Question 1

What is investor financing?

Accepted Answer

Financing a property is the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay the full price in cash up front from their own accounts at the time of the purchase. Financing for non-residential real estate is generally obtained from a bank, insurance company or other institutional lender to provide funds for the acquisition, development, and operation of a commercial real estate venture.

Question 2

What is investor financing?

Accepted Answer

Financing a property is the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay the full price in cash up front from their own accounts at the time of the purchase. Financing for non-residential real estate is generally obtained from a bank, insurance company or other institutional lender to provide funds for the acquisition, development, and operation of a commercial real estate venture.

Question 3

What is commercial financing secured by?

Accepted Answer

Commercial financing loans are secured primarily by real estate and related assets owned by the debtor. Assets used to collateralize commercial finance loans, aside from the real estate, may include fixtures, equipment, bank and/or trade accounts, receivables, inventory, general intangibles, and supplies. Documents evidencing and securing the loan typically include: loan agreements, promissory notes, mortgages or deeds of trust, assignments of rents and leases, financing statements, environmental indemnity agreements, guaranties, subordination, non-disturbance and attornment agreements, estoppel certificates, and other ancillary documents.

Question 4

What is commercial financing secured by?

Accepted Answer

Commercial financing loans are secured primarily by real estate and related assets owned by the debtor. Assets used to collateralize commercial finance loans, aside from the real estate, may include fixtures, equipment, bank and/or trade accounts, receivables, inventory, general intangibles, and supplies. Documents evidencing and securing the loan typically include: loan agreements, promissory notes, mortgages or deeds of trust, assignments of rents and leases, financing statements, environmental indemnity agreements, guaranties, subordination, non-disturbance and attornment agreements, estoppel certificates, and other ancillary documents.

Question 5

What is a 1031 exchange?

Accepted Answer

An exchange is a real estate transaction in which a taxpayer sells 
real estate held for investment or for use in a trade or business 
and uses the funds to acquire replacement property. A 1031 exchange
is governed by Code Section 1031 as well as various IRS Regulations and Rulings.

Question 6

What is a 1031 exchange?

Accepted Answer

An exchange is a real estate transaction in which a taxpayer sells 
real estate held for investment or for use in a trade or business 
and uses the funds to acquire replacement property. A 1031 exchange
is governed by Code Section 1031 as well as various IRS Regulations and Rulings.

Question 7

What is an assignment of a lease?

Accepted Answer

For commercial lending purposes, an assignment of leases assigns the 
debtor’s rights, as landlord under a lease or leases, to the 
creditor for the collection of rent as additional security for a 
debt or other obligation. The assignment grants to the creditor
a security interest in the rent stream from any leases affecting 
a property, an important source of cash to pay the note in case of 
the borrower’s default.

Question 8

What is an assignment of a lease?

Accepted Answer

For commercial lending purposes, an assignment of leases assigns the 
debtor’s rights, as landlord under a lease or leases, to the 
creditor for the collection of rent as additional security for a 
debt or other obligation. The assignment grants to the creditor
a security interest in the rent stream from any leases affecting 
a property, an important source of cash to pay the note in case of 
the borrower’s default.

Question 9

What is an estoppel certificate?

Accepted Answer

An estoppel certificate is a signed statement by a party certifying 
certain statements of fact as correct as of the date of its execution.
In a commercial financing context, the creditor often seeks estoppel certificates from existing tenants in a property to be mortgaged in order to confirm the major terms of a lease, and whether the tenant claims any defaults by its landlord. An estoppel certificate precludes a tenant from later claiming that a default or other condition of the lease exists which
was not disclosed in the estoppel certificate.

Question 10

What is an estoppel certificate?

Accepted Answer

An estoppel certificate is a signed statement by a party certifying 
certain statements of fact as correct as of the date of its execution.
In a commercial financing context, the creditor often seeks estoppel certificates from existing tenants in a property to be mortgaged in order to confirm the major terms of a lease, and whether the tenant claims any defaults by its landlord. An estoppel certificate precludes a tenant from later claiming that a default or other condition of the lease exists which
was not disclosed in the estoppel certificate.

Question 11

What are non-recourse loans?

Accepted Answer

A non-recourse loan is a secured loan that limits the creditor, 
in the event of default by the debtor, to proceed only against the
collateral securing the loan to satisfy the debt and not the 
debtor’s other assets which are not specifically pledged as collateral.

Question 12

What are non-recourse loans?

Accepted Answer

A non-recourse loan is a secured loan that limits the creditor, 
in the event of default by the debtor, to proceed only against the
collateral securing the loan to satisfy the debt and not the 
debtor’s other assets which are not specifically pledged as collateral.

Question 13

What does title insurance do?

Accepted Answer

Just as in the context of residential real estate, title insurance 
protects the insured, who can be the property owner and/or the 
mortgage lender, from loss due to undisclosed defects in title to 
real property and, for creditors, from loss due to the invalidity 
or unenforceability of its mortgage lien.

Question 14

What does title insurance do?

Accepted Answer

Just as in the context of residential real estate, title insurance 
protects the insured, who can be the property owner and/or the 
mortgage lender, from loss due to undisclosed defects in title to 
real property and, for creditors, from loss due to the invalidity 
or unenforceability of its mortgage lien.

Question 15

What choices of borrowing through a entity?

Accepted Answer

The choice of entity for purposes of commercial financing is one 
that will be dependent on many factors, including tax considerations,
identities of the owners, whether there will be preferred returns, 
who will operate the project, state law, and the like. The decision 
as to whether to use an entity and, if so, which entity to use can
be complicated and should be made with the assistance of competent 
tax, accounting and legal advisors.

Question 16

What choices of borrowing through a entity?

Accepted Answer

The choice of entity for purposes of commercial financing is one 
that will be dependent on many factors, including tax considerations,
identities of the owners, whether there will be preferred returns, 
who will operate the project, state law, and the like. The decision 
as to whether to use an entity and, if so, which entity to use can
be complicated and should be made with the assistance of competent 
tax, accounting and legal advisors.

Question 17

How is mezzanine financing different from other commercial loans?

Accepted Answer

If the owner’s equity and lender’s loan together are insufficient 
for the financial needs of a property, a borrower may sometimes also 
seek out one or more additional lenders to finance the project. 
Many creditors have become increasingly hostile to secondary 
financing involving a junior mortgage lien on property on which they 
hold a mortgage.

Question 18

How is mezzanine financing different from other commercial loans?

Accepted Answer

If the owner’s equity and lender’s loan together are insufficient 
for the financial needs of a property, a borrower may sometimes also 
seek out one or more additional lenders to finance the project. 
Many creditors have become increasingly hostile to secondary 
financing involving a junior mortgage lien on property on which they 
hold a mortgage.

Question 19

What is DSCR? and how is it calculated?

Accepted Answer

It is your debt service coverage ratio.
Every lender has a minimum debt-service coverage ratio requirement for approving a business loan. In general, this needs to be 1.25 or more.
 
Annual Net Operating Income + Depreciation & Other Non-Cash Charges
Interest + Current Maturities of Long-Term Debt
Or
EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization)
Interest + Current Maturities of Long-Term Debt

Question 20

What is DSCR? and how is it calculated?

Accepted Answer

It is your debt service coverage ratio.
Every lender has a minimum debt-service coverage ratio requirement for approving a business loan. In general, this needs to be 1.25 or more.
 
Annual Net Operating Income + Depreciation & Other Non-Cash Charges
Interest + Current Maturities of Long-Term Debt
Or
EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization)
Interest + Current Maturities of Long-Term Debt

Question 21

What are the advantages of having a interest only loan?

Accepted Answer

The interest you're paying can sometimes be offset against 
rental income and other eligible property costs. Investors 
who opt for interest-only repayments on a fixed rate loan may 
also be able to claim a tax break for up to twelve months of 
prepaid interest

Question 22

What are the advantages of having a interest only loan?

Accepted Answer

The interest you're paying can sometimes be offset against 
rental income and other eligible property costs. Investors 
who opt for interest-only repayments on a fixed rate loan may 
also be able to claim a tax break for up to twelve months of 
prepaid interest

Question 23

Who can benefit from stated income programs?

Accepted Answer

Stated income programs are perfect for self-employed professionals like you—whether you’re a business owner, freelancer, or contractor. If traditional income documentation isn’t your thing, this could be the solution you’ve been looking for.

Question 24

Who are stated income programs intended for?

Accepted Answer

Any type of self-employed professional might be eligible for a stated income loan (bank statement loan).  This includes a wide range of people, including business owners, entrepreneurs, freelancers, gig workers, contractors, and many other types of self-employed professionals.

Question 25

What is seasoning?

Accepted Answer

Generally, lenders consider a loan fully seasoned when you've had 
it for at least one year. ... Many lenders will not refinance an 
immature loan, and those wishing to sell a property with an 
unseasoned mortgage face increased scrutiny from the buyer's mortgage 
lender.
 
While it depends on your lender, you should expect to have the money
in your bank account for a minimum of 60 to 90 days for it to 
qualify as sufficient funds to put towards your mortgage loan.

Question 26

What is seasoning?

Accepted Answer

Generally, lenders consider a loan fully seasoned when you've had 
it for at least one year. ... Many lenders will not refinance an 
immature loan, and those wishing to sell a property with an 
unseasoned mortgage face increased scrutiny from the buyer's mortgage 
lender.
 
While it depends on your lender, you should expect to have the money
in your bank account for a minimum of 60 to 90 days for it to 
qualify as sufficient funds to put towards your mortgage loan.

Question 27

Can I combine my investment properties into one loan?

Accepted Answer

Yes, 5-7 properties can be combined into one loan. The benefit is instead of having to pay on properties at different times. You able to have the convenience of one payment. Also, based on the restructuring of the loans it may give you more savings in the long run. Example:

Question 28

Can I combine my investment properties into one loan?

Accepted Answer

Yes, 5-7 properties can be combined into one loan. The benefit is instead of having to pay on properties at different times. You able to have the convenience of one payment. Also, based on the restructuring of the loans it may give you more savings in the long run. Example:

Question 29

What is the minimum loan amount you will do?

Accepted Answer

Min 300K.

Question 30

What is the minimum loan amount you will do?

Accepted Answer

Min 300K.

Question 31

How many states do you lend in?

Accepted Answer

38 states for multi family and vacation properties
For commerical every state except for SD, NM and NV.

Question 32

How many states do you lend in?

Accepted Answer

38 states for multi family and vacation properties
For commerical every state except for SD, NM and NV.

Question 33

How long does it usually take to close a loan?

Accepted Answer

Typically, we can close a loan in less than 45 days. We know time is money, so we aim to make the process as quick and smooth as possible.

Question 34

How long does the process take to close

Accepted Answer

On an average less than 45 days.

Question 35

Are you a direct lender?

Accepted Answer

No, Over the years, we have developed relationship with top tier lenders. This is advantage as you able to have more choices of loan types better rates and terms.

Question 36

Are you a direct lender?

Accepted Answer

No, Over the years, we have developed relationship with top tier lenders. This is advantage as you able to have more choices of loan types better rates and terms.

Question 37

What are your closing costs

Accepted Answer

Our closing costs depend on the type of loan that you need. On an average , lenders charge  about 2-6% of the loan amount. Speak to one of our commercial experts.

Question 38

What are your closing costs

Accepted Answer

Our closing costs depend on the type of loan that you need. On an average , lenders charge  about 2-6% of the loan amount. Speak to one of our commercial experts.

Question 39

What is the average cost for appraising a investment property

Accepted Answer

Usually on average appraisers charge min 500 to 800 or more depending on the size of units.

Question 40

What is the average cost for appraising a investment property

Accepted Answer

Usually on average appraisers charge min 500 to 800 or more depending on the size of units.

Question 41

How much profit should I make on investment property?

Accepted Answer

You need to charge high enough rent to cover your expenses and take home a profit.

Question 42

How much profit should I make on investment property?

Accepted Answer

You need to charge high enough rent to cover your expenses and take home a profit.

Need $2M–$25M in Business or Acquisition Financing?

Terms Definitions Are All Essential In Finance and Real estate

E Source Lending has provided you FAQ section to help you better understand what is involved with lending. We lend on investor properties over 30 states. We have provided real estate information for investors and more.

Frequently Asked Questions

What is investor financing?

What is investor financing?

What is commercial financing secured by?

What is commercial financing secured by?

What is a 1031 exchange?

What is a 1031 exchange?

What is an assignment of a lease?

What is an assignment of a lease?

What is an estoppel certificate?

What is an estoppel certificate?

What are non-recourse loans?

What are non-recourse loans?

What does title insurance do?

What does title insurance do?

What choices of borrowing through a entity?

What choices of borrowing through a entity?

How is mezzanine financing different from other commercial loans?

How is mezzanine financing different from other commercial loans?

What is DSCR? and how is it calculated?

What is DSCR? and how is it calculated?

What are the advantages of having a interest only loan?

What are the advantages of having a interest only loan?

Who can benefit from stated income programs?

Who are stated income programs intended for?

What is seasoning?

What is seasoning?

Can I combine my investment properties into one loan?

Can I combine my investment properties into one loan?

What is the minimum loan amount you will do?

What is the minimum loan amount you will do?

How many states do you lend in?

How many states do you lend in?

How long does it usually take to close a loan?

How long does the process take to close

Are you a direct lender?

Are you a direct lender?

What are your closing costs

What are your closing costs

What is the average cost for appraising a investment property

What is the average cost for appraising a investment property

How much profit should I make on investment property?

How much profit should I make on investment property?