So let’s talk about pictures and commercial loans. One of the key items overlooked in most commercial financing requests is pictures.

Invest in or keep your commercial real estate, but adjust your lease rates to keep your tenants intact. I’ve written a past article on how even in a declining value market, income-producing real estate protects your capital better than most other investment vehicles.

Who Controls The Third Party Reports? In light of recent “events” in the mortgage markets, it comes as no surprise that lenders are changing how they handle third party reports. Eventually, most lenders followed suit.

Even in Las Vegas, one of the most overbuilt markets in the country, I found construction activity on several projects. For some commercial real estate investors, this is the end of the line for these projects.

There are several advantages to being a Specialist in commercial real estate.

Depository Institutions which include Banks, S&L’s, Credit Unions, and Mutual Savings Banks. They prefer shorter term financing such as construction and bridge loans with adjustable or short term fixed periods and are very borrower oriented in their underwriting.

While costs such as office equipment and furniture are easily recognizable as personal property, construction-related costs that are often included as part of real property may also qualify for a shorter depreciable life.

By taking an equity interest in and reducing rent to “fresh” retail models, landlords will drive traffic to shopping centers and improve investment returns on the entire shopping center.

A powerful method for building real estate holdings is the use of 1031 Exchanges, which lets investors defer capital-gains assessment on investment property by reinvesting sale proceeds into the purchase of new property within a set time period.

We all understand the basic OPM approach for investment property: Get some investors together, pool their money, buy a property together, and get a piece of the action for selecting and managing the property. This is a time tested method for growing a portfolio of commercial properties and a (nearly) passive income stream.? But this is not the only aspect of OPM in commercial real estate.

I've had real incentive to consider this week's topic: How permits affect commercial loan underwriting. To be clear, "un-permitted" work on a property is work that was done without the local city building and safety department knowing about it. When you ran into that property with un-permitted work, you may have been initially surprised to learn that lender involved disallowed any income or value attributable to those improvements. It's possible that the un-permitted work could be disallowed entirely.

For loan amounts up to $1.5MM on commercial properties, we can get the Loan-to-Value (LTV) as high as 90% in some cases regardless of the property's cash flow. So even if the borrower made an extra million dollars a year, traditional lenders wouldn't increase a commercial loan amount past their guidelines.

The Mezzanine mortgage lender uses the membership interests of the LLC as collateral for their loan instead of the property. Purchase accomplished! Mezzanine lenders also play an important role in large construction loans, too. Unfortunately, these types of commercial loans aren’t available to regular mortals.

Property values decline, but local populations remain high. It is easy to see how population movement and population growth impact the housing market, since a higher population density increases the demand for local real estate.