BIG deal... BIG financing question! - Posted by BKarnes

Posted by JohnBoy on April 19, 1999 at 09:33:50:

See if the church would allow the bank to put a lien against the property for security. Then adjust your lease with the church to offset the difference on your payments and your original lease.

So if your lease was say, $1,000 a month and a new loan payment would be at $500 a month, write a new lease with the church that puts your lease payment at $1,500 a month. The church would qualify for the loan since they have a lease with you covering all the debt service plus a positive cash flow.

If the church doesn’t want to sign for a loan then see if they would be willing to at least subordinate to a new first mortgage with the bank if you sign the mortgage. If you have a long term lease the bank will allow the owner of the building to subordinate to a new mortgage against the property.

I talked to a banker on something simular to this. There was a shopping center that I wanted to build my own building in front of at the corner of their parking lot. The owner of the center wasn’t interested in building a building to lease out to me. They would have been willing to lease the dirt and allow me to build my own building on their property. The bank would do a loan to cover the cost of building the building, but only if the owner of the shopping center would subordinate their interest on the dirt so the bank could put a first lien against the property.

It will just depend on the church and there motivation to lease to you.

BIG deal… BIG financing question! - Posted by BKarnes

Posted by BKarnes on April 19, 1999 at 08:56:43:

We are looking for specific information about how to obtain financing for extensive repairs on property under a long term lease.

My partner and I found a church that is ONLY available under a long-term lease, but the church is open to concessions in order to get their church rehabed.

Being that our business venture is creative in nature a church would be ideal. However, we would have to restyle the place to meet our specific need and were trying to figure out how to get the investment capital to do so for a property we don’t yet own. We’ve heard about something called a “lease hold mortgage.” We have also been told that lenders will consider loans under a long term lease situation, but we are hoping someone will share their thoguhts with up about the best way to proceed.

Anyone having more information about the particulars of how this works and what type of lenders to seek out, or any other viable options to pay for the restyling, please respond. Thanks in advance!

Re: BIG deal… BIG financing question! - Posted by JohnBoy

Posted by JohnBoy on April 19, 1999 at 10:04:58:

More info I forgot to mention.

If the church is willing to subordinate to a new first (Which they shouldn’t have much of a problem with if they would really like to see their building up graded) then you will need to put together a business plan on your business if your applying for the loan.

Put a business plan together out lining the business, your experience in the business, and two years of monthly projected income and expenses.

Once you got a business plan put together, go to the bank and talk to the commercial loan department. Don’t talk to them in a way that sounds like your “asking” them if they would be willing to do a loan on something like this for you. Go in and talk to them feeling extremely confident that you “Expect” them to drop everything and write this loan for you! Come off like you know your business better than anyone else in this business and your looking for a bank that will be able to financially handle all your future business needs. Basically, instead of acting like you feel like the bank needs to qualify you for the loan, act like you need to qualify the bank to allow them the privilege of getting your business from you! With your business plan professionally laid out in hand and walking in with full confidence presenting yourself as a professional businessman that “expects” the bank to bend over backwards to get your business coming off like the bank would be stupid NOT to write this loan, then it should be a slam dunk!

If you don’t have any luck getting the bank to do the loan then go for an SBA Loan.