Mortgage Stuff Newsletter - Valuing Commercial Properties Using a Cap Ratemmercial Loan Closers on Earth
Volume 14 Issue 13

Newsletter Date: November 19, 2014


MORTGAGE STUFF (C-Loans Client Letter)

You are receiving this letter because you are a commercial mortgage broker client of either Blackburne & Sons or C-Loans, Inc. Removal instructions are below. Today we'll talk about how to value an income property using a cap rate. And as always, we have lots of great jokes, funny pics, and a cool video for you.

Joke Du Jour

One of our clients brought in his massive Doberman Pinscher to be spayed. As a veterinary assistant. I escorted the patient into the doctor's office; but before taking this dog's leash, I glimpsed those large teeth of hers and asked the owner,"Is she friendly?" "Friendly?" said the man. "She's had five litters!”

Mr. Blackburne, Our Cub Scout Pack Is Selling Decorative Wreaths. Would You Like To ... Ahhhh!

Business Loans Not Secured By Real Estate

I'm talking here about unsecured business loans - equipment loans, inventory loans, accounts receivable financing, asset-backed lines of credit, etc.

The reason you want to get into the business of brokering business loans is because such loans close in 10 to 14 days, NOT three months.

C-Loans.com is now offering business financing. Please click here if you are trying to pace a business loan not secured by real estate.

Chili Peppers Joke

"Members of the Danish National Chamber Orchestra released a video of themselves performing while eating the world's hottest chili peppers. In response, the Red Hot Chili Peppers released a video of themselves eating a Danish." -- Seth Meyers

Submit Your Commercial Mortgage App Today

Blackburne & Sons continues to seek first mortgages between $100,000 to $3.5 million on standing commercial properties nationwide. Our hottest product right now is our blanket loan against a portfolio of rental homes. We'll also hypothecate notes and buy commercial loans at a discount.

Please be sure to bookmark our commercial mortgage rate sheet right now. To apply for a private money commercial loan from Blackburne & Sons, please find your favorite loan officer below:

Alicia Gandy: 916-338-3232
To apply to Alicia online, please click here.

Desmond Stoll: 916-338-3232
To apply to Desmond online, please click here
.

Tom Blackburne: 574-210-6686
To apply to Tom online, please click here.

Image Recognition Joke

"Google has developed image-recognition software that can accurately capture what's happening in a photo; but it still has some bugs. It described Kim Kardashian's recent photo as 'Woman being chased by two Butterball turkeys.'" -- Jimmy Fallon

Using a Cap Rate To Value Commercial Property

The formula is pretty simple:

Value = NOI / Cap Rate

So where do you get the Net Operating Income ("NOI")? If this property is for sale, usually the commercial broker (commercial realtor) will have prepared a marketing brochure that contains a Pro Forma Operating Statement and the property's NOI..

Okay, but where do you find the right Cap Rate? Simply call some commercial brokers located close to the subject property and ask them, "I have a 25-year-old office building in the Kingstown district of Valencia. What's your best guess at a reasonable cap rate?" The commercial broker might come back and say, "Depending on the strength of the tenants and the length of the leases, you're probably looking at a cap rate of between 7.25% and 7.75%."

"Gee, George, you make this all sound so easy, but I wouldn't have a clue where to find a commercial broker located close to the subject property. My office is 1,200 miles from the property."

That's easy too. Simply go to maps.yahoo.com and plot the subject property's address. Then click on the "Find Nearby" link and type in "real estate brokers". Voila!

You could be learning stuff like this every day if you were subscribed to my free commercial loan training blog.

Sooo Mean!

Since the snow came all the wife has done is look through the window. If it gets any worse, I'll have to let her in. (I promise no wives were injured in the making of this joke ... but if my beautiful bride of 31 years should ever see this, I could be in REAL trouble. Ha-ha!)

Preferred Equity "Loans"

Do you really understand preferred equity? This free whitepaper will help you to truly understand it. It's written in easy-to-understand layman's language.

You'll use preferred equity in three common scenarios. (1) You have an investor buying a non-owner-user commercial-investment property. The bank refuses to make a first mortgage larger than 60% LTV. The buyer only wants to put down 25%. We'll cover the gap. (2) Your client has a balloon payment coming due, but he can't qualify for a new first mortgage large enough to pay off the old first mortgage. We'll cover the gap. (3) Your client wants to buy out an impossible partner. We'll provide the capital to buy him out.

Got a potential preferred equity deal? Call your favorite B&S loan officer:

Desmond Stoll: 916-338-3232
To apply to Desmond online, please click here.

Tom Blackburne: 574-210-6686
To apply to Tom online, please click here.

Alicia Gandy: 916-338-3232
To apply to Alicia online, please click here.

If You Don't Bring Us Some Commercial Loans, We'll Be Forced To Send Out Our Enforcer

Free Written Directory of 2,000 Commercial Lenders

Please notice I said TWO THOUSAND commercial lenders, not just 200. Imagine if you had scores and scores of commercial lenders for every deal. And did I mention it was free? To get your free list.

Snakes Joke

This lady tells the story: “Felix, my husband, was playing golf with our town's fire chief when he hit a ball into the rough. As Felix headed for the brush to find his ball, the chief warned him, ‘Be careful, the rattlesnakes are out.’ The chief explained that calls had been coming in all week requesting assistance with removing the snakes. ‘You've got to be kidding,’ Felix replied in astonishment. ‘People actually call the fire department to help them with rattlesnakes? What do you say to them?’ ‘Well,’ said the chief, ‘the first thing I ask is, 'Is it on fire?'"

One-Point Commercial Bridge Loans

Please don't forget about Blackburne & Sons' one-point bridge loan product for commercial properties:

Interest Rate: 9.9% to 12.9%
Loan Fee: 1 point + $950 (nothing up-front)
Term: Six months
Prepayment Penalty: None
Maximum Loan-to-Value Ratio: 65% (70% on purchases)
Properties: Multifamily (5+ units), Commercial, and Industrial

Watches Joke

"Yesterday a couple of guys busted into a store here in the neighborhood and stole $2 million worth of money and watches. The police described them as armed and punctual." -- Dave Letterman

Place Your Commercial Loans With C-Loans.com

C-Loans.com recently closed an $18.5 million commercial construction loan. The broker earned a $92,500 commission.

C-Loans.com is a commercial mortgage portal where you can enter a commercial loan in just four minutes and then submit it to hundreds of different commercial lenders with one click. And C-Loans is free!

Holy Poo-Poo!

We're Now Making Home Loans in California

For the past 34 years Blackburne & Sons has exclusively been a commercial lender. That has now changed. We are now aggressively seeking non-owner-occupied home loans in California.

Sorry, folks, we are ONLY licensed to make non-owner-occupied home loans in California. We cannot make home loans in any other state; but we will make individual commercial loans or blanket residential loans (5+ houses) nationwide.

Got a nationwide commercial deal or a California non-owner-occupied residential deal? Please call your California Loan Officer:

Alicia Gandy at 916-338-3232
NMLS # 389678

Desmond Stoll at 916-338-3232
NMLS # 1013512

Dog Name Joke

"Nice dog. What's its name?" I asked my friend's 10-year old son. "Bob," he said. "And what's your cat's name?" "Bob." "Well, how do you keep them straight?" I asked. "Well, one is Bob Cat and the other is Bob Barker," the boy answered. "Go ahead and tell him your rabbit's name," his father suggested. The kid smiled and said... "Dennis Hopper.”

Nine-Hour Video Course on How to Broker Commercial Mortgage Loans

Important note: This nine-hour video course now also includes my $399 audio course on Intermediate Commercial Real Estate Finance - all for the same $549 cost. This 9-hour video course is my bread-and-butter course that teaches you how to market for commercial loans, how to underwrite them (the ratios), how to place them, and how to collect your fee. Thousands of very happy commercial mortgage brokers have taken this course. Details.

I Learned a New Word Recently - Snuggery

The word "snuggery" refers to a snug place, a friendly nook to which someone might retreat or retire for seclusion and comfort. It can refer mean a snug job position offering security without risk, a sinecure. In Britain, it also refers to a small room adjoining the bar in a pub.

Great New Apartment Loan Program

You're probably used to thinking of Blackburne & Sons as a subprime commercial lender, but since our acquisition of CommercialMortgage.com (I paid more than a house), some of the nation's largest commercial mortgage investors are giving us wonderful opportunities. Please be sure to check out our great new apartment program.

To apply for an apartment loan from Blackburne & Sons, please find your favorite loan officer below:

Desmond Stoll: 916-338-3232
To apply to Desmond online, please click here.

Tom Blackburne: 574-210-6686
To apply to Tom online, please click here.

Alicia Gandy: 916-338-3232
To apply to Alicia online, please click here.

Cool Video

A gang of Russian thugs picked on the wrong guy.

Earn Big Referral Fees. We've Made It Really Easy.

Blackburne & Sons will pay you a referral fee of 20% of our loan fee, just for providing us with the name and the phone number of a prospective commercial mortgage borrower. We once paid a referral fee of $21,250 to a guy named Alan Dunn.

Just click here to refer us a commercial loan.

Final Funny

A toothpaste factory had a problem. They sometimes shipped empty boxes without the tube inside. This challenged their perceived quality with the buyers and distributors. Understanding how important the relationship with them was, the CEO of the company assembled his top people. They decided to hire an external engineering company to solve their empty boxes problem.

The project followed the usual process: budget and project sponsor allocated, RFP, and third-parties selected. Six months (and $8 million) later they had a fantastic solution - on time, on budget, and high quality. Everyone in the project was pleased. They solved the problem by using a high-tech precision scale that would sound a bell and flash lights whenever a toothpaste box weighed less than it should. The line would stop, someone would walk over, remove the defective box, and then press another button to re-start the line. As a result of the new package monitoring process, no empty boxes were being shipped out of the factory. With no more customer complaints, the CEO felt the $8 million was well spent.

He then reviewed the line statistics report and discovered the number of empty boxes picked up by the scale in the first week was consistent with projections, however, the next three weeks were zero! The estimated rate should have been at least a dozen boxes a day. He had the engineers check the equipment, they verified the report as accurate.

Puzzled, the CEO traveled down to the factory, viewed the part of the line where the precision scale was installed, and observed just ahead of the new $8 million dollar solution sat a $20 desk fan blowing the empty boxes off the belt and into a bin. He asked the line supervisor what that was about. "Oh, that," the supervisor replied, "Bert, the kid from maintenance, put it there because he was tired of walking over every time the bell rang."

Buy Commercial Leads

You can buy commercial leads from C-Loans for just $1 to $9, plus 37.5 bps. when the deal closes.

Get a Free e-Book on CREF

I've assembled my best commercial real estate finance training articles into a wonderful e-book that is yours free.

 


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Call Mick at (574) 855-6292 or email him at mcarlson@blackburne.com

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C-Loans.com® is sponsored by C-Loans, Inc. — For more information, contact Mick Carlson
4811 Chippendale Drive, Suite 101, Sacramento, CA 95841 telephone: (574) 855-6292 * Fax: (916) 338-2328
Real Estate Broker -- California Bureau of Real Estate -- License Number 01330173

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