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    What is an Environmental Report in Commercial Real Estate (And Do You Need One)?

What is an Environmental Report in Commercial Real Estate (And Do You Need One)?

Many traditional and hard money lenders in Atlanta require an environmental report before they’ll grant someone a commercial loan. The report should show that the property has been examined for environmental contamination. Even if there’s no lender requirement, though it may be a good idea to obtain one anyway, just for your own peace of mind — and for your future buyers’ peace of mind.
What is an Environmental Report?
An environmental report is an investigation on commercial property to discover if there are any dangerous contaminants. Potential buyers assume the cost of the investigation and it is completed in one or two phases.
Phase I Environmental Report
This is the initial investigation to test for dangerous contaminants. Investigators will research past tenants and prior uses of the property to determine suspicion of contaminant use. In addition, they’ll look for evidence of pollution by examining the adjacent land. If there is indication of contamination; phase II will be initiated. The cost for this report is around $3,000.
Phase II Environmental Report
After contamination is suspected, investigators will conduct a more thorough investigation. If necessary, tests such as soil, groundwater and air analysis will take place. The cost for this report can vary depending on the property and the situation.
What Does This Mean for You and a Lender?
If you’ve purchased contaminated commercial property, you will be on the hook for any clean-up costs regardless if you caused the contamination or not. A lender could be on the line in the event of a foreclosure; making this a risky deal. You won’t always be denied a loan; however, it may be a good idea to search for something else.
Do You Need a Hard Money Lender in Atlanta?
If you’re looking for a hard […]

Energy-Efficient Commercial Buildings

If your real estate niche is investing in commercial buildings, be sure to check out the federal tax incentives offered for energy efficiency upgrades. Since commercial buildings release the most carbon emissions and are the world’s largest energy consumers, the government is looking for ways to entice building owners and designers into going green.
Commercial Building Tax Deduction
You may be eligible for a deduction of up to $1.80 per square foot if you reduce your building’s total energy usage by at least 50%. You can qualify for this deduction by replacing your building’s boiler or furnace with a new heating and cooling system; installing energy efficient interior lighting technology; or doing things like adding insulation or replacing windows. Even though this offer is set to expire (it must be installed by December 31, 2016), this type of credit is typically extended.

If you haven’t yet decreased your total energy usage by 50%, you still may be able to take advantage of partial deductions of up to $0.60 per square foot. You’ll need to implement and meet energy saving goals throughout the year.
Solar Investment Tax Credit
A 30% tax credit is available if you install rooftop or utility-scale solar energy systems. The Solar Investment Tax Credit has been extended to last until 2023. After that, the tax credit will go down to 10%.
Do You Need a Hard Money Loan in Atlanta?
If you’re looking for a hard money loan in Atlanta, we may be able to help you.

Call us at 404-814-1644 or contact us online to find out whether you might qualify for this type of funding. In the meantime, check to ensure that you meet our loan criteria. Our loan amounts can be up to 65 percent of the after-repaired value of […]

How to Deal With Late Rent During the Holidays

While everyone is scrambling to get their festivities organized and shopping done, unfortunately, it’s too common for rent payments to be put on the back burner. Landlords are faced with this problem each year, and if it’s happened to you, you know that it’s a tough decision (you know, whether  or not to be a Scrooge).
Keeping a Professional Distance From Your Tenants
If you’re a landlord, you know that maintaining a professional relationship and not becoming involved in your tenant’s financial woes is a necessity. No one enjoys evicting a tenant—especially during the holiday season—but you should remember that this is a business decision where you can weigh the pros and cons.
A Word on Eviction
Evicting someone is not easy, and it’s quite a lengthy process. After evicting your current tenant, you’ll most likely need to turn around the property quickly. However, it’s not easy finding an excellent tenant, especially when you’re facing the potential loss of more than one month’s income. Deciding to evict someone for a one-month lapse may not be worth it to you—especially if you’ve had a solid relationship with your tenant in the past.

If your tenant is always late, the answer should be easy. If not, you may want to consider things such as communication, history and present circumstances to help you decide.

Having to chase down your tenant for the monthly rent is not your job. If they contact you first, it may be to your advantage to just hear them out and work out a payment plan. Good tenants are sometimes hard to come by, and if they’ve always paid on time in the past, there may be some options you could explore for handling their arrears.
Do You Need a Hard Money Loan […]

Commercial Lease Acronyms That You Need to Know

If you’re new to the world of commercial investment—there are a lot of terms, lease types and calculations you’ll need to be aware of. On top of that, everything is an acronym. Learning the lingo of the industry can be overwhelming—but it should be ranked high on your to-do list.

If you’ve acquired a building and think you’re ready to start looking for a tenant, you’ll want to have the lease conditions drafted well ahead of time—but be prepared for negotiations! Here are some acronyms you should be familiar with before starting out.

Building Owners and Managers Association International (BOMA): A network for commercial real estate professionals and a source of information for industry standards, legislation and developments.

Common Area Maintenance (CAM): Operating expenses that are passed on to tenants such as building supplies and maintenance, snow removal and landscaping upkeep.

Rentable Area or Rentable Square Feet (RSF): The amount of the tenant’s usable space, plus a portion of the building’s common areas (hallways, restrooms, etc.). These areas are usually shared by all tenants in a building.

Tenant’s Improvements and Betterments (TIBs): Permanent changes to the landlord’s property or building that will increase its value.

Triple Net Lease (NNN): A common commercial lease type where the tenant assumes the responsibility of paying all real estate taxes, insurance and maintenance on top of a specified base rent.

Usable Area or Usable Square Footage (USF): The area that is usable by the tenant only and does not include common area space.

While there are dozens of terms not listed, you’ll run into the above quite often. It won’t be long before you find yourself fluent in the language of commercial real estate.
Do You Need a Hard Money Loan in Atlanta?
If you’re looking for a […]

3 Tips for Valuing a Commercial Property

 

Many real estate investors understand the value of walking around a residential neighborhood to gauge the potential investment value of a property. However, fewer REIs place the same importance on walking a commercial property. However, if you know what to look for, you can glean some valuable insight into value of commercial real estate.
Valuing Commercial Property: Typical Vehicles and People in the Area
As you walk through the area, make note of what you see.

Do you feel safe as you walk?
What kinds of cars and trucks do you see?
Is the neighborhood demographic appropriate for the type of business you’re considering buying?

Check the alleys for signs of rodents, homeless camps and other factors that may make a property less than desirable. You can renovate a building but you can’t change its surroundings.
Ease of Ingress and Egress Has an Impact on a Commercial Property’s Value
Speaking of things you can’t change, how easy is it to access the commercial property you’re considering? Look at the traffic flow in and out of the parking lot, entryway and loading area. Would it be easy to access in a car? What about a local delivery truck or a semi with a trailer? Depending on the type of business, tight spaces and a lack of pull-through options might be a deal breaker.
Use of Neighboring Properties in Valuing a Commercial Property
Do the local businesses compliment the intended usage of the property you’re considering? For retail, it’s ideal to have complimentary, but not competing, stores nearby. For any business, you should consider whether neighboring sounds, smells or activities will impact the potential value of your property.
Do You Need a Hard Money Loan in Atlanta?
If you’re looking for a hard money loan […]

Commercial Real Estate Investing 101: What You Need to Know

Commercial real estate investing can be a lucrative field – but if you’ve primarily dealt with residential investment properties, you might be a bit nervous about jumping in with both feet.
Commercial Real Estate Investing 101: What Makes a Good Investment Property?
If you’re a commercial real estate investor, the same principles that apply to residential investors will apply to you:

Appreciation. Property values that go up result in a profit for you.
Cash flow. If you rent a property to make a profit, and you have more income coming in than expenses going out, you’ll have a positive cash flow.
Principal reduction. Each month, you’ll pay down on your property. The amount you owe decreases. Naturally, with a short-term hard money loan, this won’t have as much of an impact as it would if you had a conventional loan – but many people start with a hard money loan and transition into conventional financing over time.

Where to Find Commercial Real Estate Opportunities
If you know a commercial broker, you’re already well on your way to finding great investment opportunities. It’s always a good idea to cultivate professional relationships with industry professionals.

However, if you don’t already know a broker, there are still plenty of ways to find amazing deals on commercial properties. You can:

Use websites such as Loopnet.com, which is a large site for commercial properties. You can find apartment buildings, office buildings and restaurants (and several other types of commercial properties, as well) on Loopnet.
Talk to local Realtors®. In many cases, even if the real estate agent you talk to doesn’t have commercial listings of his or her own, they’ll be able to help you find several in your area.

Do You Need a Hard Money Loan for a Commercial […]

Investors and Developers: Could You Use Hard Money?

In some cases, investors and developers are better off taking out a hard money loan than using a traditional loan.

So when is a hard money loan better for developers and investors?

Typically, hard money is a better choice when an investor or developer:

Needs to close quickly and following traditional funding routes would take too long. Often, banks and other traditional lenders take several weeks – if not longer – to process the paperwork on a loan.
Has several good opportunities but not enough cash to accept them all. Banks won’t extend credit if it appears you’ll become over-extended.
Wants to take advantage of an opportunity without the financial strength banks require. While your credit scores and financial history are important with a hard money loan, they carry far more weight with a conventional loan – and that can make it difficult to obtain financing in many cases.
Has credit through a lender, but the credit isn’t sufficient for the investment.

Credit and Hard Money
Although credit is important when you’re interested in borrowing hard money, usually the collateral is more important than a borrower’s credit history. Because these types of loans, which can be for up to 65 percent of the collateral’s after-repair value, or ARV, are typically short-term and designed for investment purposes, they’re often the way to success for investors and developers.
Are You Looking for a Hard Money Loan in Atlanta?
If you’re interested in obtaining a hard money loan in Atlanta or its suburbs, we can help.

Call us at 404-814-1644 or get in touch with us online. We’ll be happy to answer your questions and walk you through the application process. You can also apply online today.

Commercial Hard Money Loans: What You Need to Know

Commercial hard money loans aren’t something you typically hear about in casual conversation, and if you’re like most people, you’re wondering what they are – and whether they could help you.
What Are Commercial Hard Money Loans?
Commercial hard money loans are designed to help business owners get access to cash quickly. They aren’t the same as traditional commercial loans; in fact, there are several key differences.

In order to obtain a commercial loan through a bank or another lender, you generally have to provide:

Proof of income
High credit scores
Tax returns
Financials from your business

You’ll also have to go through inspections, appraisals and a number of other requirements before a traditional lender will agree to let you borrow money.

Conversely, a commercial hard money loan doesn’t require as much documentation. These loans are asset-based, so the lender is more interested in the value of the property. That’s not to say that your credit scores and other information aren’t important – it’s just that commercial hard money lenders are usually willing to take risks that banks and other lenders won’t take.
Commercial Hard Money Loans vs. Traditional Commercial Loans
For the most part, traditional lenders take weeks (or months, in some cases) to approve commercial loans. The underwriting process can be extensive, but you may not have the luxury of time.

That’s where a commercial hard money lender comes in.

A commercial hard money lender is usually able to provide the money you need more quickly than a bank or traditional lender can. It’s important that you know that these types of loans are designed for short-term use. The interest rates may be higher than they would be with a traditional loan, but commercial hard money loans are generally faster, simpler and easier to obtain […]

New Paces Funding Website

To start 2014 off, we’ve updated our website.  New content as well as the ability to apply for a hard money loan online.  If you need an Atlanta hard money loan or for other parts of the south, contact us today at (404) 814-1644 x101 or email Dean@PacesFunding.com.  We also do hard money loans on commercial properties.  Check us out at www.PacesFunding.com

Introducing Paces Funding

Paces Funding is Atlanta’s largest hard money lender. We are leading the way with innovative financing solutions for real estate investors. Our staff has processed over 1,000 loans over the past decade and is excited about the new opportunities we will be providing our clients. Over the next six months, Paces Funding will be introducing new real estate financing and investment opportunities.

Contact us today to get pre-approved for a hard money loan.