Page 186 - Trump University Commercial Real Estate 101

TRUMP UNIVERSITY COMMERCIAL REAL ESTATE 101

Frequently a first mortgage lender will have a mezzanine program
in place to lend you the extra ten percent. Sometimes your broker will

find a lender who specializes in mezzanine debt and will provide that
extra 10 percent (or more or less) on top of your fi rst mortgage.
Naturally, mezzanine debt carries a higher interest rate than the

primary financing. You also must be sure that your primary lender

allows mezzanine or secondary financing. If it will not allow such a loan,
your alternative is to find a primary lender who will.

Bridge

These loans bridge the gap between needing to close now on a prop-
erty and eventually getting a permanent loan. There may be some-
thing about the property that does not conform to underwriting
standards, but will conform later.
For instance, you may have a great deal, but occupancy is cur-
rently below 85 percent. In order to get a permanent loan at the best
long - term interest rate, most lenders require occupancy to be above
85 percent. They call that stabilized occupancy .
Your bridge lender will recognize the quality of the deal and the pre-
dicament you ’ re in. This lender will be happy to finance the property —

for a higher interest rate and with your property as collateral. As soon as
you reach 85 percent occupancy, you swap out that loan for the lower -
cost, permanent one.
Small Business Administration

You can get insured loans from an SBA - approved lender if you agree
to be the majority occupant in the building. You can often get in with
a down payment as low as ten percent, and interest rates are usually
lower than with a conventional loan.

Private Money

One of my favorite sources is private citizens with money to lend.

Their money is just as green as what you find at banks, but without the
bureaucratic hoops to jump through.

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