Loan for commercial real estate

Re: [spiers] Loan for commercial real estate

Folks,

AS you know, I am fairly strict about no "offers to buy" or "offers to sell" on
this list... I want
to keep this list "trade-lead free" since I think trade leads are too bogus as a
way to approach
the biz... Albert's question was technically an offer to buy, but I let it go
thru to see what
technical info we might get back... Albert got back three offers to sell, which
I've caught and
forwarded to Albert alone... and certainly those three received alberts email
and I trust the
parties will continue off-list with the Albert's question.

A side note, if you want to make sure your "offer to sell' gets onto the list,
load it up with
useful inside info on loans, or whatever.

A couple of things I would say: 1. yes, albert, biz loan rates are horrendous,
relatively
speaking, but they are fre market. House loans are much subsidized. Part of
the loan
amount is subsidized with funny interest rates, but the other part is tax
advantage. In
Canada a home loan has a minimum down of 25%, and there is no such thing as a 30
year
loan, 25 years being the longest, since there is no advantage, or point, in
stringing out
interest payments, since there is no tax offset. This makes canadian real
estate, in theory, a
more stable bet than usa real estate, as far as value.

2. Since home loans are much lower, and money is fungible, it is not uncommon
for small biz
people to take out a sat 6% loan on the home, and use the money in the biz,
enjoying a 50%
cut in biz interest rates. Since on your biz loan, the banks will demand a
perfected security
agreement in their "abundance of caution" anyway, making any "incorporation"
safety go away
from the banks point of view, either way your home is at risk, either with biz
loan or private
loan.

3. Why do you need a loan? Do you have orders in hand, right now, signed
purchase orders,
that will cover the suppliers minimum production run, profitably, in a workable
amount of
time? If not, you need no loan. So do NOT get one yet.

4. I'll pick up this thread in response to Granich's question coming up shortly
in another
email response...

John


On Thu, 16 Mar 2006 22:59:15 -0800 (PST), ALBERT SUNG
wrote :

> Hi,
>
> I am currently purchasing a retail building and
> discover that commercial loan is very expensive: with
> 25% down, the interest rate on a 25-YEAR mortgage is a
> whopping 9.5% versus residential loan of 6-7%!!
>
> Are anybody out there kind enough to tell me any good
> commercial loan lender who can give a better rate?
>
> Thank you.
>
>
> Albert Sung
>

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