Commercial Loans Blog

Private Money Commercial Construction Loans

Posted by George Blackburne on Tue, Jan 15, 2019

Under construction-2My own hard money shop, Blackburne & Sons, does NOT make private money construction loans.  One more time:  Blackburne & Sons does NOT make private money construction loans.  Watch, I'll still get a bunch of applications for construction loans.  Ha-ha!

Very few other hard money commercial lenders make ground-up commercial construction loans either.  The problem is that construction loans have to be funded in a series of draws or invoice payments.  Funded does not mean that the loan closed.  Funded means that the loan proceeds are actually released to the borrower.

 

ketchup

 

New call-to-action

 

Please Click After Viewing   Earn Up to 12% Interest Video

 

Example:

Billy "White Nose" Johnson is a developer, who also has a penchant for fast cars, pretty girls, and cocaine.  Billy applied to Rookie Bank for a $2 million construction loan to build a small apartment building in Indianapolis.  At the closing of the construction loan, Rookie Bank gave Billy a $1.8 million check to go build the apartment building.  The bank held back $200,000 for the interest reserve.

One year later, when the interest reserve had run out, the bank called Billy to ask that he start making monthly payments.  After the bank had left a dozen messages, many of them threatening, the bank sent an inspector out to look at the apartment building.  There was no apartment building, just an empty field.

 

Buy a List of 2,500 Commercial Lenders Freshly Updated in 2019

 

stop-vegans

 

Nine-Hour Video Training Course  How to Broker Commercial Loans

 

Six months later, a private investigator from the bank located Billy in a local homeless shelter, suffering horribly from withdrawal symptoms.  Apparently Billy had gone on a partying binge with the loan proceeds.  Almost $1.8 million had gone up Billy's nose.

By the way, while a commercial property is under construction, it's not generating any rental income.  Therefore most construction lenders will hold back nine-months' or one-years' worth of monthly interest payments in an interest reserve, out of which the construction lender pays itself a monthly interest payment.

 

Commercial Mortgage Brokers Tired of Being Poor?

 

picture-quality-cctv

 

Get Four Free Commercial    Training Courses

 

Obviously construction lenders must therefore never release the construction loan proceeds entirely to the developer.  Instead, construction loan proceeds are released using either a five-draw system or the bank pays the invoices of the subcontractors directly, after the developer has signed off on their work and after a progress inspector from the bank has inspected the work.

The five-draw system of funding construction loans is an older, almost obsolete method of controlling the loan proceeds.  The proposed work is divided up into five, roughly equal phases.  At the closing, the construction lender funds the first draw, and the developer cannot get at draw number two until he has completed the first phase.  The problem with the five-draw system is that the construction lender still has to release $400,000 to the developer and to pray that he doesn't have a drug problem.

 

Free List of 3,159 Commercial Lenders  Sort By Your Own Criteria

 

clever-answer

 

Submit Your Loan to 750 Commercial   Lenders Using C-Loans.com.  It's Free!

 

Progress inspections are site visits by the commercial loan officer or by a progress inspector, hired by the construction lender, to verify that the work is being completed according to the plans and specifications.  A progress inspector might charge $200 to $350 per inspection, and the the cost of these progress inspections is paid for by the developer.

It is now time to get to the point of today's training article:

Very few private money (hard money) lenders make ground-up construction loans.  There are several reasons.  First of all, private money loans are much more expensive than bank loans, so few good developers will pay their prices.

 

Apply  For a Commercial Construction Loan

I am actually pro-Trump, but in the interests of equal opportunity humor...

parasites

 

Banks and Credit Unions:  Get 200 Free SBA Loan Leads

 

The second problem is that construction loans need to be made by local lenders.  Pay attention here.  This is important:  Construction loans are almost always made by local lenders because the bank needs to go out and drive by the project on a regular basis to make sure that work is progressing.

The smart developer or commercial loan broker will immediately see that in order to find a construction lender, he needs to find a bank located close to his project.  How? Go to Google Maps and type in the address of the property.  Then hit the "Nearby" icon and type in "Banks".  In most areas, he will find scores of different banks.

 

Become a Hard Money Lender and Earn   $50,000 Per Month  Before Closing a Deal

It's the servicing income, guys!

silent-treatment-1

 

Get Both Video Training   Programs For Just $849.

 

The second reason is because private money lenders are usually one-office lenders.  Few have offices located across a state or region.  Therefore they are very limited geographically in their construction lending area.

A buddy of mine, Mike Cleaver of Emerald Creek Capital, makes construction loans and renovation loans of over $2 million in New York City.  Brooklyn is hot right now.  Even though he is limited to New York City (guys, I really mean NYC only), he still gets to make a fair number of these loans because of the population.  You can reach Mike with your NYC construction loans and renovation loans of over $2 million at 212-239-6845.  Did I mention New York City only?

 

Apply For Preferred Equity or  a Commercial Scond Mortgage

 

nyc

 

Franchise financing

 

The third reason why few private money lenders make construction loans is because many private money lenders raise their lending capital by syndicating private investors.  A private money lender might have 50 private investors in a single deal.  If the lender is using an invoice system of funding his construction loans, it is very awkward to fund a $2,000 invoice by asking for $400 from each of 50 private investors.  My buddy, Mike Cleaver, solves this problem by using his mortgage fund.

Okay, now I need your help.  Between C-Loans.com and CommercialMortgage.com, I have given you guys access to over 4,000 commercial real estate lenders for free.  Free!    

 

Business Loans Not Secured By   Real Estate - Unsecured or Secured 

 

Save icon

 

Click me

 

So this is my appeal.  Do you know of a private money lender who makes commercial construction loans?  Won't you please-please share him with me by sending me his contact information at george@blackburne.com?  Thanks so much!.

 

Apply to 218 Different SBA Lenders  Few Borrowers Grasp That  SBA Lenders Are NOT the Same

 

floss

 

Apply For a Commercial Loan to Blackburne & Sons

 

Subscribe to the Commercial  Loans Blog  Today!  

 

 

 

 

 

 

 

 

 

 

 

Topics: private construction loans

Placing a Commercial Loan With a Bank SHOULD Be Easy

Posted by George Blackburne on Wed, Jan 9, 2019

Commercial BankBefore I get into the subject of placing a commercial loan with a bank, I have two great TV show recommendations.

As you know, Netflix is now producing its own movies, and it just released the movie, Bird Box, starring Sandra Bullock.  What a fantastic movie!  It creates the same kind of eerie suspense as Signs and A Quiet Place.  I was squirming like a worm on a hot sidewalk - but it was an exciting and fun discomfort.  "Oh, my goodness, Cisca, I can't look," as I buried my head under a blanket.  Ha-ha!

 

Buy a List of 2,500 Commercial Lenders Freshly Updated in 2019

 

cab127841c9f439cd81707c9924b33a1-1

 

Submit Your Loan to 750 Commercial   Lenders Using C-Loans.com.  It's Free!

 

Also on Netflix is the TV series, Damnation.  In the 1920's in America, many business owners treated their workers heartlessly.  And if the workers dared to organize and strike, the cigar-smoking robber barons would simply bring in strike-breakers.  These strike-breakers were not just club-wielding thugs.  They carried firearms and committed the outright murder of the leaders of the strike.  This is the fascinating story of a reformed strike-breaker who discovers Jesus - but who does NOT forget how to shoot a gun.  It's a shoot 'em up, bang-bang kind of show that offers a fascinating glimpse into the dark chapter of America's past.  My wife and I binge-watched it.

Okay, now onto some training in the commercial loan business.  Placing a commercial loan with a bank should be easy.  If it's not, you simply need to move onto a new bank.

 

Free List of 3,159 Commercial Lenders  Sort By Your Own Criteria

 

flip-flops

 

Get Four Free Commercial    Training Courses

 

Commercial banks are moody and unpredictable.  For example, one moment they might love loans on self-storage facilities, and the next moment - usually after taking a loss - they wouldn't touch a loan on a self-storage facility with a ten-foot pole.  

Another reason for the wild mood swings of a bank is liquidity.  If a bank is fully-invested, even the tiniest black hair is a deal-killer.  A black hair is a flaw in a commercial loan.  There is no such thing as a perfect commercial loan.  Every commercial loan ever funded had some black hairs.

 

Apply For a Commercial Loan to Blackburne & Sons

 

Bears-3

 

New call-to-action

 

Please Click After Viewing   Earn Up to 12% Interest Video

 

But if a bank has gotten a ton of pay-off's, and it is sitting on a pile of uninvested cash, the pressure to lend is tremendous.  If you catch the right bank at the right time - a bank that is loaded with liquidity - you can even finance an ax murderer. 

Now there is no way for an investor or a commercial loan broker to know a bank's mood in advance.  Therefore the trick to closing near-bankable commercial loans is to present your loan to at least 15 banks, three at a time.  Only if all 15 banks turn you down should you give up on the sweet interest rates offered by banks.

 

Dirt Cheap Commercial Leads Choose Type, Size, States, Location

 

Confuse Vegan-2

 

Apply to 218 Different SBA Lenders  Few Borrowers Grasp That  SBA Lenders Are NOT the Same

 

"But George, where am I going to find 15 banks?  I only know two or three."

Finding banks making commercial loan is easy!  The Blackburne List - freshly scrubbed and updated - contains a list of 2,500 commercial real estate lenders.  You also have free access to C-Loans.com and CommercialMortgage.com.  A blind, cripple could find 15 banks for any commercial loan request.

 

Nine-Hour Video Training Course  How to Broker Commercial Loans

 

Bean Jar

 

Apply For Preferred Equity or  a Commercial Scond Mortgage

 

I use a similar business plan when placing my hard money commercial loans with our private investors.  We prepare a one-page Mortgage Investment Bulletin, and then we blast it out to about 1,200 wealthy private investors.  On any given day, at least 50 of them have dough that they looking to place.

You commercial loan brokers, if you are not working daily to get into the hard money business, you're a dummy.  Imagine being Loan Committee and having the authority to approve or decline your own loans.  (You still have to be very prudent and responsible.)  And once you become a hard money lender, you can earn loan servicing fees, which provide crucial cash flow during recessions.

 

Banks and Credit Unions: Get 200 Free Commercial Loan Leads

 

Bleach-2

 

Input Your Commercial Referral Here

 

"Oh, my goodness, George.  I could never service loans.  That's much too hard!"

Absolute nonsense!  You can hire a sub-servicing company to service your first 30 performing loans for just a handful of dollars per loan per month.  And once you become a hard money lender, you'll have plenty of dough to later buy your own loan servicing software.

Quick summary:  Plan on submitting your near-bankable commercial loans to fifteen banks, three at a time.  To find these banks, consider The Blackburne List - freshly scrubbed and updated.

 

Become a Hard Money Lender and Earn   $50,000 Per Month  Before Closing a Deal

 

Cat cone-1

 

Get Both Video Training   Programs For Just $849.

 

Subscribe to the Commercial  Loans Blog  Today!

 

Topics: 15 Banks

Freshly Updated List of 2,500 Commercial Lenders

Posted by George Blackburne on Mon, Jan 7, 2019

Screen Shot 2019-01-07 at 2.06.15 PMEvery two-and-a-half years, I suck it up and write a check for thousands of dollars to my staff to update The Blackburne List.  The Blackburne List is a huge list of commercial real estate lenders.  

It's a Herculean task to update a list of 2,500 commercial lenders, and it takes weeks.  If you need a commercial loan, this is the tool for you!  The list contains the name of the commercial loan officer, the name of commercial loan company, their address, the commercial loan officer's phone number, and his email address.

 

Buy a List of 2,500 Commercial Lenders Freshly Updated in 2019

 

Data

 

Nine-Hour Video Training Course  How to Broker Commercial Loans

 

It used to be that most bank branches had their own commercial loan officer, someone trained in both commercial finance and commercial real estate finance.  Commercial finance includes secured and unsecured lines of credit, equipment loans and leases, inventory loans, and accounts receivable financing.

Commercial real estate finance includes commercial loans on income properties, mezzanine loans (banks very seldom ever make them), and preferred equity investments (banks never make such investments).

 

Submit Your Loan to 750 Commercial   Lenders Using C-Loans.com.  It's Free!

 

Entralling

 

Get Four Free Commercial    Training Courses

 

 

Modernly, banks typically assign a single commercial real estate loan officer to cover four or five branches.  The modern commercial real estate loan officer, working for a bank, seldom comes into the office; but rather he is usually out in the field calling on good bank customers and prospective customers.  A good bank customer - a very important term of art for us in the commercial loan business - is someone who regularly maintains large cash balances at the bank.

A very good way to get your commercial loan closed is to tell the commercial loan officer that your borrower is willing to transfer all of his bank accounts to the bank.  Please read this last sentence again.  It is hugely important.

 

Apply For a Commercial Loan to Blackburne & Sons

 

Cat Squish

 

Don't Be Afraid of 9% First Trust Deeds  We've Sold Them For Almost 40 Years

 

This offer to create a deposit relationship works great with community banks and regional banks.  The larger money center banks, however, couldn't give a hoot.  They have more than enough money to lend and a severe shortage of good borrowers.

A community bank is a commercial bank that derives funds from, and lends, to the community where it operates, and it is not affiliated with a multi-bank holding company.

 

Apply to 218 Different SBA Lenders  Few Borrowers Grasp That  SBA Lenders Are NOT the Same

 

cockpit

 

Dirt Cheap Commercial Leads Choose Type, Size, States, Location

 

A regional bank is a depository institution; i.e., a bank, savings and loan, or credit union, which is larger than a community bank, which operates below the state level, but smaller than a money center bank, which operates either nationally or internationally.

A money center bank is similar in structure to a common bank; however, its borrowing and lending activities are with governments, large corporations, and regular banks. These types of financial institutions (or designated branches of these institutions) generally do not borrow from or lend to consumers.

 

Free List of 3,159 Commercial Lenders  Sort By Your Own Criteria

 

Cupcakes

 

Apply For Preferred Equity or  a Commercial Scond Mortgage

 

I was talking with my own commercial loan officers this week, and I made the point that a commercial loan broker will often submit his deal to as many as fifteen different commercial lenders.  Armed with The Blackburne List, you will never again have any more trouble finding fifteen commercial lenders to whom to submit your deal.

 

Input Your Commercial Referral Here

 

hair-stylist-1

 

Earn a $21,250 Referral Fee  In Your Sleep

 

Subscribe to the Commercial  Loans Blog  Today!

 

 

Topics: Blackburne List

Never Try To Be a Commercial Loan Wholesaler

Posted by George Blackburne on Fri, Jan 4, 2019

Daidy chainAny commercial loan broker with more than six-month's worth of experience will tell you, "Daisy chains never close." A daisy chain occurs when one commercial loan broker takes a loan to another commercial loan broker, rather than directly to a commercial lender.

 

Cold Dog-1

 

New call-to-action

 

Please Click After Viewing   Earn Up to 12% Interest Video

 

So why do daisy chains never close?  There are three reasons:  First of all, the points get too high.  The lender charges points, the second broker charges points, and the originating broker charges points.  At some point the borrower says, "There is no way I am going to pay three (or more) points!  Sayonara."

The second reason is that the communication process is very unwieldy.  The lender asks the second broker a question, who has to ask the originating broker the question, and then the originating broker has to ask the borrower the question.  By the time the question goes down the line and the answer comes back, the answer is often garbled junk.  It's like that game many of us played in kindergarten.  Eight kids stand in a line, and the first kid whispers a sentence into the ear of the second kid, who whispers the sentence into the ear of the third kid.  By the time the sentence gets to the eighth kid, the final sentence has no relation to the original sentence.

 

Submit Your Loan to 750 Commercial   Lenders Using C-Loans.com.  It's Free!

 

Fat panda

 

Nine-Hour Video Training Course  How to Broker Commercial Loans

 

The third reason why daisy chains never close is because the process is incredibly slow.  In the meantime, the borrower is shopping his commercial loan to direct lenders all over town.  

Since commercial loan brokers know that daisy chains never close, a commercial loan broker will exhaust every direct commercial lender that he knows before bringing his commercial loan to a wholesaler.  By wholesaler, I mean a commercial loan broker trying to act like a middle-man between direct commercial lenders and other commercial loan brokers.

 

Get Four Free Commercial    Training Courses

 

Chips in Church

 

Dirt Cheap Commercial Leads Choose Type, Size, States, Location

 

This means that the typical commercial loan brought to a wholesaler has already been turned down by a half-dozen direct lenders.  The deal is a stinker, and it will never close with anyone.

To make matters worse, the originating commercial loan broker will NOT tell the wholesaler that the deal has already been shopped all over town.  He will NOT tell the wholesaler why the loan was turned down - horrible area, toxic issues, vacancies, problems with the borrower.  He hallucinates that the wholesaler will never discover the huge black hairs.  A black hair is a flaw in a commercial loan application.

 

Commercial Mortgage Brokers Tired of Being Poor?

 

Facebook After Death-1

 

Banks and Credit Unions:  Get 200 Free SBA Loan Leads

 

The result is that the wholesaler spends hours and hours working on trying to place a commercial loan, only to learn what the originating commercial loan broker already knew - that the property was located in a horrible area, that the property was toxically contaminated, that too many units were vacant, or that the borrower has more problems than Doan's has pills (poor credit, unpaid income taxes, judgments, unpaid child support, delinquent real estate taxes, etc.).

Working as a commercial loan wholesaler is a huge waste of time that produces very little income.

 

Apply to 218 Different SBA Lenders  Few Borrowers Grasp That  SBA Lenders Are NOT the Same

 

Blood Flow

 

Buy a List of 2,500 Commercial Lenders Freshly Updated in 2019

 

So how should a commercial loan broker work with other commercial loan brokers?  Answer:  You should work only on a name-and-number referral basis in exchange for a 20% referral fee basis.  Make the originating broker get the heck out of the way so that you can work directly with the borrower.

The originating commercial loan broker has to be content that the second commercial loan broker will get as large of a loan brokerage fee for the team as he can, and then he has to be content to take just 20% of the total fee to the team.  What if the originating commercial loan broker insists on adding a point?  You will have to tell him, "Don't let the door hit you on the back of the head on your way out."

 

Input Your Commercial Referral Here

 

Crocs-1

 

Apply For Preferred Equity or  a Commercial Scond Mortgage

 

But guys, you have CommercialMortgage.com!   "Wholesaler?  We don't need no stinkin' wholesalers."  You can find all of the banks and credit unions that you need using CommercialMortgage.com ("CMDC").  Every day we add two to three new banks.  We literally now have thousands of banks and credit unions on CMDC.

And guys, CMDC is free!  You deal directly with these banks, and neither CMDC nor any stinkin' wholesaler will try to insert a fee between you and the lender.

 

Free Commercial Loan Placement Kit

 

Cat Heroes

 

Franchise financing

 

So how does C-Loans, Inc., the owner of CommercialMortgage.com, make any dough?  Because we own the portal, we get to see every lead.  We then solicit you to allow our hard money shop, Blackburne & Sons to make your commercial loan.  Between loan fees (pretty modest for a hard money shop) and our loan servicing fees (it's the loan servicing income, dummies), we make a ton of money on every hard money loan that we close from CMDC.  In truth, CMDC is a honey trap, and because it is 100% fee, you would be crazy not to dip your wick into this delicious databank of commercial lenders.

And guys, if you are working daily to build a loan servicing portfolio - which pays you monthly even during recessions - you are truly blowing it.  I make $76,000 per month in loan servicing income, whether I close a new loan or not.  And servicing performing loans is a piece of cake.  You will pay a sub-servicing company a few dollars per loan per month to service your first 30 loans, and later, when you are loaded with dough, you can simply buy your own loan servicing software.  Easy-peasy, if you make good loans.

 

Apply For a Commercial Loan to Blackburne & Sons

 

Ants-1

Become a Hard Money Lender and Earn   $50,000 Per Month  Before Closing a Deal

 

Get Both Video Training   Programs For Just $849.

 

It's the loan servicing income, dummies!

 

Business Loans Not Secured By   Real Estate - Unsecured or Secured 

 

Subscribe to the Commercial  Loans Blog  Today!

 

 

Topics: commercial loan wholesaler