Commercial Loans Blog

  by  mjb84 

Discounted note is a common theme happening today is the selling of the notes from banks that are in trouble or need to get debt off their books. 

Note buyers will buy these notes at 40 cents on the dollar – often with NO knowledge by the business or investor who owns the property.  In most cases, the notes are CURRENT.  We are not talking troubled properties necessarily.  The note buyers that offer a discount to the owner of the property to refinance it out.  If the client can refinance, everyone wins. 

The note buyer buys the paper at 40 cents on the dollar and, sells it to the owner at 80 cents.  The owner gets 20% knocked off his debt which usually lowers his payment.  The problem comes in when the client can not refinance – but that is another story for another time.  On this deal, it was a retail plaza that appraised at $3.6 million and, they owed $2.8 million and, they could get the note paid off for just $1.9 million.  Even at that LTV, ($1.9 million vs. a $3.6 million value – 53% LTV), the clients had been denied when they came to us. 

The property cash flowed but, the 3 owners did not personally debt cover without some creative add-backs to their income.  We found the add-backs and, got the deal done.  In this case, it was our knowledge of tax returns and, putting them with the right lender who would take the time to dig through the myriad of S-Corps and, LLC’s that these investors had.  And $900,000 worth of debt just disappeared – isn’t America great!

Call Karen Schimpf today at 866-400-8630 or www.http://bizloansconnection.com for help with all your commercial refinance needs!

by Brian Peart