still stuck...with 9 days to go! - Posted by Rich

Posted by Rich on May 22, 1999 at 19:06:50:

Hi Johnboy,
The bank that verbally approved the deal, did have one stipulation…I get a profit/loss analysis by the Small Business Development Co. I’m meeting with them on Monday afternoon. If that goes well, I should be able to get the letter from the bank, saying I’m working on financing and it will take a little more time. Hopefully that will do the trick. The guy from The SBDC was familiar with the SBA Lowdoc, but wasn’t sure I needed to go that route. I’ll ask him more about it on Monday.
Thanks again for your input.

  • Rich

still stuck…with 9 days to go! - Posted by Rich

Posted by Rich on May 22, 1999 at 17:07:34:

Hi. I’m back after a week of frustration trying to come up with the 20k I need for a downpayment on the commercial property I’m trying to buy. For those who aren’t familiar with my deal, here it is: I’m trying to buy a 18000 sq. ft. commercial property to relocate my business. I have a contract that expires May 31, for $65k for a property that just appraised for $110k. The mortgage company had said I was preapproved for $100k, but now says they’ll give me 80% of selling price or $53k. I’ve spoken with another mortgage company that will do the whole deal but they want to tie up another property…and need another appraisal on that property(not enough time). I’ve spoken with the local Small Business Development Company about helping to fund the project and they think I have a great deal and idea for expanding my business. But it takes them about a month to work their magic. I’ve contacted the realtor to see about an extension, and she says that there is a sudden influx of interest in this property and there is a pizza company champing at the bit for my contract to expire to put in their pizza prep business. She doubts whether the owners will extend (a previous party tied up the property for 4 months trying to get financing and it finally fell through)…that’s when I stepped in. The building includes the contents which has in my estimation (I’m an antique dealer and appraiser) at least $15k worth of stuff. I was hoping to borrow the 20k and then auction off the contents and some of my own antiques so I should be able to pay off the 20k as soon as I have the auction, which I could do within a couple of weeks of taking possession. So if there are any hardmoney lenders out there. I’m all ears. Or if anyone has any other ideas, feel free to let 'em fly.
Thanks. - Rich

Re: still stuck…with 9 days to go! - Posted by dan

Posted by dan on May 23, 1999 at 10:29:45:

Where are you located?

Change your way of thinking… - Posted by Dave

Posted by Dave on May 22, 1999 at 21:16:38:

This is just my opinion, but I have done this a few times and it has worked every time. Forget the formal qualifying from the banks or jumping through hoops for the SBA. You need the money fast and I don’t think anything is going to work except for creative financing. You will have to pay a higher interest rate, but it’s either that or you will lose the deal. Once you have the property in your name, you will have time to look for better financing. The financing becomes 100 times easier once you actually own the property. Here is what I did for my Brother-in-law a few months ago. He was about 6 months out of a bankruptcy, had a low paying job, and didn’t have any money. I had just loaned him $40 so he could buy a few groceries for his family. He had found a business with building for sale. The asking price for the building was $75,000 and the price for the business was $55,000. The owner wanted $14,000 down and would carry the balance.
My Brother-in-law wanted the business bad, but didn’t have any money to give for the down payment. He contacted me because he knew I was always buying homes with nothing down. I told him to ask the owner if he would carry back a second deed for the balance of the property, if he could get $40,000. My brother-in-law thought I was insane. Why would he offer $40,000 when he didn’t even have the $14,000? This gave the owner the incentive to accept a second deed. Guess what? The owner said “yes”! I then ran an ad in several different larger papers in the Northwest where we live. I put the ad under ‘MONEY WANTED’. It ran like this : Investors Alert! Need $48,000. Will pay 10% for 10 years.
Well secured by 1st deed on real estate (65% LTV). Excellent Opportunity! Phone #. We had several interested investors the first couple of days. You see…they didn’t care about the details. They just saw that their money was very well protected because of the LTV on the real estate and because they were in first position. My Brother-in-law closed on the building and business and put about $8,000 in the bank at the same time. So… if it was me in your shoes I would put an ad in 1-3 larger newspapers like this : Need $71,500 on commercial property. 65 % LTV. Excellent Opportunity! Phone #. You will have to decide on the interest rate. It seems that investors expect different rates in different parts of the country. Now, once you start getting calls you have to become a salesperson. Try and sound as professional as you can, know the terms you are asking for, and SELL your idea to the investor. What I like about this method of financing is it is totally up to the individual investor whether or not to finance you. It’s not up to some uptight person working in a bank worrying about getting their next raise so that they might be able to buy a new washer and dryer. Why is it that these people seem to decide our financial future? Run ads in the local papers starting Monday morning and maybe you will get lucky and find someone in the short time frame that you have. Also, start calling some realtors and title company employees and ask if they know of any investors that are looking for a new deal. I’ve done this more than once and it works very well. Sorry about the long post, but I wanted to make you realize that what you’re trying to do is definately possible. Good Luck! Dave

Re: still stuck…with 9 days to go! - Posted by JohnBoy

Posted by JohnBoy on May 22, 1999 at 17:47:49:

I take it you didn’t try for the SBA yet? Call the appraisor that did the original appraisal and find out what local banks he has done appraisals for. Then call those banks and see if they do SBA loans. Go to one of those banks and apply for the SBA LowDoc Loan. They can have that approved by tuesday afternoon, weds. morning the lastest, IF you get in their first thing monday morning. The bank should allow the appraisal you already have since they have used that appraisor in the past.

If all goes through ok you can close in time if the bank can get the title work back fast enough. Even if this delayed things for a few more days the seller should be willing to extend for that unless this pizza place is offering more money and can close fast without waiting for financing.

Ask the realtor if the pizza place has the cash to close fast or will they need 30 days or longer to close if they buy it. You already have approvals but you need another appraisal because the lender your using won’t accept the one you already have. Isn’t the pizza place going to need one also?

Tell the agent your approved and your ready to close but the bank has to wait for another appraisal to come in. What if you can give them a loan commitment subject to the appraisal and title work? You will be able to close faster than the pizza place at this point unless they’re paying cash. If they don’t extend you a little more time and if the pizza place runs into a problem then they end up with no sale at all. Tell them your not going to play around with this. You need an a little more time to close and they need to agree to extend this time now or your not doing the deal.

Will the lender that approved this deal give you a date by when they will fund? Get a commitment in writing from them so you can take it to the seller to show your approved and plan on closing. Talk is cheap. They were already held up once before. Give them something in writing to show your serious and just waiting on the bank to get another appraisal.