Why Choose Debtcraft?
The right spot for your commercial second mortgage . . . Surfing the web for a second loan against your real estate is difficult. Banks and other lenders want a packet, an on-line application or an appointment and these all take your valuable time. Debtcraft is different. Since we are the principal underwriters, funders and investors we want to know as quickly as possible how to serve you. We believe that we are different and can provide the financing you seek, based solely on our track record and on-going successes with customers. We can help whether the loan you want is $50,000 second loan against commercial land in Escondido, CA or a $700,000 second mortgage against a half empty apartment building in Gardena, CA. We are experts at 2nd Loans against commercial property. Thank for visiting our site! Call us or use the chat button below to get started.Things You Need to Know
Commercial property owners that seek junior financing (that is prohibited by the lender holding the first lien) are always told that financing is NOT available, and that the property cannot be used as collateral. And while technically true, there are legitimate alternatives.Whether you call us or not, here are some pieces of information that you need to know as you shop for a loan:
The first lienholder can prohibit the second loan. Typical bank lending on commercial properties prohibit junior liens or subordinate loans attached to the asset in which the lending institution holds the FIRST MORTGAGE OR FIRST TRUST DEED. As a matter of practice, the first lien banks always put language in their loan docs that specifically prohibit additional liens on the property. The First Lien loan documents typically show that if secondary financing is discovered, the bank’s loan can be accelerated and the loan will be declared in default. Banks do this to keep the foreclosure process super simple if this event becomes inevitable. That is, they know that a secondary lender is likely to delay the collection or foreclosure process by being involved, doing so to protect and preserve their rights and own interests. Having another lender at the table slows and complicates the process for the first lien holder. Another important reason that banks prohibit secondary financing is that THERE IS NO LIEN PRIORITY WHEN DEBTORS DECLARE BANKRUPTCY irrespective if there is a lot of equity in the asset. In the event that the debtor declares bankruptcy, the senior lender wants to have the entire collateralized security and not risk that a judge will award priority to another lien holder who also has rights to the property. In bankruptcy, the only real priority of payoff is that secured lien holders get paid before unsecured creditors. The unsecured creditors often only get pennies on the dollar of what they are owed or get wiped out completely. Bankruptcy tends to make all secured lien holders “more equal” despite lien position.There are safe and legitimate ways to navigate around this.
Lenders often get nervous when the second loan request is larger than the balance on the first loan. For us that fact has no merit. Rates on second mortgages often are much higher than first loans. If there is sufficient equity in your real estate, there is no reason to pay more than high double digits on your loan. Lenders want extra equity as a cushion since they have to worry about the first loan too. The best providers offer larger loans since they also are looking at loan servicing abilities.How Does This Work?
Having a poignant and direct conversation about what you seek is where we start. Give us 7 minutes to answer your questions and provide a quote. Here’s what we need on our first telephone conversation:- What loan size do you want?
- When do you want to close?
- What are the terms of your FIRST loan?
- What’s the approximate value of your property?
What Are the Alternative Loan Structures?
Junior loans that can be made against commercial real estate often take a mezzanine position that hold shares of the company that owns the property as its security, but not the property itself, or this second loan is cross-collateralized by a completely different property. The subordinated loans that are becoming popular are not mortgage loans that get attached to the property. These mezzanine loans hold the shares of the entity that owns the property as collateral. If the debtor defaults on a mezzanine loan, he or she risks losing the entity that owns the property and, therefore, risks losing the property itself. In case of default of the mezzanine loan, the second lien lender takes over the ownership of the borrower entity, not the property itself. This structure is usually comprised of Special Purpose Entity’s (SPE) to satisfy the creditors as to bankruptcy-remoteness and follow the first lien covenants against secondary debt and ensure the collateral value. Similarly, the owning entity may simply create an agreement through qualified legal counsel that provides non-collateralized financing. For example, a commercial property owner that happens to be a limited partnership, may create an amendment to the operating agreement that establishes a unique, sub class of investors that lend money to the holding entity and in return receive a preferred interest position as to repayment. And though these class of investors that provide the secondary financing cannot take over the holding entity, the arrangement can allow for the forced sale of the asset in case terms are not met. Borrowing money against commercial real estate where the senior lender prohibits such activities is only advisable if the structure and character of the financing legitimately and legally navigates around the senior lender’s security instrument language. This is best done by securing an enthusiastic and qualified lending or capital team including legal counsel, accountancy and private investment dollars and advisory services.“Our brokerage firm has had an excellent experience and has successfully closed commercial loan deals with them since 2011. Our need to be able to fund our loans, especially our SECOND COMMERCIAL LOANS, as a skilled broker is critical for our success. We recommend Debtcraft without reservation and like how they are free to discuss the deal.”
“Our team has been working with Michael and Richard for several years. Being in the commercial real estate industry, we thrive on networking and cultivating solid relationships. It has always been a pleasure to work with them, and they have also opened the doors to other business opportunities for us due to their extensive knowledge, vast connections and know-how. We wish them much continued success and hope and expect to collaborate on many more future ventures.”
“Hey Guys! WE did it! We closed 22938 Hatteras – I couldn’t have done it without you jumping as high as I needed when it came to pulling the trigger on this deal! You guys shared my vision on this project and believed in it like I did. I wish all my investors were as easy to deal with as you guys! Plus, it’s nice to deal with those that follow through on what they promise! I’ll be calling you first on the next opportunity that comes my way. Thanks again.”
“I am new to investing (though have what I think are considerable resources) and have spent a lot of time looking at different options, such as the stock market, business opportunities, etc. Most everything looked fine but rarely did i find a firm that was sophisticated and smart AND attentive and caring. This was (and is) important to me. I appreciate the time that everyone has taken with me to understand trust deeds, the SFR Venture Fund, etc. Looking forward to working with everyone again on the next suitable opportunity.”
“Guys,I am happy to write on your wall of fame…
I operate mostly as an analyst, structuring debt and equity investment opportunities for my clients. From time to time I see a deal that needs a second opinion…usually a deal that is above my pay grade (hahaha)… I turn to you guys since TRUST is high and EXPERTISE and EXPERIENCE is abundant. Thanks for the years of collaboration and joint efforts. Have a great 2015!!”
“As a seasoned agent focusing on high-end real estate sales in the Los Angeles area, I come across many types of personalities. Picking quality relationships contributes greatly to my success, especially in the areas of finance. Debtcraft shines and sets itself apart. Michael and Richard are easy to work with and are results-oriented. They perform.”
“Having partnered with Michael and Richard for many years and knowing their business, personal integrity and successful work ethic, we jumped at the opportunity to co-invest with them in the SFR Venture Fund. Working with a team we trust was critical as we don’t have the time or resources for investment or financial mistakes.”
Summary
Article Name
Need a Second Loan Against Commercial Property?
Description
Looking for a second loan against commercial property? Loan Closings in less than 2 weeks. Multi residential, industrial, office and retail. LTV to 75%.