All Forum Posts by: Ken Jernigan

Not usually. Your family member will have to subordinate to the primary lender. Terms of subordination vary depending on the lender. I've worked a few deals like this and you can PM me if you want to discuss it.

Depending on location, it may qualify for USDA. 20% down, 30 year loan. You can check eligibility here: https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

Deed of Trust could be a separate document. If you're using commercial financing  the lender will require seller to subordinate anyway.

Wow, a dress code? If you've got a solid market, then that should be a good move. Key is getting a good agent who can help you evaluate properties. Like other assets key is location, condition and occupancy. Right now the office market is pretty strong with co-work formats hot. Lenders still seem to like office developments.

Individual LLC members will be required to personally guarantee the loan. Any member withdrawing would be a material change in the loan, and could trigger an acceleration. If payments have been current, it is more likely the lender would work with you or give you time to re-finance. But during the 2008 recession a number of lenders did get pretty tough with borrowers. They basically wanted them gone an looked for any excuse.

This project may qualify for USDA financing where you could get a 30-year loan with 20% down. You may PM me if you want more info.

I've financed a number of hotels over the years and have a few in the pipeline currently. This asset class is cyclical and we're kind of late in this one. Financing is becoming increasingly challenging, especially for new construction. Quality acquisitions are attracting multiple offers. LTV/LTC is running 60%-80% depending on lender, term and interest rate. Most important are a strong flag and experienced investor group.

Although independents are almost impossible to finance, a well run property will produce strong cash flow. SBA would be a good option.

Income can only be verified through tax return transcripts or bank statements. Seems like there's more to this story. In any case, businesses like this are extremely difficult to run successfully. They are highly regulated, income streams can be unreliable and clients sometimes difficult. I'd give this one a wide berth.

True enough on the SBA--they only do owner-occupied commercial real estate, defined as 51% of the square footage. USDA however allows non-owner occupied, but it has to be in a community of 50 thousand population or less. Looks like the biggest hurdle, though is running a business in a residential zone. No lender will finance a non-compliant use. Better check that out first.

Might be able to get a hard money lender interested but at a much lower LTV, say 60-65%. Rate will be pretty high though. Do you have other sources of income, and hopefully not a lot of other debt? Lenders will look at the global cash flow.