Find a Reliable Bail Bond Company

The bail bonds industry is a lot like any other industry currently available to the public in the sense that not all businesses or companies operate in an honest manner. How do you know if the services you are offered are feasibly legitimate or if you may be getting swindled by someone offering to help you?

Although the bail bond industry is heavily regulated there are a select few companies out there that do not conduct business in an ethical fashion. When selecting a bail bonds company it is also beneficial to look into the background of the company as well as meeting face to face with their bonds agent before agreeing to any arrangements. A number of commercial bail companies have come under scrutiny in the past years for malpractice. Most of these cases involved misconduct with the fugitive recovery agents or bounty hunters attempting to detain a bail jumper. In some cases criminal charges have been filed and pursued against bounty hunters for illegal detainment procedures.

The first thing to remember when selecting a bail bonds company is that if it sounds "too good to be true" it probably is. If bondsman is offering you "no money down" or "zero down" loan you should strongly consider going somewhere else. The fee amount required for the bond is set by the state's Department of Insurance in which the agency is operating in and should be consistent across all commercial bail companies within the state. Once this payment is received the agent will have to pay their financing company a large portion of the state designated fee (10% in California). This is one way a customer can spot an "unethical" bonds agent. How can this business stand to profit if they are providing a loan with no money down when their surety company needs to be paid?

Typically a agency will require the co-signer to put up a "mortgage" or security interest in physical property to secure the loan amount in the event that the bailee skips the court date assigned to them. When selecting a "no money down" bail agent the practice is common that these agencies will use the collateral mortgage over the co-signers' head in order to secure the ten percent bond premiums. These types of agencies tend to use collection methods and etiquette that is not practiced by the majority of bail bonds agencies. Although this is not always the case, typically a company offering a "zero down" bond have a motivation behind this sales pitch which tends to benefit the agency over the customer.

Although the bail bond industry is one which is driven by urgency in the customer's needs, a customer seeking a reliable bailer should take some time to ensure the choice they have selected is serving the best interests of the client. All commercial bail companies are required to charge the same amounts based off the state laws so it is truly the quality of service that distinguishes a legitimate bond company.

Multifamily Financing Tips

Apartment buildings are hot today. As a matter of fact those who own them benefit from this real estate bear market. If you wonder how's that, just think of the millions of homeowners whose properties have been foreclosed or were forced to short sale their homes. These folks are now renting, they can't qualify to buy another house, at least not for a few years. In the meantime, banks are in no hurry to dispose of the recently foreclosed homes as the government has helped them eliminate their losses (through bailouts). While these homes are sitting vacant for months, if not years, the apartments are getting full and more demand is thus created.

Before rushing in to look for apartment buildings be sure to learn what it takes to qualify for a mortgage nowadays. Skin in the game is a must, there are no 100% loan programs available today no matter what the internet says. Financial strength is also required, the lender must feel comfortable that you'll have sufficient reserves/net worth to cover for the mortgage payments should high vacancy occur or major repairs must be made. And last but not least, it's the background in owning and managing apartment buildings. Owning and managing residential properties is not sufficient experience, yes both are real estate but completely different breeds. For more details on how to position yourself first in line for financing read my past article titled "Reality vs Fantasy in Commercial Financing".

As far as apartment building loan programs there are a few that most seasoned owners/investors are currently taking advantage of. For example, there is a Multifamily Small Loan Program that streamlines the entire loan process for multifamily acquisition and refinancing for loans between $1 million to $3 million ($5 million in major MSAs). Why is this loan so cool? First of all because once you have it you won't need to refinance after a few years. You see, most bank loans have terms of three, five, seven or ten years (with balloon payments and longer amortizations), after which owners simply are forced to refinance. Not with this loan! You get a low rate and save money - and equity - by not having to refinance in the future.

Does it appear too good to be true? No, not really, because as mentioned earlier a substantial down payment (if purchase) or equity (if refinancing) is required. Expect an average of 70 to 80% LTV (Loan to Value) with no exceptions above this limit. Expect to provide evidence of previous multifamily ownership and a solid PFS (Personal Financial Statement). If you're half way there here is an idea. Find a trustworthy partner with whom to join forces, and remember the word "trustworthy".

When it comes to rates while they are low they won't be as low as residential rates. However, the lower the LTV the better the rate. For example a loan with a forty percent equity and a higher debt service ratio will benefit in form of lower rates due to its lower risk. (For a rate quote please contact me). The other difference is that residential loans today tend to come with no prepayment penalties while many commercial loans do. So what should a borrower expect? Up to five years with a penalty determined when the loan is underwritten. Yet, this should not be considered a big detriment unless you plan on selling the property during the next few years. This loan program is best used for those planning on holding on to the property in longer term (more than five years) otherwise, there are better programs for short-term investors.

Properties best suited for this program are those in good to great condition and with high occupancy rates of 90% or above. I see plenty of requests out there for distressed multifamily properties and yes, there are great opportunities in buying and stabilizing such properties. And hard money or private money may be the temporary solution. After the property is fully stabilized it may then qualify for the Multifamily Small Loan Program.

Please try to forget the guidelines from the past decade. Forget the no down payment or little down payment programs. Forget the stated income, no income and no documentation programs. They are fantasy, unrealistic, time-wasting thoughts. They are gone and not coming back for a long time. Seasoned investors know this and that's why they work rather efficiently when they are in need of financing. Their goal is a successful closing and they know what it takes to get there...a viable project and a viable borrower with more than enough proof to provide to the lender.

One last piece of advice. If you're looking to finance apartment buildings in Croatia or Australia or some other far-off land you won't get funded by American lenders. No matter how appealing your project is it won't happen. Why? The problem is one of taxation. If a foreign bank were to make a big loan here in the states, the US government would levy a foreign lender tax of 30% of its interest income. Conversely, an American lender doing a loan in another country would subject itself to a similar tax imposed by the foreign country (check with your tax adviser for more details). There is one exception, however, and that is if an Australian bank starts a subsidiary bank here in the US and the subsidiary makes loans in the US. Generally speaking, if you are seeking a loan in Croatia, save time and energy, and go local.

The Lending industry is quite chaotic and unpredictable, especially in today's economic environment. Banks will like your deal today and hate it tomorrow. Most commercial loans are originated today as Portfolio Loans. This means the lender keeps the loan in their portfolio for the entire term. So, if they find today they have too many retail centers in their portfolio, they will decide - over night and without a warning - to shift to apartment buildings.

 

Fast Small Business Loans Offer Liquidity for Struggling Companies

Whether you're in high-end fashion or IT support, having money on hand when you need it is an essential part of owning and succeeding with a small business. Rather than having to wait a month or even two to get the money from outstanding accounts receivable transactions, selling those invoices for fast small business loans could make or break your next business venture.

Once considered highly risky, factoring loans have become more secure and therefore more popular over the past few decades. Some businesses even use this type of loan to pay for start-up costs. When a bank won't loan you the money you need to expand your business, factoring companies offer the best and most effective solution.

The trick to getting a good rate for your factoring loan is to find a company that specializes in a certain area. This specialization could be the size of businesses they work with or the field within which they work.

For instance, some factoring companies only buy invoices from businesses that make less than $10,000 per month. This allows a factoring company to focus their efforts on just one type of business, giving you a better lending agreement. Because factoring does take a larger percentage of your profits than, say, a bank loan does, it's important to find a factoring company that can offer you a competitive price offer.

Few small businesses have an accounts receivable department capable of collecting the needed monies quickly. Whereas it would take your own department weeks and possibly months to complete outstanding transactions, you can get the money up front by selling your invoices to a factoring company.

In cases where your accounts receivable are not outstanding but you need money now rather than by the due date of the original transaction, a factoring company can give you cash in hand. Some factoring companies claim that they can even get you the money you need within two days of contacting them! For small business, this immediate cash liquidity can be the difference between success and failure.

Another way that a factoring firm can offer a small business financial stability is by handling international accounts receivable. Like a regular collections department, few small businesses have the liquidity to train and hire staff capable of working with overseas transactions. Because a factoring company works exclusively in their particular niche field, the employees and staff there already have the experience necessary to make settling international accounts simple.

For a variety of solid business reasons, using a factoring company for fast small business loans is a highly beneficial practice. Whether your business is in an unexpected financial hole or you have the opportunity but not the funds to expand, selling your invoices for cash up front can make your business dreams possible.

 

Financing Apartment Buildings

First it was the boom, then it came the bust, and now it's the bear market. Despite the massive liquidity injected by the Fed, overall the U.S. real estate has yet to experience more bearish seasons. But there is one branch of the real estate sector that appears to be exempt from the deflationary pressures of our economy. Apartment buildings are gaining popularity due to exceptional levels of high occupancy. Therefore many investors have made the decision to park their money in this kind of investment.

If you're new to multifamily investing you will most likely want to know as much as possible about the world of financing. While each transaction is unique and underwritten on a its own merits it's worth knowing that there are a few basic requirements commercial lenders use. If you're a seasoned investor you could still benefit from keeping up to date on such criteria especially if you're looking at acquiring a new property or refinancing one that you already own.

The Collateral

The underlying asset is among the first on the lender's list to review. This is the security the lender uses for taking the risk of lending you money. Therefore, the building you own or looking to buy represents the source of repayment for the commercial loan.

Believe it or not with very few exceptions lenders do not like distressed properties and REOs. These kind come with a myriad of problems such as high vacancies, management and tenants issues, title, lack of maintenance and or upgrades, local economy, and in many cases inability to service debt. As a result, hard money may be one of the very limited financing options.

For conventional transactions great emphasis is placed on the property and its condition. In case of foreclosure, the lender wants to be sure it has a marketable property. This is the reason for which the lender will typically not allow the borrower to choose the appraiser. The commercial appraisal is detailed and it utilizes three variables to derive the property value: income approach, replacement cost, and sales comparison method. The income approach carries the utmost important factor in determining the collateral approval. A building could be fancy, well-maintained, and in a great location, but if the income is not there to support the value the collateral does not pass the test.

The Cap Rate

Among other factors worth mentioning are the age and condition of the property, the vacancy rate, and the area market capitalization rate. The "Cap Rate" is a ratio used to determine a property's value based on its generated income. It's computed by taking the rental net operating income (NOI) and dividing it by the property's fair market value (FMV) or sales price. The lender will then compare the property's Cap Rate with the general area's rate for similar properties. The red flag arises when the ratio is lower than the norm, therefore a higher cap rate is certainly desirable. Conversely, a very high ratio raises another red flag. Rest assured that an underwriter would question why a property has such a high ratio. Are there any underlying issues that could potentially affect the property in the future? Remember that an underwriter has a detective's eye, he/she is looking for what could go wrong before looking at the positives.

If you're looking at buying an apartment building something tells me you'd want to first look at the Cap Rate. Often a high ratio means a better deal for you. If the area's Cap Rate is approximately 8% and the property you're looking to buy has a 5% ratio you must justify why you're buying it. What is it that compels you to pay the higher price? Remember also that the appraisal will put a heavy emphasis on the lower ratio.

Now, let's do some quick calculations as an example. We'll assume that you're trying to determine between two previewed properties. The first property has a NOI of $35,000 and an asking price of $600,000. The second property has a NOI of $15,000 and an asking price of $150,000. Which one would the Cap Rate suggest is a better investment? Obviously, the second property since the Cap Rate is 10% ($15,000 / $150,000) versus 5.8% ($35,000 / $600,000).

On the other hand, if you're the proud owner of an apartment complex and you want to figure out its estimated value, you can do this by first learning what the area Cap Rate is for your location. Let's say the area Cap Rate is 8% and your property's NOI is $42,000. You can then easily determine your value at $525,000 ($42,000 /.008).

The Cash Flow

Cash flow plays a significant role when underwriting a multifamily loan. Within the industry the cash-flow analysis is known as the Debt Coverage Ratio ( DCR). Such ratio measures the property's net income ability to cover the annual debt service. The lender will analyze the property's rent-roll - and the financials - and determine the annual income and expenses. After that it determines if the annual cash flow can service the new debt.

The DCR is calculated by dividing the property's annual NOI by the property's projected annual debt service (based on the new loan). Annual debt service includes the principal and interest payment only. Taxes, insurance, and the rest of the expenses have already been deducted when determining the NOI. Lenders are looking to see a minimum of 1.25 ratio, meaning that for every $1 of debt service the property must generate a minimum of $1.25 in net operating income. So, let's say a building's NOI is $35,000 while the annual P&I is $27,000 (or $2,250 monthly). The resulting DCR is 1.29, a ratio within the guidelines. However, a mere increase of a half percent on the rate could bring down the ratio below 1.25 thus putting the loan in jeopardy of being denied.

Borrower Strength

Most loans funding today are recourse loans. It means that lenders are not satisfied with the collateral only and you, as the borrower must provide a personal guarantee; which implies that your credit and financial strength will be scrutinized. Keep in mind that even if title to the property is vested in the name of a corporation, LLC, or some other form, lenders still require personal guarantees from their owners or members.

Underwriting trend is rather conservative so lenders expect you to prove a great credit history, sufficient apartment building experience, and a decent net worth with a generous amount of liquid funds. When it comes to the capital invested or equity owned most programs want to see the borrower's equity at twenty percent or more. Your net worth should look impressive. Fannie Mae, for instance, wants to see the borrower's net worth be at least the loan amount requested.

Finally, the apartment building is the primary source of collateral and loan repayment, therefore it carries more weight when compared with the borrower during the loan underwriting process. Still, the strength or weakness of the borrower will ultimately impact the approval or denial of the loan.

A loan package meeting these basic requirements creates the foundation for a successful loan approval. However, keep in mind it doesn't necessarily mean that a transaction that meets the criteria is automatically approved for a loan. Still, not meeting any one of the above requirements will most likely end in denial of your commercial loan request.

The Lending industry is quite chaotic and unpredictable, especially in today's economic environment. Banks will like your deal today and hate it tomorrow. Most commercial loans are originated today as Portfolio Loans. This means the lender keeps the loan in their portfolio for the entire term. So, if they find today they have too many retail centers in their portfolio, they will decide - over night and without a warning - to shift to apartment buildings.