COMMERCIAL BROKER NEWSLETTER
You are receiving this letter because you either wrote to us or you are a commercial real estate broker client of either Blackburne & Sons or C-Loans, Inc. Today we'll explain why commercial loans that cash flow very well can be stinkers. We also have lots of cute, clean jokes, some funny pics, and a disgusting but fascinating video about ticks.
Joke Du Jour
At a workshop on dog temperament, the instructor noted that a test for a canine's disposition was for an owner to fall down and act hurt. A dog with poor temperament would try to bite the person, whereas a good dog would lick his owner's face or show concern.
Once, while eating pizza in the living room, I decided to try out this theory on my two dogs. I stood up, clutched my heart, let out a scream and collapsed on the floor. The dogs looked at me, glanced at each other and raced to the coffee table for my pizza.
Not That There is Anything Wrong With That
Download Your Free Guide, "How To Find Houses To Flip"
Download your free guide here.
I started carrying a knife after an attempted mugging a few years ago. Since then, my mugging attempts have been a lot more successful.
Today's Lesson: Be Wary of Commercial Loans That Cash Flow Too Well
“This is a really good commercial loan, George. It has a 1.63 debt service coverage ratio.” Whenever I hear comments like that, I roll my eyes. The property is inevitably in a slum. How can I possibly know this? It has to do with the cap rate.
You will recall that the capitalization rate is the return on his money that an investor would earn if he bought an income property for all cash. The nicer the property and the nicer the area, the lower the cap rate with which an investor will be satisfied. An apartment buyer might be satisfied with a 6.5% cap rate in an average area, and he might be satisfied with a cap rate of just 3.5% in a premier area.
On the other hand, if the property is in the slums, a seller might have to keep lowering his asking price in order to attract a buyer. Who wants to buy this apartment building in the ‘hood for $1 million. The cap rate is 7%. No one? Who wants to buy this property in the ‘hood for $900,000. That’s a 9% cap rate. No one? And so on. Finally, who wants to buy this apartment building for $520,000? This is an 11% cap rate. Finally he finds a buyer.
The buyer then applies to Blackburne & Sons for a 75% loan-to-value, purchase money first mortgage. There is tons of net operating income because no one wanted to buy the property unless the cash flow was huge. (They didn’t want to get shot while collecting the rents.) Therefore the proposed debt service coverage ratio was enormous. On paper, the deal looks great.
The problem is that when Blackburne & Sons sends out a loan officer to do a site inspection, local toughs chase him off the property. Pasadena. But we sort of knew this was going to happen when the mortgage broker told us about the 1.63 debt service coverage ratio. If a property cash flows too well, invariably the property is in a slum or there is some other glaring problem, like toxic contamination
Space X Joke
"SpaceX is planning to build a Mars rocket right here in Los Angeles. The voyage to Mars will take nine months, but eight of those months will be spent just getting out of L.A.” -- Conan O'Brien
Hot-To-Trot To Make Fix and Flip Loans
Blackburne & Sons is making a huge push into fix and flip lending. Of course we will still make our private money permanent loans on commercial properties nationwide; but we are now also looking to make fix and flip loans in most states across the country.
Please click here to submit a fix and flip loan or a private money commercial loan or call me, George IV, at (916) 338-3232 Ext. 314.
"In honor of Tax Day, Hardee's offered free breakfast biscuits if you said the password 'Made From Scratch.' Arby's had a similar deal. They gave you a free roast beef sandwich with the password 'Made From Squirrel.'” — Jimmy Fallon
Private Money Commercial Permanent Loans Nationwide From $100,000 to $3.5MM
Do you need a purchase money lender who will actually go to 75% loan-to-value? Banks never actually close deals at 75% LTV. Blackburne & Sons has decided to compete against banks by being far more aggressive on loan-to-value ratio. We are very bullish on commercial real estate.
Do you need a lender who will allow the seller to carry back a second mortgage? Does your client have a balloon payment coming due on his commercial property? Has your bank offered him a discounted pay-off? Does your borrower have less-than-stellar credit? Is your client's company losing money? Is your borrower a foreign national?
Do you need a non-recourse loan? Do you need a commercial loan with no prepayment penalty? Is your client's commercial property partially vacant? Do all of your commercial leases run out in the next 18 months? Do you need a lender who will allow a negative cash flow? Do you need a lender who will also look at the borrower's global income - income from salaries, other investments, etc.? Do you need a loan against a portfolio of single family homes?
Here is our latest rate sheet.
Blackburne & Sons is looking for commercial real estate loans that are not quite clean enough for a bank. Please click here to submit a private money commercial loan or call me, George IV, at (916) 338-3232 Ext. 314.
Q: If there were four potatoes in a room, which one would be the prostitute?
A: The one that's labeled "IDAHO"
Fix and Flip Leverage
You can get amazing leverage on fix and flip financing these days. Apply for a fix and flip loan here.
Fix and flip lenders, including Blackburne & Sons, will loan you 75% to 85% of the cost of the dilapidated house, plus 100% of the cost of the renovation, plus a four-month interest reserve.
Quite frankly, it's a helluva deal. Few other industries offer this kind of leverage. If you are not already flipping houses, it is something that you should consider.
I just wrote a wonderful article that explains everything you need to know about fix and flip financing.
My blog also has a number of very helpful articles about fix and flip financing. All of my 400 blog articles are free training lessons in commercial real estate finance. If you want to become a more successful broker, be sure to subscribe to my free blog.
Baby Name Joke
Virginia: When was your son born?
Beverly: In March. He came on the first of the month.
Virginia: Is that why you call him Bill?
Only Blackburne & Sons Can Do This:
Blackburne & Sons has some truly unique and super cool programs:
- We'll give you a bridge loan on your commercial property for only one point! There is no prepayment penalty.
- We allow sellers to carry back a second mortgage behind our first mortgage.
- We will actually lend up to a 75% loan-to-value ratio. Banks claim they will lend up to 75% LTV, but in real life they will only go 68% LTV.
- We offer private money (loosey-goosey underwriting) commercial loans with 30-year payments and a 15-year term. Our competitors offer 2- to 3-year bridge loans. We offer 15-year permanent loans with no prepayment penalty. Never again will you have a balloon payment come due during a recession.
- We have a terrific apartment permanent program that can compete with agency loans.
- We buy commercial first mortgages (usually at a discount).
- Instead of discounting your wonderful commercial first mortgage, consider pledging it as collateral for a smaller loan. This is called a hypothecation. We make loans secured by mortgage notes owned by the borrower.
Moment of Silence Joke
At a wedding I attended, the priest called for a moment of silence to remember the faithful dead. As the church grew quiet, a little boy sitting in front of me turned to his father and said excitedly, "Dad, you have some of their albums!"
Free Copy of the Blackburne List
The Blackburne List is a list of over 2,500 commercial lenders located nationwide. We just spent almost $30,000 and three months updating this list.
The Blackburne List is available for purchase for just $79.95. Is money tight? You can also buy one of our three Regional Lists (750+ lenders) for just $39.95. But why spend money at all?
We will trade you one of our three Regional Lists for the contact information of just one banker making commercial real estate loans. If you refer us three bankers, you will own the list for all three regions. Together you will own the entire Blackburne List.
There is another way that you can access The Blackburne List. Our newest portal, CommercialMortgage.com, is an online way to search the entire Blackburne List for the 30 lenders most suitable to make your loan. Use of CommercialMortgage.com is also 100% free!
A little known fact… The first testicular guard, “the cup”, was used in hockey in 1874, and the first helmet was used in 1974. That means it took 100 years for men to realize that their brain is also important.
Sweet Apartment Program for "A" Deals
Blackburne & Sons has an incredible apartment loan program for "A" quality deals. The rate is adjusted according to the desirability of the property and the area, but it starts at 3.87% and 1 point for a fixed rate, 30-year fully-amortized loan. For more details, please call George IV at (916) 338-3232 Ext. 314.
Q: How does a lumberjack start his computer?
A: By logging on!
Do You Need a Commercial Loan Right Now?
If you need a non-prime, subprime, or slightly-flawed commercial loan, simply complete this super-easy mini-app to Blackburne & Sons.
If you need a bank-quality commercial mortgage loan right now from a life company, commercial bank, or conduit, you should enter your deal into C-Loans.com.
If you still can't find a commercial lender using C-Loans, then try CommercialMortgage.com.
Please keep in mind that the 3,159 commercial lenders on CommercialMortgage.com are different than the 750 commercial lenders on C-Loans.
Sewing Machine Joke
My granddaughter came to spend a few weeks with me, and I decided to teach her to sew. After I had gone through a lengthy explanation of how to thread the machine, she stepped back, put her hands on her hips, and said in disbelief, "You mean you can do all that, but you can't operate my Game Boy?"
One-Point Commercial Bridge Loans
Suppose you have listed a commercial property for sale, and the seller is getting antsy. You can often hold him off long enough to find a buyer by getting him a bridge loan. Blackburne & Sons offers a six-month bridge loan for just one point and no prepayment penalty. Please click here to submit a commercial bridge loan mini-app or call me, George IV, at (916) 338-3232 Ext. 314.
Paul Revere Joke
Q: Know what Paul Revere said at the end of his famous ride?
Two Ways To Earn Referral Fees For Commercial Loans - We Once Paid $21,250.
This one is an absolute no-brainer. You simply put a link to C-Loans.com on your real estate website. We once paid a $21,250 referral fee to a guy who was asleep when the lead came in! Here are the details.
You can also referral commercial loans by hand. Here is our referral fee program.
Video - Eeeeuuuu, Ticks!
You'll find this interesting and disgusting.
On a Personal Note
My father used to tell me, sometimes all it takes is just showing up.
That is how I feel when I go to conferences. Truth be told, I hate going. I hate being away from home and my family. I hate having to talk to strangers and the “clique” nature of it all. Everyone bragging about how much larger their company is, or how many more loans they closed. That being said, conferences are great for networking and learning about the industry.
Every single time I go, I always remember, just show up. If I can commit to going and showing up then the rest takes care of itself.
So here I am, in San Francisco for the CMA (Commercial Mortgage Association) and the hard part is over. I am here, and so now all I can do is make the most of it!
Don't Forget About C-Loans.com
We have a whole new crop of hungry commercial lenders on C-Loans, so if you have a commercial loan you're trying to place, it takes just four minutes to submit your deal to 750 commercial lenders. And remember, C-Loans.com is free!
One day Ole and Sven were paging through the Sears Catalog and admiring all the beautiful models. Ole said to Sven, "Haf you seen da perdy girls in dis catalog?" Sven replied, "Ya. Dey sure are bootiful, an yust look at da prices!" Ole looked wide eyed and said, "Yumpin' yimminy. Dey ain't very expensive. At dees prices I'm buyin' me vun." Sven smiled, patted Ole on the back and said, “By golly Ole, if she's as perdy as she looks in da catalog, I vill get vun too." Three weeks later Sven came by and asked Ole, “Did ja ever git dat girl you ordered from da Sears Catalog?" Ole replied, “No, but it von't be long now. Her clothes came yesterday!”
George Blackburne, IV
BRE# - 01873244
NMLS# - 382122
BLACKBURNE & SONS REALTY CAPITAL CORPORATION
4811 Chippendale Drive, Suite 101
Sacramento, CA 95841
Phone: (916) 338-3232 Ext. 314
Fax: (916) 338-2328