Avatar's Blog

» Property Values in H.M. Refinances

Posted on 1/20/2006

Refinancing your commercial property to generate some working capital? Here are some tips for getting started:

  • Contact local realtors. Ask them what you could expect to the sell for if you had to sell it in the next four to five months. Ask at least two.
  • Consider that realtors want your business and may wear rose colored glasses when quoting you a number. A more realistic number may be something than what they promise you.
  • This is the quick sale value of your property and will differ from the MAI appraised value.

To determine how much you can pull from the property, take the quick sale value of the property and multiply it by 65%. Reduce the product by any outstanding liens on the property, including mortgages, tax liens, etc. If some liens can be subordinated, you may be able to keep those in place, so long as the total loans to value does not exceed 80%. The reason? The owner/borrower must always have some equity in the property. Avatar lends up to 65% LTV and permits another 15% in subordinated loans.

Posted in Avatar's Loan Criteria