.

Hard money loan requests accompanied by photos are funded at a rate of better than 2:1. In hard money lending, good quality photos really can be worth a thousand words - or thousands of dollars.

1. Use a digial camera to save time and money on scanning them to get them into your computer for emailing.
2. Email the photos - don't send them in an envelope, where they get lost among the papers on your potential lender's desk.
3. Take photos in good daylight. Use flash if the light is even a little pale. Make sure the photos are bright and the contrast is good. Use a photo editor to fix colors, lightness, etc. Dark muddy photos make your property look less valuable.
4. Take close up photos showing the building, interiors, etc. A photo from across the street tends to reduce the impact of the building - crop your photos to show things off to their best advantage.
5. Clean the place up before taking photos. Do not let garbage or untidy lumps, bumps, and bundles spoil the value of your loan request.