Loan Programs

Take a look at our very competitive rates & fees


Rates: As low as 5.5%
Loan Size: $1 Million Minimum $150 Million Maximum
Acceptable Uses: Purchase, Refinance, Major Rehab
Terms: 2 & 3 Year Terms available
Leverage / Loan to Value:
Up to 80% of Actual Cost Maximum
Typically 80% LTV
Minimum FICO Score: 620 Minimum 680 Average
All Property types/NATIONWIDE

NEW 2018 PROGRAM: (6+4) Interest rate 6.00% and closing fee 4.00%.
Apply today for commercial, construction, hard money, or bridge loan, 75% loan to value
Super Fast Turn-Around,2 Days for Commitment, As Fast as 5 Days for Closing
Up to 75% Loan-to-Value, Loans for Commercial Property, Acquisitions & Refinancing
Development and Construction, Bridge Loans., Bank Workouts
Hard Money, Bankruptcies & Foreclosures, Note Purchases, Discounted Payoffs
Rates as low as 6.00%-Closing in 5 days-Up to 75% funding-From $1,000,000-$50,000,000.00
Global Funding. All Property types: Apartment, condo, office, Hotel,  Retail, Office, Sub-Division, land, Industrial, Assisted Living.

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Commercial Lending

Experience and Integrity. Since 2005

First Mortgages

Americap Direct, our business is opening  your access to capital and commercial real estate funding. Our Loan -To- Value ratios are the highest in the industry-- up to 90%. Americap Direct Inc. offers both Full Documentation and Stated Income programs in addition to Conduit Loans. Because we “structure and underwrite” our loans ourselves, we offer greater flexibility, creativity and timeliness.
As an owner of the nation’s 5th largest intermediary in the placement of commercial real estate capital, our tea m has the resources and expertise to deliver superior results. Americap Direct Inc. offers funding for land acquisition, refinancing, land development, cross collateralization, islands, and much more both nationally and internationally. We serve a diverse clientele reaching beyond the U.S. borders to Canada, Mexico, Europe, the Caribbean, Central and South America, and beyond. The network’s advisory expertise, local market data and technology all combine to support our clients in making timely and profitable decisions on commercial real estate issues
We specialize in providing debt and equity solutions from $1 million to no limit.

  • Construction Loans
  • Permanent Financing
  • Acquisition Financing
  • Fixed or Adjustable Rates
  • Credit Tenant Lease (CTL) Loans
  • Mezzanine Financing
  • Bridge Loans and hard money loans
  • Hedge funds
  • Participating Debt
  • 144a bond and EB-5 Funding
  • Equity Placement
  • Joint Ventures
  • Credit enhancement (proof of funds.BG,SBLC)

  • Rates and terms are structured to achieve individual financing goals. Financing can be provided for virtually all property types, including:
  • Multifamily; affordable, market rate, mixed-use
  • Seniors; independent or assisted living
  • Nursing Homes, Congregate Care
  • Student Housing
  • Manufacturing/Industrial
  • Distribution/Warehouse
  • Hotel
  • Office
  • Medical Office
  • Retail
  • Restaurant
  • Renewable Energy Installations

The "AMD" Capital network represents some of the largest institutional investors in the world, including premier life insurance companies, capital market conduits, banking partners and pension funds. Our promise is to approach your financing needs with creative insight, flexibility and innovative solutions.

Apply now at [email protected]

  • 3 Color Photos or Old Appraisal
  • 2015 and 2016 Profit and Loss
  • Rent Roll (if applicable)
  • Personal Financial Statement
  • Operating Agreement/By-Laws
  • Purchase Sales Agreement (if a purchase
  • Hud-1 (if purchased in the last 3 years)
    List of Improvements Made (since purchase)
    Resume/Background of Principal(s
  • Loan to Value Ratio Up to 75%
  • (up to 100% in certain cases)
  • Interest Rate 3.00% – 12%
  • Term 1 – 3 years; 5-25 years
  • Amortization – Interest Only
  • Recourse & Non-recourse
  • Lender Fee 3 – 5 Points
  • Exit Fee – None
  • Extensions – Yes
  • Extension Fee: 1/2 – 1 Point
  • Borrowing Entity: Special Purpose Entity
Americap Direct/Partner Development 
125 Units Multi family development
call 1877-998-7539
Construction Lending Program

  • Loan sizes range from $500,000 to $350 million.
  • Term ranges from 12 to 24 months.
  • Interest rates: spread over Wall Street Journal Prime Rate.
  • Guaranty is full recourse for project completion and loan repayment.
  • Subordinate mortgages may be permitted subject to secondary market loan guidelines and completion of lender due diligence and underwriting.
  • Prior to closing, a suitable permanent loan commitment must be in place.
  • Gap funding permitted subject to due diligence and underwriting.
  • Typical due diligence fees apply which cover the costs of third party reports (appraisal, market feasibility if rental achievement is a requirement of permanent loan commitment, phase I environmental and plan & cost review) and other lender due diligence costs. The borrower is responsible for legal fees and customary closing costs.
Conventional Lending Program
  • Loan sizes range from $1 to $500 million.
  • Term ranges from 24 to 25 years
  • Loan to value from 70-85%.
  • Interest rates: spread over Wall Street Journal Prime Rate.
  • Guaranty is full recourse for project completion and loan repayment.
  • Subordinate mortgages may be permitted subject to secondary market loan guidelines and completion of lender due diligence and underwriting.
  • Prior to closing, a suitable permanent loan commitment must be in place.
  • Typical due diligence fees apply which cover the costs of third party reports such as the appraisal, phase I environmental, plan & cost review, and other lender due diligence costs. The borrower is responsible for legal fees and customary closing costs.
  • Call us for current rates

           Non Recouse Loans

  • Non-Recourse Commercial
  • $1 to $50+ Million
  • Rates from 3.75%
  • Terms Up to 30 years
  • Max LTV 85%
  • Nationwide Urban and Suburban
  • Income-producing commercial properties without differed maintenance
A third party expense deposit is required.
Acceptable Property Types: Hospitality, NNN, Warehouse, Retail, Office, Self-Storage, Assisted Living, Student Housing, and Mobile Home Parks.
Down payment assitance up to $500,000 for residential or commercial Property.
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Bridge loans                    No Doc Commercial loan

Fast decision-Easy process-Fast closing

Americap Direct has formed Business Relationships with 5 – 8 Reputable Bridge Lenders to better assist our Clients.

  • Below are one of our Lending Partners terms which are not all inclusive.
  • Rates: As low as 8.5%
  • Loan Size: $1 Million Minimum $150 Million Maximum
  • Acceptable Uses: Purchase, Refinance, Major Rehab
  • Terms: 2 & 3 Year Terms available
  • Leverage / Loan to Value:
  • Up to 80% of Actual Cost Maximum
  • Typically 65% LTV
  • Minimum FICO Score: 620 Minimum 680 Average
  • Non-Recourse: Available on Case by Case basis
  • Prepayment Penalty: Step Down Prepay, Flat Prepay, YM
  • Debt Service: Varies with Investor
  • Amortization: Interest Only Payments are possible

Closing as fast as 2 weeks - Lenders have Ready Capital.
Property Location - Anywhere in the U.S.

Collateral Types - Multifamily, Hotel, Student Housing, Retail, Office, Industrial, Warehouse, Hospitality, Quick Service Restaurants, Mixed-Use and Assisted Living.

Risk Tolerance - Comfortable with Bankruptcy, Estate/Partnership Disputes, Foreclosures and Other Potential Borrower Issues

Other Situations - Foreclosures; Refinancing; Acquisitions; Value-Add; Discounted Payoffs; Bankruptcies (DIP); Short Sales; Hotel PIPs; Rescue Financing; TIs & LCs; C&I Loans; CapEx;

Origination & Application Fee(s):
Americap Direct has applicable Engagement/Processing Fee – paid upon acceptance of approval. No fee charge unless underwriter
approve transaction.

Americap Direct has a 1 to 3% Success Fee – paid at closing and determined after a review of a full package
Lender/Investor Fees will also be applicable and disclosed and determined after a review of a full package


NATIONWIDE – Investor 1-4 Unit, Multifamily, Mixed-Use, Mobile Home Parks, Self-Storage, Industrial Buildings, Multi-Tenant and Owner Occupied Commercial and more

• Rates start from 6.99%
• Loan Amounts up to $25,000,000
• LTV up to 70%
• Minimum Credit Score 650
• 30 Year Loan / 30 Year Fully Amortized

Loan Program Highlights
NO Tax Returns
Perfect for self-employed
Owner-User? No Problem
Common sense underwriting
Loan turned down by other lenders
Permanent financing, NO balloons
Quick Closings
Loan Calculator

Conventional Mortgages for all property types
Rates as low as 3.85%, 2,5,10 years, up to 25 years. From $500,000 to $25 Million.
Max LTV 80%. Point as low as 1.00%. No upfront fees.
Mid balance-Conduit-FHA loans-Bridge loans Construction loans, SBA 7a and
USDA B&L  Insurance loans.

  1. Medical/Healthcare
    Up to 90% LTV Unlimited Cash Out No Pre-Payment Penalty Flexible Amortization Schedules Close in 3-5 Days Non Recourse Loans Par Pricing Brokers Protected Pays up to 3 pts. yield spread 2-5 year adjustable rates Interest Only
  2. Hotel/Motel/Casino
    Purchasing existing hotel business starting up a new hotel $1M-$75MM construction financing up to 90% LTC remodeling UP TO 90% LTC acquisition of properties, MAX 80% refinancing properties MAX 80% purchasing business equipment working capital up to $5 million
  3. Industrial & Warehouse
    Industrial & Warehouse
    Minimum Warehouse Loan Size is $500,000 Loan Collateralized by Commercial Real Estate - No Business Only Financing Acquisition or Refinance of Stabilized Warehouse Building Properties Bank, Conduit, and Conventional Financing Available 3, 5, 7, 10 Year Fixed Rates 15, 20, 25, & 30 Year Amortizations Flexible Prepay Options 75% LTV - Subordinate Debt OK Minimum 660 Credit Score 3 Years of Historical Income Req. Low Minimum 1.40 DSCR
  4. Mix use, Self storage, sub division
    For apartment buildings and small apartment complexes.  Loans range from $500 thousand to $10 million. Rate & Term Refinance, Cash Out Refinance, Acquisition Financing and Rehab Financing Brokers Protected Pays up to 3 pts. yield spread 2-5 year adjustable rates Interest Only
More info                                                                   More info                                                                    More Info                                                                   More Info
  1. Retail/Mall
    Deal Type: Purchase, Refinance, Construction, Bridge Transaction Size: $500,000 and Up Term: Up to 20 years Amortization: Up to 30 years Loan to Value: Maximum 75% Interest Rates: Fixed Rates as low as 3.95% Debt Service Ratio: 1.25x
  2. Gas station, resturants, car wash, auto repair, C-Store
    SBA 7(a) up to $5million, 10,25 years,90% LTV SBA 504, 20 yrs, prime + 2.75%, 80% max 10 year prepay Hard Money up $5mm, rate 10-18%, max ltv-65%. points 3-10% (1% to Broker)
  3. Office, medical, student housing
    Up to 90% LTV Unlimited Cash Out No Pre-Payment Penalty Flexible Amortization Schedules Close in 30-45 Days Non Recourse Loans Par Pricing Brokers Protected Pays up to 3 pts. yield spread 2-5 year adjustable rates Interest Only
  4. Assisted living
    Assisted living
    loan amounts from $250k to $50 million 700 minimum fico fixed rate as low as 5% low down payment and 100% financing 7 year term and up to 10 year amortization Closing in 4 weeks
Conventional commercial loans are mortgages that are provided by a bank, credit union, savings institution, or other traditional financial institution and are secured by a first lien position on the subject properties being financed. The collateral may be any type of commercial real estate and do not always require previous experience. These loans are typically best suited for inexperienced borrowers, small loan balances, specialty properties, or any other structure that may require a personal guaranty

Underwriting Parameters

Conventional Lenders typically have maximum LTVs of 75-80%, while some lenders can stretch up to 85% in limited circumstances for especially strong borrowers. Borrowers should expect to have “hard cash” equity invested in purchase transactions, while being able to maintain a post-closing liquidity sufficient to service their debt for several months and an overall net worth equal to or greater than the loan amount (although there may be some flexibility). Properties will need to be able meet a DSCR of 1.25-1.55x (depending on the LTV and property type) at the underwriting rate.
Conventional Loan Features

Term Length/Amortization: The length of term and amortization depends heavily on the institution providing the funding as well as the property type. Terms can vary from 3-15 years with amortizations ranging from 10-30 years. Depending on the way the loan is structured, it may “balloon” at the end of the term, meaning at the loan balance will need to either be refinanced or paid off; otherwise the loan is self-amortizing, meaning that the loan will be fully paid off when the loan matures, so there is no loan balance to pay off (unless the loan is prepaid before it matures).

Recourse: Conventional loans may be non-recourse, limited recourse, or full recourse loans. If it is non-recourse, the Borrowers are not personally liable for the repayment of the loan and that the collateralized property and its cash flows would be the sole source of repayment of the debt in the event of a default or foreclosure. However, in the event the Borrower actively participates in an activity that could cause harm to the property, there could be springing recourse in some limited circumstances; this may include loan fraud, property transfer or subordinate financing without consent of the Lender, and voluntary or collusive activity leading to a bankruptcy filing, among other such actions. Limited recourse loans makes the sponsors guarantying the loan responsible for a percentage of any shortfall between the loan balance and sales price in the event of default and foreclosure, where the property must be auctioned off as well as any applicable legal and ancillary fees. The carve outs for the non-recourse loans would also apply. Full recourse loans make the sponsors guarantying the loan responsible for any and all shortfalls between the loan balance and sales price in the event of default and foreclosure as well as any applicable legal and ancillary fees.

Loan Assumption: A conventional loan may or may not be assumable. Typically assumption occurs when the Borrower wants to sell the commercial real estate that secures the loan, and the Purchaser of the property wants to take the loan over. Once the property sale and assumption is completed, the Purchaser becomes the owner of the property and is bound by the original terms of the assumed loan and the original Borrower/Seller is released from its obligation to the property and the existing loan. The benefit of this structure is that the assumption of the loan allows the Borrower/Seller to avoid pre-payment costs and give the buyer the opportunity to assume a loan that may have favorable terms than what is market. Loan assumption is an especially attractive option in high interest rate environments or tight credit environments. 
Seller carry and Seller Finance
It’s really important that you know how to structure deals that no one else does. What if you don’t have enough of a down payment? How do you close that deal? What if you find a great deal that’s distressed? How do you finance something like that? What if the seller has a great property with great upside, but has no financials? How do you creatively structure and close that deal?

Well, in my experience, real estate agents are not the best source to learn how to be creative in commercial real estate. They’re more concerned about the commission, and rightfully so, because they have to make a living, so they’re not a good source. Also, in my experience, nearly ninety-five percent of all sellers have no clue how to creatively structure anything creative. They’re not a good source either. Who’s left? It’s you. It’s going to be up to you to learn this topic very well. In this video, I’m going to dive deep into details on how to show you how to creatively close deals that you otherwise would have possibly passed on.
Small Business Association loans
Also known as SBA loans, real property (not equipment or cash-flow loans) loans through the SBA are generally one of two types: a 504 or 7A loan. The 504 loan is a 50 percent first loan from a bank and a 40 percent second loan from the government (also known as a debenture). The 7A loan is a 90 percent government-guaranteed bank loan. SBA loans – 504 and 7A – have their advantages and disadvantages. The advantages of both loans include small down payments (10 percent), fixed interest rates, ability to finance building improvements and wide availability from a number of lending sources. The disadvantages of both loans are the origination fees, the prepayment penalties, the collateral and personal guarantees, and the business requirements of profitability and number of years in business.

Conventional financing

Once upon a time, before the preponderance of SBA financing, if you wanted to buy a building, you showed up at your local bank or savings and loan office and applied. What resulted was a loan of 75 percent to 80 percent of the purchase price. Boom. Done. Not much has changed over the years – except, of course, the savings and loans are extinct, there are fewer commercial banks, and the banks would prefer for you to originate an SBA loan because the bank’s risk is less since the government is guaranteeing a portion of the loan. Hmm, I guess a lot has changed.

Seller financing

We saw a lot more seller financing when the market interest rates bubbled above 4 percent to 5 percent and a borrower could not seek 90 percent financing through the SBA. There are few advantages for a buyer to seek seller financing, but if a seller of commercial real estate owns the property free and clear and is willing to finance the purchase, the buyer generally avoids the need for an appraisal and may also skirt certain origination fees.
Types Of Alternative Business Lending

Merchant Cash Advance

If a business accepts credit card payments, then a Merchant Cash Advance (MCA) is a very attractive form of alternative lending. Instead of conventional financing, where a loan is paid back in sizable monthly installments, businesses who use MCAs receive their loan, and then pay it back in the form of a flat percentage of credit card sales. For example, if a restaurant needs working capital, but cannot get financing through regular bank loans, then the restaurant can get a merchant cast advance, utilize the funding as they see fit, and then pay it off through a small portion of the total volume of credit card sales. The higher the volume of sales, the faster the MCA is paid off.

Factoring or Accounts Receivable Financing

Factoring is a form of alternative financing that will not only get a business the working capital it needs, but it is a great way to streamline accounting – even businesses who do not need money use factoring. Factoring is a method by which companies sell their overdue accounts receivables to a collection company in return for cash. For example, a manufacturing company has clients with outstanding bills, but diverting time and payroll hours to have someone hunt down that money would be a waste of resources. By selling those bills to a factoring company, the business receives money (minus a percentage fee from the factoring company), and they take the headache of tracking down the owed money off of the company’s hands. Factoring is a great alternative financing method that allows businesses to receive working capital from customer bills that might otherwise not yield a single penny in a timely manner. Many businesses sell all outstanding customer bills to factoring companies after 90 days or so, just to stave off any strain on the cash flow, and to take any additional strain off of the accounting department.

Asset Based Lines of Credit

For companies that manufacture goods, restaurants, IT companies, beauty salons – basically, any business that uses equipment – asset based lines of credit are a great alternative business funding method. Lenders will extend lines of credit based on the value of the equipment and hard assets owned by the business (and, by extension, the business owner). The higher the value of the assets and equipment, the greater the line of credit and access to working capital that can be extended to the business.

Unsecured Lines of Credit

Sometimes business owners do not have the collateral to leverage against a traditional loan. Perhaps the business is just getting off the ground, or the business has a lucrative operation but a small customer base, or perhaps the business has very low overhead and the owner doesn’t have a house or major equipment to use as collateral. In these cases, many business owners turn to unsecured lines of credit as an alternative financing method to get working capital. Unsecured lines of credit usually have a much higher interest rate and payment terms than conventional loans, because the lender is assuming all of the risk in the investment.
Crowdfunding and Micro-Investors
One of the more popular forms of alternative lending comes in the form of crowdfunding and micro-investments. Some business owners will post their business ideas or goals online, so people and investors can give money to help the business reach its goals. Typically, these businesses will offer something in return when certain goals are met, or when certain amounts of funding are received. These crowdfunding campaigns can be risky, because the business does not usually receive any money until the total goal is reached.
The Power in Knowing How to Structure Creative Financing for Commercial Property

1. Leverage

Don’t you agree that there’s power in knowing how to lower your down payment? Right? There’s power there. Don’t you also agree that there’s power in learning how to avoid banks and lenders and creatively structuring your commercial deals? There’s great power there.


You have the cash, but not the credit or experience. These guys have recovered well from the recession. They have built up a little bit of savings, but they have no credit, and they have no experience. They’re not favorable to the bank.
How do you structure a deal like that? They found a great property, they have the money, but they don’t have these two requirements here to get to commercial property. There’s power in knowing how to do that.

3. Commercial Wholesalers

Or, those of you wanting to wholesale commercial properties out there for big dollars. We teach that in our company here how to structure wholesale deals that are small and on the large side. If you were to structure a creative deal, let’s say with a master lease, where the seller carries second mortgage, seller carry first mortgage, all those type of things that are really, really cool, that I’m going to teach you in a few minutes. If you were to structure a deal like that and take it to your buyer, it will immediately give the impression to your buyer that you’re deal is unique and very desirable.

4. Knowing How to Structure Creative Deals

It gives you a way to finance distressed properties that a bank wouldn’t touch. You’re going to run across quite a few of those as you jump into commercial real estate.

5. How to Deal with a Seller Concerned About Capital Gains Taxes

How do you deal with that? You’re going to run across quite a few of those sellers, and you must know how to structure deals where you can, “Avoid or delay,” their capital gains returns. I’m going to show you how to do that, an example in a few minutes.

6. Dealing With a Seller Who is Ill, Elderly, or Burnt out

How many of you know a seller who is ill, elderly, or burnt out? Either residential or commercial?
I’ll bet a lot of you have seen those type of sellers. All right? How do you deal with those? I bet some of you have unknowingly passed through or passed on quite a few of those deals because you had no clue of how to handle those sellers. Well, after this training, you’re going to know how to deal with them.

7. FUN

Putting together creative commercial deals is just plain fun. It’s so fulfilling for me and for my students. I would say that roughly half of the deals that we do have some type of creative component, so it’s just a lot of fun.

One Secret to Seller Financing

There is power and importance of knowing how to creatively finance commercial real estate deals. The one secret for creative commercial financing is to ask. There is power in asking. In life, if you do not ask, you do not get. That’s how it works. In real estate, the same thing. Especially when you’re doing something creative, you must ask the seller.

Here’s How You Ask

You would say, “Mr. Seller, would you be open to any type of seller financing?” You see? Pretty simple, right? Now, if the seller says, “Yes, what do you have in mind?” You would just say, “I’m not sure yet. I just want to see if you’re open to it. I’ll get back to you.” That simple. If the seller says, “No,” to us, no means not yet or yes to something else. That’s the mentality you have when dealing with sellers with seller financing. No means not yet or yes to something else.

One Rule When Asking

One rule I want you to follow. The one rule is never ask for seller financing on their first phone call. That will tell him that you have no money and you will scare him away.
Three Fundamental Strategies of Creative Commercial Financing

1. Owner Carry First Mortgage

The owner is carrying the first mortgage. He is being the bank for you.
Let’s say the purchase price of a property is a hundred thousand dollars. I’m just making it up, and the down payment is ten-thousand dollars. That means the mortgage is going to be ninety-thousand dollars, so the seller is going to carry the mortgage for you. This is great for properties that are owned free and clear.

2. Owner Carry Second Mortgage

Like the first, the owner’s carrying a second mortgage for you. That means the first mortgage is with the bank, the second mortgage is with the owner. Here’s a quick example. Let’s say that the bank is requiring a twenty-five percent down payment, which is quite typical, right? Now, but you only have fifteen-percent of the twenty-five. What happens to the other ten percent?
Now, in this strategy, the owner can carry that shortage, that ten percent for you. The bank will carry the fifteen percent mortgage, and the seller will carry the ten percent mortgage, equaling twenty-five percent. It’s a great way to leverage and to increase drastically your cash and cash return.

3. Master Lease Agreement
Examples of Each
Owner Carry First Mortgage

Let’s say you have an eight unit apartment building, and the purchase price is five-hundred thousand dollars as an example. You found this property. Now, just quickly compute the income and the expenses. All right, so we had eight units at eight-hundred dollars a month, times twelve months is equal to seventy-six thousand dollars, eight-hundred, okay? Now, we have the income. Next is the expenses. Now, we’re going to take away thirty-five percent for a typical and normal expenses. Thirty-five percent of seventy-six thousand, eight-hundred for expenses. Do that subtraction and I come up with forty-nine thousand dollars. Income minus expenses equals forty-nine thousand dollars. That’s by the way the net operating income, very important term.

Now I have the income, I have the expenses, what’s next? You got to figure out the mortgage. In this deal, we have negotiated a ten percent down term. Why? Is because the owner owns it free and clear and he can be the bank, so we’re going to offer him ten percent down on this property Ten percent of five-hundred thousand dollars is fifty-thousand dollars, so your mortgage is going to be four-hundred and fifty-thousand dollars. Now, let’s figure out what the payments will be. I’m going to make this up again. Payments going to be five percent with a thirty-year amortization. Pretty typical. Those payments will be about twenty-four hundred dollars a month, which would be about twenty-nine thousand dollars a year. We have mortgage payments at about twenty-nine thousand dollars per year. Mortgage payments. What I do next is I’m going to subtract my mortgage payments from my NOI. If I do forty-nine thousand dollars minus twenty-nine thousand dollars, equals twenty-thousand dollars per year in cash flow.
That’s my cash flow, twenty-thousand dollars per year. Now, to do ROI calculation, or a cash and guess calculations, basically you would divide your annual cash flow by your down payment. Twenty-thousand dollars divided by fifty-thousand dollars, that’s a pretty good cash and cash return.
That’s only possible because you put down ten percent. It’s only possible because he owns the property free and clear. Owner carry first mortgages are great for free and clear properties, very useful. The next time you find an owner who owns his property free and clear, check out this strategy and see if it works with him. You now know how the math works. It’s also useful for distressed owners. It’s also useful for when you have little cash, no credit, or experience. Why? Is because if you have little cash, let’s say you wanted to buy this property, from a bank it would probably cost twenty-five percent down payment, but because he can be the bank for us, we’re able to put down ten percent.

You don’t need credit or experience because the seller is the bank. There’s no credit requirement other than what the seller wants to see.

Installment Sale

Next is, this is really cool, if the owner needs to delay paying capital gains taxes if he sells. The owner carry first mortgage works really, really well for that. In fact, that little technique is called the installment sale. Installment sale is a very, very effective technique if the seller needs to somehow split up his capital gains taxes over the course of years.


Let’s say that he owns this property free and clear, and he’s about to make a huge profit. He doesn’t want to pay one lump some of taxes, you can do an installment sale with the owner carry first mortgage, and you can buy his property over the next five years, twenty percent at a time. Something like that, so you can be creative as you can be on this type of strategy. Now you know how to calculate the cash flow, the cash and cash return, and this is what it’s useful for.

Owner Carry Second Mortgage.

Let’s say that you have an eight unit apartment complex, commercial property, five-hundred thousand dollar purchase price. The down payment from banks are typically is going to be twenty-five percent on average. Twenty-five percent of the purchase price of five-hundred thousand dollars is a hundred and twenty-five thousand dollars. What if you couldn’t come up with the entire one-hundred and twenty-five thousand dollars, but the seller’s motivated? He wanted to sell, but all you had was fifty-thousand dollars, but the bank wants a total equity of a hundred and twenty-five? What do you do?
What you do is you have the seller, the owner, carry a second mortgage in the amount of seventy-five thousand dollars. He carries the seventy-five, you have the fifty, you meet the bank’s a hundred and twenty-five thousand dollar equity requirement. The bank is happy, you get the buy the property, and the seller gets to sell his property.

One of the small but important detail I need to add is when you do your calculations on cash flow, don’t forget that you’re making a second mortgage payment, you’re making a interest only payment on the seventy-five thousand dollars of the seller. That means that you’re going to have two mortgages to pay, so make sure the numbers work out.

How It’s Useful

Now, again, let’s say you have a motivated seller, but you only have fifty-thousand of the one twenty-five. Well, this is useful for when you need to leverage. You’re leveraging your fifty-thousand dollars into this deal, because you have a down payment shortage, so it’s very useful for that.

You need to have a motivated seller for that to work. When you have a motivated seller, and a ready and willing bank that will allow a seller to carry second, you can leverage your fifty-thousand dollars into a five-hundred thousand dollar property. Now, what it does is when you’re putting down fifty-thousand dollars, that’s your outlay, your investment. Instead of the one twenty-five, basically it’s going to increase your cash and cash returns. In this case, your ROI, your cash and cash return is going to more than double than would be if you were to put down the hundred twenty-five thousand dollars.


The owner carry second mortgage is a great way to not only leverage, but to just go through the roof on your cash and cash and ROI. When you see this language here, let’s say that you’re on LoopNet, or any other type of online community where you see commercial properties, or even maybe in a flier. You see this language here, “Seller financing available.” You see that, or you see, “Owner may carry.”
That is code language for motivated seller, for seller needs to move this property. This is code language for, “Bring me something creative.” Now you know what to bring them. You see this language, you bring them an owner carry second mortgage offer

Why Would a Seller Consider Creative Financing

I’m going to share four reasons of why that may be possible. I am going to answer the question, “Why would a seller even consider creative financing? Why wouldn’t the seller just go ahead and just put their property on the market and just sell it? Why wouldn’t he just pull in the cash buyer and sell the property for the price he wants and be done with it?”

Well, in many cases, he may not be able to. The reason why is because of these four reasons.

You guys have just learned how to put together, conceptually, a seller carry first mortgage, a seller carry second mortgage, and a master lease. You can now take those three strategies and see if your seller falls in one of these categories or reasons, and apply what you just learned.

1. The first reason why a seller would even consider creative financing is if this property has high vacancy, is in poor condition.
These days, if a property is eighty percent occupied, it’s considered distressed these days, all right? A bank wouldn’t want to qualify the property for a loan, so how could you sell it for top dollar with high vacancy? Same thing with poor conditioning. The property’s in poor condition, same situation as this here. If a property suffers from this, and the seller still wants to sell the property, the only way to get his price is to do creative financing.

2. Let’s say the property is in good condition, condition’s okay, but the seller’s not. What if the seller kept no books and records on the property? Amazing as it sounds, a lot of commercial owners keep very poor records of their income and expense. It doesn’t allow you to validate how much the property makes.
If it doesn’t allow you to validate it, the bank is going to have the same problem, so the bank is not going to give you the dollars you need to buy the property. The banks may do that, but they may want to ask for a large down payment to protect their downside, and the deal makes no sense. When the property’s okay, but there’s nothing to substantiate the pricing, that’s when creative financing may come into play.

3. Let’s say the seller has concerns about paying capital gains taxes if he sells. Where you already learned from previous video about the master lease, which is a creative financing technique. You also learned of the owner carry first. In both situations we can mitigate his concerns about paying taxes when he sells. We can mitigate it by spreading out over time his capital gains taxes. You can look at an installment sale. You can look at a master lease. You can look at an owner carry first mortgage as a way to mitigate this.

4. The seller needs a quick sale because of a life situation.
For example, if the seller is ill, going through divorce, or being relocated, he needs to sell the property quickly. Sometimes, for privacy’s sake, a seller does not want to list a property on MLS or online, and wants a quick sale. In any case, when a life circumstance requires a quick sale, the best way, the best way is to do creative financing.

Most Important Mentality to Have When Structuring Creative Commercial Deals?
Here it is. It could be summed up in one sentence. “Mr. Seller, I will give you your blank if you give me my blank.”
This is going to set your posture moving forward when you structure anything creative in commercial real estate. Watch this. “Mr. Seller, I will give you your price if you give me my terms.” That’s your posture. Always. That’s the single most important mentality to have when you’re structuring anything creative. If the seller wants his price, you get your terms. When you want to put together anything creative, like the seller carry first, seller carry second, or master lease, this is your posture. “Mr. Seller, I’ll give you your price, but I want my terms.”

“How do you come up with the terms?”

The terms will come up via the seller’s motivations. We do, we ask the seller a bunch of questions, we visit the seller, we look at financials, we do an evaluation, we listen very carefully, and we come up with the seller’s motivations.
We take those seller’s motivations and we structure the creative deals.
Terms come from seller motivations. I’m going to give you a quick example here of how that works.

Here you have one question, but two potential answers, and it will put together how you come up with the terms from the seller’s motivations.

Three quick examples.

Example 1. If the seller inherited their property that’s in high distress and wants a quick sale, what’s most likely to work? A, is it a small down payment, ten day due diligence, and fifteen day close? Or, is it a large down payment, with a sixty day close?

The answer is A, Because what’s the motivation? He’s distressed. He needs to quick sell, so a small down payment may be okay. Ten day due diligence as opposed to sixty would be great, and the fifteen day close. That’s how to measure the motivations versus the terms.
Example 2. If the seller wants to delay paying capital gains if she were to sell. What’s most likely to work? An outright sale with a wealthy cash buyer and close in seven days? Or, a master lease term over an extended amount of time that you and the seller agree upon?

The obvious answer is B, the master lease where you extend a deal out, because their motivation is what? She doesn’t want to pay, or she wants to delay her capital gains. Again, what’s the motivation? We set the terms
Example 3. The seller wants to sell, but would like to maintain some type of monthly income from the property. What’s most likely to work? A master lease where you structure a monthly payment plan to him over and above paying his mortgage? Or, B, a master lease, a joint venture, where he shares in the profits when you sell the property years down the road?

The answer is A, a master lease where you structure a monthly payment to him over or above the mortgage payment.

How Term Sheets Work For Commercial Real Estate Loans

The term sheet is an important document in commercial real estate lending. It is used to outline the terms of a potential loan prior to fully underwriting the deal and issuing a commitment letter. In this article, we will take a closer look at how terms sheets work for commercial real estate loans.
To provide an introduction to the Term Sheet and its importance in the lending transaction, I’m going to cover the following topics:

What is a Term Sheet?
Why are Term Sheets Important?
What information does a typical Term Sheet contain?
Analysis of a sample Term Sheet?
What is a Term Sheet?

Once a commercial lender has identified a borrower, held introductory conversations, and conducted enough preliminary analysis to determine that they’d like to proceed into a full underwrite, they will issue a Term Sheet to the potential borrower.  Simply defined, a Term Sheet is a document that outlines the general structure under which the bank would be willing to extend credit.
It is critical to note that a Term Sheet is not a commitment to lend.  It is an expression of interest in a potential transaction, provided that the Borrower is able to meet the terms and conditions outlined in the document.
Term Sheets are non-binding (for both the borrower and the lender) and may be revised several times before acknowledged and signed by both parties.

Why are Term Sheets Important?

Term Sheets are a critical component in the loan transaction for several reasons:
It is a formal expression of the lender’s interest in the transaction
As a starting point for negotiations, it outlines the structure under which the lender would approve the loan
It sets forth the potential performance covenants that would be enforced over the life of the loan
It outlines additional documentation that the borrower is required to provide so that a full analysis can be performed
It signals to other participants in the transaction (Real Estate Brokers, vendors, contractors, etc) that the borrower is in the process of securing financing
Analysis of a Sample Term Sheet

While the deal terms will differ, the general structure of a Term Sheet is fairly standard from bank to bank. Below is an actual Term Sheet (with identifiable information redacted) that we’ll  walk through: [Term Sheet]
Term Sheet Name/Address
Every Term Sheet will start addressed to either the individual who represents the Borrowing entity or an individual representing that borrowing entity that has a relationship with the bank.

Term Sheet Introduction

Every Term Sheet is going to start with an introduction.  While the actual language will differ from bank to bank, the introduction typically says something like “Thank you for the opportunity to work with you.  XYZ bank is pleased to offer the following terms under which credit will be extended…”  It is just a brief introductory paragraph meant to transition into the specifics of the deal

Term Sheet Section Headings

Borrower:  Identification of the borrowing entity; typically an LLC in a real estate transaction.
Purpose:  Description of the stated purpose for the loan.  This is important because the Borrower has an obligation to use the funds for the same purpose that the bank is lending the money for.  For example, if the Term Sheet states that the funds are to be used for the construction of a multi-family property, but the Borrower uses them to buy a boat, this is a problem.

Amount:  The stated amount of the loan being considered.  It is important to note that this isn’t always going to be the same amount that the Borrower is asking for.  Maybe the Borrower is asking for $1 Million, but the lender’s preliminary analysis suggests that the project can only support a loan of $950,000, per credit policy.  As such, the lender would indicate a loan amount of $950,000 in the Term Sheet and negotiate from there.

Rate:  The proposed Interest Rate for the loan facility.  Again, this isn’t necessarily the rate the customer wants, it is the rate at which the bank is willing to lend.  The Term Sheet will also clearly state whether the rate is fixed or floating and any potential adjustments over the life of the loan.  For example, it may say:  “Floating Rate based on the WSJ LIBOR Index + 300bps” or “6.50% fixed for the term of the loan.”

Fees:  A statement of the fees on the proposed loan.  In most cases, there is an origination fee and occasionally there is a fee for draws or other transactions.  For example, the Term Sheet may say something like: Origination fee of 50bps ($50,000) plus a fee of $500 per construction draw.

Maturity:  The proposed term of the loan.  For example:  “24 Months.” The Term Sheet may also specify extension options.  The proposed term is derived from the borrower’s needs (for instance, the estimated duration of construction) and/or the lender’s risk appetite for the loan type.

Payment Terms:  Description of the proposed payment structure.  For example”  “Interest Only monthly; Principal due at maturity.”
Amortization Period:  The proposed amortization period.  For loans that aren’t fully amortizing, this section would work in conjunction with the Payment Terms to establish the exact terms of repayment.  For example, it may say something like, 5-year repayment term, based on a 30-year amortization, meaning that the loan term is 5 years, but payments are calculated based on a 30-year amortization schedule.

Collateral:  Description of the proposed collateral securing the loan.  For example, it may say something like:  “First Lien Mortgage on 60 unit multifamily, garden style apartment complex, assignment of rents and leases, and all other improvements made to the collateral property.”
Guarantor(s):  When lending to an LLC or a small business, the bank is typically going to want the personal guarantees of the individuals involved in the transaction.  This section identifies the individuals by name.  For example, it may say:  “John Smith and Bill Franklin, joint and several”  If there is more than one guarantor, the bank will typically want a “joint and several” guarantee, meaning that if the loan goes bad, each named individual is responsible for the entirety of the loan balance AND the collection of individuals is responsible for the loan balance.
General Performance Covenants:  This is where it gets interesting because this section lists all requirements that the Borrowing entity will have to abide by during the term of the loan.  This is also the part that will vary from Term Sheet to Term Sheet, depending on the proposed transaction. Some examples of things that you may see in this section include:

DSCR:  Borrower required to maintain Debt Service Coverage of 1.25X during the course of the loan, as demonstrated by Borrower financials and checked quarterly by the bank.

Relationship:  Borrower required to maintain their primary operating accounts with the lender.
Debt:  Borrower may not take on any additional debt on the collateral property without the express written consent of the lender.
Subordination:  Subordination of all existing debts and amounts owed on the collateral property.
Inspections:  Bank to require inspections prior to the distribution of draw proceeds.

Liquidity:  Borrower required to maintain $XX in liquidity during the course of the loan as demonstrated by financial statements and checked periodically by the lender.

Items Needed for Closing:  Should the Borrower wish to sign the Term Sheet and proceed with the transaction, the last section describes the documents and information needed to proceed to a full analysis of the deal.  This section may include things like:
  1. 2 Years of tax returns
  2. CPA prepared financial statements
  3. Personal financial statement for all guarantors
  4. Project plans and elevations
  5. Environmental report
  6. Appraisal
  7. Draw Schedule
  8. Sources and Uses budget
  9. Articles of Incorporation
  10. Operating Agreement
  11. Certificate of good standing
  12. Surveys
  13. Engineering reports
  14. Permits

This list is illustrative and not exhaustive.  The actual items needed for closing will be specific to each deal.

Once the borrower has received and reviewed the Term Sheet, one of three things will happen:

The borrower accepts the terms, signs it, returns it to the lender, and the deal proceeds into underwriting;
The borrower elects to negotiate certain deal points (rate, term, etc.) with the lender.  If they come to an agreement, the lender will revise the term sheet and return it to the borrower for signature.  Once signed the deal will proceed into underwriting;
The borrower rejects the proposed terms, doesn’t sign the Term Sheet, and walks away from the deal.  A Term Sheet isn’t binding so this is possible without any fees or penalties.

Once the Term Sheet has been signed, the deal proceeds to underwriting where a complete analysis is performed on every aspect of the transaction.  If everything checks out and the deal is within the lender’s risk tolerance, the bank will issue a commitment to lend, which is very similar to the Term Sheet, but differs in 2 key ways:  (1) It is a commitment on behalf of the lender; and (2) It is legally binding for parties.

In this article, we took a deep dive into term sheets for commercial real estate loans. We discussed what terms sheets are, why term sheets are important, and then we looked at a real-world example of a term sheet for a commercial real estate loan. We also discussed several of the key components and sections that are usually included in a commercial real estate loan term sheet.
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