Loan Officer

The economic situation has brought some changes to the hotel industry and in particular to the hotel lending environment. Capital is scarce and deals are hard to close. Mortgage brokers are becoming very important in the hotel lending environment of today’s world. You need a mortgage and you don’t know how to proceed. Should you use a broker or go directly to a bank.

A bank is considered a direct lender. It is they who provide the money to the borrower at the closing table. In exchange, the hotel lender receives a note evidencing the borrower’s debt and the obligations to repay. The hotel lender also gets a lien on the property.

Mortgage brokers do not lend money. They are essentially a service provider who offers the loan products of several hotel lenders. A mortgage broker counsels you on the loans available from a wide variety of hotel lending sources. They will also counsel you during the qualification process if you have problems with such things as credit problems.

A few years ago, when hotel lending was very free and open, a broker was not as critical. Good real estate brokers who do hotels have relationships with hotel lenders. Now that financing is very difficult, they have these referrals to buyers to help them finance their assets. Well-connected brokers can contact various hotel lenders to find properties for buyers and make referrals.

A good broker will evaluate the deal and the buyer and sometimes make recommendations of hotel lenders. A savvy broker will make several recommendations and let the client make the contacts so that they can make up their own mind on selecting a hotel lender.

In today’s uncertain economic environment, certain transactions require lending from multiple sources. The minimum number for seeking multiple sources for hotel lending varies. There are some who feel that deals of more than $10 million dollars require more than one lender while others think that financing can be obtained from one hotel lender unless it is more than $20 million dollars. When you have to ask for deals over $20 million, you may have to deal with what is known as the “country club” effect. It may take two or three hotel lenders to handle the financing. This is a product of the recent economic fallout of the last 12 months.

A viable hotel lender has to pay attention to several other important details. Some of these areas demand the attention of hotel lawyers. Because hotels are going concerns that are situated on real estate, the hotel lender will obtain the security in the real and personal property as well as in all aspects of the operating business.

If there are other liens on the property, the hotel lender may need to get all other parties to subordinate their interest to that of the lender’s. If another lien holder were to remove beds, TVs, etc., it would have an adverse impact on the lender’s collateral and additional expenses to start up again could be prohibitive.

A hotel lender and their agents should review management agreements, franchise agreements, leases and other contracts such as liquor licenses and ownership structure of the hotel as it affects security in hotel revenues.

In evaluating the hotel as collateral, the operating business and the revenue stream it produces are critical aspects of collateral value. The physical plant, its geographic location and its position within the selected market segment, are factors to be considered.

These factors that are unique to hotels are fundamentals which should be examined by hotel consultants and appraisers. Hotel lenders are well advised to seek out these experts to help evaluate the property and the business. The cost of these services is usually paid by the borrower.

Motels & Hotel Loans

Overview

Motel loans are commercial loans which are offered to purchase a motel. It is perhaps one of the most high-priced business ventures one can agree to when purchasing a motel. This hospitality industry is unpredictable, competitive, and gigantic, which means finance is very important. There are many things that come into consideration when it comes to starting a motel, and chances are that you would require a loan to assist you to get your enterprise working. There are lots of questions that arise when it comes to finance for opening a motel, particularly if you are a newcomer in this kind of procedure. Specifically, what type of expenditure can you anticipate with a loan or how big would the loan be? You may also want to find out how to get the loan you require to start a new venture.

What are your alternatives?

Motel loans are initially hard to obtain, for instance if your motel is located in rough areas or small towns which cannot support bigger flagged motels. As far as the loan alternatives are concerned you must anticipate local SBA loans, CMBS alternatives, or conventional loans. These conventional commercial loans are usually offered by banks wherein the loan amount will initially not exceed 65% of the value on purchases and on the odd occasion it may exceed to 50% of refinances. Conventional loans for motels are usually fixed for a period of 5 years with an amortization schedule of 20 years.

You must usually take a closer look at SBA loans, as this type of loan is one of the best methods of financing for motels. Initially, this type of loan has the highest level of financial availability for motels at almost 85% for purchasing and even refinancing. Even the fixed-rate loans range from the period of 5 to 10 years with these types of programs. This 85% finance can even be rolled as 85% of entire venture costs. For instance, if you need to purchase a motel at $1,000,000 and the property requires an additional $300,000 for renovations in order to get the previous motel up to the par.

In this case your loan will be at 85% of the total amount which is $1,300,000. This means that you sill get limited finance in your hand. CBMS loan lenders are those loan lenders who deal in selling commercial mortgage secondary market loans. It is almost like the 85% of financing, the stated income program, and 30-year fixed-rate loan. However, most of the changes in this sector are still worthwhile for the owner of the motel to research what alternatives are available in the market for obtaining a motel loan.

You must remember that motel loans are not similar to business loans because when you are financing for your motel then you can also finance for your entire business. Alternatively, this is a sign that you have a perfect plan and understand what you would do when you undertake this venture. So, it is necessary for you to research all the loan lenders who deal in offering motel loans and are always ready to accept your application. It is necessary to understand the pros and cons of the entire loan process so that you are fully prepared to deal with the loan lenders.

Motels & Hotel Loans

While it is true that the CMBS meltdown has removed more than $200 billion dollars of capital from the commercial real estate market, some look for a return to normalcy by the end of the year. The residential real estate market does not seem to have that much effect on hotel financing. Big capital seems to be wary of pricing risks, and once someone is ready to “move on” and values are established, things will come back to normal. Some even see the sobering financial markets as a positive development that will help restrain room growth and lead to a stronger and sustainable base for future recovery.

There was some refreshing news from the hotel financing sector at a meeting in May. The recession for the hotel industry should be over by the end of 2008 and things should only get better from there. Everyone seems to regard this as a time of great opportunity if one is careful and has good partners. Some look to profit in note purchases and sales because of better pricing, yields and liquidity. An investor can also look for selective deals where fast action and determination can generate some very favorable results. If you can find the capital, this is a great time in the hotel financing sector because you should be opening into some great markets in 2010 and 2011.

Many investors believe that the coming three to twelve months is the time in the real estate market to begin getting involved in hotel financing. Everyone is still trying to sort through the Wall Street meltdown, but they see opportunities ahead. Interest is strong for both mid-market and upscale brands. However, more people seem to be attracted to the limited services brands which are generally priced under $10 million. Those involved in hotel financing indicate they are less inclined to do deals than several months ago. But there is still money available, with the $10 million and under transaction category being the most active.

One of the facts of hotel financing is that deals above $20 million most often involve two or three lenders. This is one thing that changed with the subprime fallout over the past twelve months. There are instances where smaller banks or community banks couldn’t deal with that risk. You can put together deals wherein you may partner with entities such as the SBA or a large lender such as GE Commercial Finance.

It is important to follow a qualification process when you are involved in hotel financing. You can qualify the potential buyer by obtaining financial statements of involved partners franchisors and brand contacts to check past deals.

Be sure that your paperwork is in order. Make sure the lender has everything he needs to underwrite the transaction. The word here is to be prepared. Have your own materials and be prepared to answer more questions than ever. The hotel financing environment is still tight but now is the time to act. However, you must also be prepared to bring more equity.

Motels & Hotel Loans

Hotel funding is the key to being successful in the hotel business. It is important to take the time to find the right hotel funding based on all options that are available to you. The goal is to find the most ideal funding for hotel needs. Research the various loans available as well as the interest rate, terms and allowable lending rates available to you. You should be able to find the ideal opportunity that fits your situation.

The sluggish economy has slowed travelers thus affecting the number of transactions being executed throughout the industry. Debt is harder to obtain. There seems to be a difference between those who believe there should be a pricing adjustment and those who feel that their cash flow is better than it was a year ago. Smart money now is buying hotels if they have sellers that have adjusted the pricing and are not still thinking it is still ’07. To make up for a sluggish economy, some principals in hotel funding are focused on growth overseas, particularly in the Asia-Pacific and Europe/Middle East regions.

There are still many opportunities for hotel funding. You can consider hotel construction loans, hard money loans and hotel construction loans from direct lenders. One of the best routes to take is to talk to a loan officer directly or work with a financial planner to determine the right investment for you. You can find out more about hotel funding by talking with your banker, as well. Some lenders only operate within the country. If you are a foreigner, it is possible that you will be restricted on how much of your property purchase can be financed. Many countries limit the amount of the property that can be financed at all and it cannot be financed by just anyone.

Current events have brought changes to the whole industry as well as hotel funding. There is little capital to spread around and deals are hard to close. You might consider using a broker to help you with your project. A good broker should have ties to lenders to help them finance their assets. Brokers can also be helpful because they know what the lenders’ parameters are. Some lenders have strict limits as to what they are willing to use as criteria to lend on; from geography restrictions to brand requirements.

When searching for hotel funding, be sure the lender has everything he needs to underwrite the transaction. These should include financial statements of involved partners, getting references from previous franchisors and brand contacts to check past relationships.

Check the advantages of each type of hotel funding. Conventional loans can offer up to 65% on Loan-To-Value and up to 55% cash out Loan-To-Value on hotels. Closing costs are usually less than an SBA Loan Program. You can get length of loan terms to meet your needs. There are two types of SBA loans. First is the 7a program for financing of $3 million or less. The second is the 504 program for purchases between $1 million to $6 million. Each has its strengths and specific requirements. Though a bank does not have to participate with SBA, it is noteworthy that most banks do participate. Talk to your agent about which type of loan is right for you.

Certain transactions require multiple lenders. It is true that hotel funding fro projects over $20 million will require multiple lenders. Most local banks cannot handle this risk without the help of larger lenders.

Now is a good time to start you search for hotel funding. Most of the industry feels that the economic climate is ready to rebound and you will be opening to a robust economy by 2010 and 2011.

Motels & Hotel Loans

It is well publicized that the current economic downturn has removed $200 billion a year from the commercial real estate markets. But 88% of the industry think tank seems to agree that we are at the very end of the current cycle. Thirty four percent believe that we are in the first inning of a new cycle. For the industry, the recession is expected to end by the end of 2008 and things should get better from here. There is no doubt that capital is harder to come by. However, if you can find the capital, this is a great time to be developing, because you should be opening into some great markets in 2010 and 2011. So get yourself some strong partners, do your homework, and be prepared to bring more equity than in the past.

Hotel loans come under the same underwriting guidelines as other commercial properties. There is usually service income that is part of the net operation. The lender will categorize the hotel based on product type, amenities, and location. After analyzing the financial statements of the hotel, the true profitability will become clear. This will allow the underwriting company to compare similar entities to determine the proper pricing structure. Underwriting for flag hotels gets a better rate than a non-flagged hotel. This is known as aggressive underwriting. Aggressive underwriting translates into lower rates, fees, and longer terms.

There is an examination of all the various departments of the hotel. The profitability of each department is calculated by taking the revenue of that department and applying all allowable expenses including the cost of goods or services sold.

Other items to be considered are market, location, property condition and the characteristics of the property. The property should be accessible and visible from the highway. Business hotels will provide ready access to downtime business areas and airports. There will be sufficient parking to accommodate range of services and location. Vacation hotels will be highly visible from interstates and be close to tourist attractions.
A stable history of operation is critical. There should be at least three years of operation that can be examined in order to secure a hotel loan. The minimum occupancy rate for the past three years should be at least 60%. Flagged properties are preferable with franchise agreements extending beyond the term of the proposed hotel loan.

Hotel loan rates are set specific to each loan and are usually determined by various factors. Some of these factors are: hotel management experience, cash flow coverage, equity injection, and location of prospective hotel, personal credit score total finance for the hotel and whether it is a SBA or non-SBA loan.

Hotel loan interest rates are tied to a variety of indexes. They are the prime rate, 30-day commercial paper, 30 or 90 day LIBOR, 5,7, or 10 year Treasury Swap Rates, and a 5 or 10 year US Treasury Note. Fixed rates are indexed to US Treasury, Treasury Swap Rates, or FHLB-Seattle for 2, 5, 10, 20, or up to 25 years.

There are conventional hotel loans that offer up to 65% of appraisal value. Closing costs for a conventional loan are much less than under an SBA Loan.

Motels & Hotel Loans

Hotel mortgages are no more exempt from the current economic crisis than any other part of the business world. However, government intervention in the economic meltdown could mean that opportunity is about to come knocking even in the hotel mortgage industry. There are some hotel investment experts who feel that the hotel mortgage sector has already seen its worst days. Just as in any other sector of the market these days, bad deals will not fly and good deals will continue to get done. Debt is harder to obtain, and the hotel mortgage industry is still absorbing the blow from July of last year when people stopped doing commercial mortgage-back securities. The 800 pound gorilla in the room is liquidity – or the lack of it.

Talking about the economic situation and what opportunities might exist in the hotel mortgage industry, we can look at the failure of Lehman Brothers. The firm had about $60 billion in real estate holdings and a lot of people felt that there may be opportunities here. Equity investors had pulled out of the hotel mortgage market and put their projects on the shelf while waiting for an opportunistic situation. Since Lehman had about $60 billion dollars in real estate holdings, it could well mean that the time is ripe for hotel mortgages to proceed. Analysts believe that Barclays – who purchased Lehman Brothers – may be in no hurry to liquidate. They seem to have two avenues – to wait it out and let the value return or get rid of all hotel mortgages regardless of asset quality or sponsorship quality.

So, that is the financial climate that those who seek hotel mortgages find themselves in today. Remember, to be successful, you have to know your surroundings. Out of all this gloomy news, there is a silver lining. There are deals to be made in the hotel mortgage industry. When you go down the numbers, commercial real estate defaults still remain at 0.3% to 0.43%, which is a very small number. Compare that to the numbers in the residential real estate market. Equity investors feel the time is now to find those hotel mortgage deals. The slow market is providing opportunities for developers and buyers of hotel mortgages who have capital and can seek out good deals.

Smart money now is buying hotel mortgages if they can find sellers that have adjusted the pricing to reflect the current situation. Smart investors are seeking hotel mortgages now because they want to be opening us as we come out of a recession. It is still possible to get 70% financing on hotel mortgages below $30 million dollars. Those at $100 million dollars and above are requiring more equity.

When you decide that a hotel mortgage is right for you, it is important to know how to obtain that mortgage. A good idea is to get a mortgage broker. A mortgage broker advises you on the loans available from a wide variety of lending sources. They are not paid by any one company to push their particular deals. As an investor seeking a hotel mortgage, you are a unique customer. Mortgage brokers get paid to solve problems and close deals. When it comes to financing niche properties such as hotels, it is strongly recommended that you use a broker. A hotel mortgage certainly qualifies as a niche property.

Motels & Hotel Loans

GMAC was founded in 1919 as a wholly owned subsidiary of General Motors Corporation. It was originally founded to provide GM dealers with the financing necessary to provide and maintain vehicle inventories and to provide customers with a means to purchase vehicles. The company has since expanded and now includes three primary business units: automotive financing, real estate financing and insurance.

A mortgage is lien or encumbrance on property. A mortgage is usually sought for new money, but is has become the generic term for a loan secured by property. A GMAC commercial mortgage is generally structured as a long-term loan. Periodic payments are similar to an annuity and calculated according to the time value of money formula. The time range is generally from ten to thirty years. GMAC commercial mortgages provide funds against property to earn interest income, and generally borrow these funds themselves by taking deposits or issuing bonds. All types of real property can, and usually are, secured with a mortgage and bear an interest rate that is supposed to reflect the lender’s risk. The price at which lenders borrow money affects the cost of borrowing.

Fixed rate mortgages carry an unchanging interest rate for their entire term. They allow you to lock in rates when they are low, but if the rate should go down, you are stuck with the initial rate. GMAC commercial mortgages start with fixed rates for three to five years, and then switch to variable rates for the remainder of the mortgage. This is sometimes called a two-step loan. This keeps payments predictable at first; delaying any fluctuations until you are better able to handle them.

You can also get a GMAC commercial mortgage as an “interest only” loan. This simply refers to making payments exclusively towards the interest for the first three to five years. This reduces your monthly payments so that you can concentrate on improving your cash flow. Since you’re not paying anything on the principal, your monthly payments will be considerably larger once the interest-only period ends.

If you need to stretch your money, you can apply for a GMAC commercial mortgage with a balloon payment. This shorter-term loan, which can range from 5 to 15 years, requires small monthly principal and interest payments. You can then use your immediate cash flow to grow your business. Your last payment, or balloon installment, includes the remaining interest and principal on the loan and can amount to tens of thousands of dollars or more. Balloon payments are risky for any business, particularly if you are applying for a GMAC commercial mortgage for the first time. The borrower anticipates growth will occur. However, it may not come on the same schedule as your balloon payment. To avoid problems, you can either negotiate for a lesser balloon payment before agreeing to the loan, or roll the balloon into a new GMAC commercial mortgage with better payment terms.

Businesses seek GMAC commercial mortgages to buy land to construct a new building, to by an existing property or business, or to acquire multi-unit properties so you can rent space to businesses or individuals.

Motels & Hotel Loans

There are various types of real estate properties that are available nowadays in the market. Condo hotels are one such type of real estate property in which people are generally seen to make investments nowadays. A condo hotel is very similar to a normal hotel, the only difference being in the fact that every single room in the hotel is privately owned. With commercial loans for making investments in different real estate properties being available, one can easily obtain a condo hotel loan to invest in condo hotels. Nowadays it is noticed that commercial lenders are interested in providing condo hotel loan as it helps them to make good profit, making use of the increase in the interest rates on commercial loans.
Condo hotels are generally purchased by people who are interested in finding a place to live in while going for vacation and at the same time want to earn profits from their investment. Just like any other commercial loan, for condo hotel loan too people have to pay a certain percentage of the loan they are seeking as down payment. In order to be eligible for receiving a condo hotel loan it is very important that the borrower maintain a good credit, just like any other commercial loan.
Usually condo hotels are bought by the interested buyers even when its construction is going on. It is noticed that when this type of hotels are put up for sale, they are sold out in the first day itself. The sale of condo hotels is seen to involve a huge amount of money, and it is not possible for the buyers, to pay for the sale on their own, and they need to seek loans from the financial institutions. The condo hotel loan is the special type of commercial loans that is given out to people, when they want to seek ownership for a condo hotel.
In order to obtain more information on a condo hotel loan, the best possible option is to try and get in contact with a commercial loan lender. They would be able provide more information on the finer details pertaining to condo hotel loans. The terms and conditions for these loans tend to be different for different financial companies. By discussing with the lenders the people will be able to get a better idea about the loans and get to make their choice wisely.
With access to something useful as internet, it has become easier for the people interested in investing in condo hotels, to avail more information about these loans. It has been noticed that there are many useful websites that have helped people to benefit from the information that is provided in these websites. Also the official websites of some well known finance companies are there on the internet, which would help the people in gaining knowledge about the requirements that must be met by the people to avail a condo hotel loan.
There are innumerable people who have already availed condo hotel loans in order to buy a condo hotel of their own. This type of loan is found to be real useful for those people, who desire to have their own condo hotels.

Motels & Hotel Loans

In present times one will find different types of commercial loans in the market, which are found to be useful for different commercial purposes. Most of the financial institutions and banks are seen to have different loans that would be used by people for their different commercial interests. One will find that there are hotel loans that are provided by the finance companies to those people who wish to make investments in hotels. Quite similar to other popular forms of commercial loans, it is noticed that the rates of interest for hotel loans tends to vary with different financial institutions. Depending on the type of hotel being invested in hotel loan rates are seen to be different.

Irrespective of the fact whether old hotels are being purchased or new hotels being constructed, it usually involves a great deal of money. As a result the people interested in investing with hotels have no other choice but to approach for hotel loans from commercial lenders. However getting a hotel loan is not very easy. In order to get approval for a hotel loan, the hotel must belong to a reputed chain of hotels. Finance companies do not prefer providing loans to those hotels that are not well known. Some companies however provide loans to some lesser known hotels, but charge high hotel loan rates from them.

In order to find hotel loans with affordable hotel loan rates it is very important to ensure that the hotels are well maintained and are able to attract people to stay there. This ensures the lenders that the hotel does a good business, and therefore provides them with enough money to repay the loans in time.

To ensure that the hotels are provided with loans with reasonable hotel loan rates, the people seeking the hotel loans have to impress the lenders, with the past operations of the hotel. The hotel must have maintained a satisfactory profit margin over the years, and also show the capacity of earning more profit with its future operations.

The time period for which hotel loans are brought by the people generally tends to be different for different finance companies. The people seeking the hotel loans can choose the time period which best suits them. Hotel loan rates are found to be higher when compared with those loans that are brought by people for helping them in setting their residence. It has been seen that the hotel loan rates usually are much higher than the other types of commercial loans.

Just like in the case of other commercial loans, hotel loans too need to be repaid in time. If this is not done, then in spite of having low interest rates, the loan amount would become so high, that repaying the loan will prove to be a very daunting task. People should be regular with their monthly patients, which will prevent them from feeling the pain of having to deal with unmanageable hotel loan rates.

Being cautious with the type of hotel loan being chosen and the hotel loan rates, will help the borrowers to ensure that they do not have to face too much of a financial crisis.

Motels & Hotel Loans

Office building loans are special type of commercial loans that aid in purchasing, refinancing or constructing an office building. There are many financing firms that offer office building loans, Los Angeles. They offer financing with competitive rates and terms.

Office building loans, Los Angeles is generally financed through a commercial mortgage. The first and foremost point to be considered in acquiring loan for office building is to decide whether you want to get building for single business or multiple business. Office building loan entails financial history of your business operation. Sometimes, the individual shareholders are required to submit the financial information. Since the value of commercial property is generally higher than personal property, it is vital to understand all the procedures involved in office building loans before signing any documents.

In order to obtain office building loans, Los Angeles, you need to provide tax documents, profit and loss accounts and balance sheets for the last two years. It is also important to submit your two years income statement. Some financing firms require Environmental insurance on the property. Some other firms require FICO (fair Isaac Corporation) score for providing office building loan. FICO score is the score used to determine your ability to repay the loan amount.

There are many types of commercial loan programs that aid in financing office building loans, Los Angeles. The programs vary from one another in terms and requirements. The loan type can also depend upon your business situation. You can analyze each and every option thoroughly with the help of a talented financial advisor so that you can get financial assistance to meet your requirements fully.

The most conventional type of office building loans, Los Angeles is Real estate purchase loan. You can utilize your office building as collateral in the transaction. The loan amount is available at different interest rates depending upon the value of your building. There are firms that offer financing to fit your business goals. You can obtain real estate purchase loan for purchasing or building an addition to your office building. Generally, office building financing is offered up to 70% Loan to value. Some firms offer loans at great terms with fast commitment and closing. It is advisable to work with a broker who knows your business.

There is another widely used method of obtaining office building loans, Los Angeles. The Fixed rate commercial Mortgage. This is one of the simplest types of loans that allow you to plan since the payments and the interest rates are fixed throughout the period of loan. The market fluctuations do not affect your loan amount. The Loan to Value ratio for office building loan under this type is normally 80%. The term period may vary from 5 years to 20 years depending upon the loan amount and

The adjustable commercial mortgage is a popular method of office building loans, Los Angeles. As the name itself implies, the loan has an adjustable annual rate of interest. You can get higher amounts of loan under this type.

Motels & Hotel Loans