Tactics and Case Studies for Illinois Commercial Investment Properties
As the fifth most populous state in the country, Illinois is home to plenty of opportunity for real estate investors. If you’re thinking about investing in a commercial property in Illinois, here are a few key points to keep in mind.
A Mixture of Urban and Suburban Locations
Between Chicago, which has more than 2.5 million residents, and other cities like Peoria, Rockford, and Joliet, Illinois features a wide range of urban and suburban areas where people live and work.
As such, there is also a great deal of diversity when it comes to the types of commercial properties found in Illinois. For instance, the residential areas outside of downtown Chicago present many opportunities for those interested in purchasing small multifamily apartment buildings.
In downtown Chicago, one would be more likely to find mixed-use and office locations.
The team at Commercial Direct, a division of Silver Hill Funding, LLC, has provided investors with the funding needed to acquire these and other commercial property types in Illinois.
As we work with these investors, we learn more about the various challenges they face while taking steps to make their financial dreams become a reality. If you’re interested in growing your investment portfolio, perhaps you’re facing these same challenges.
Here are a few success stories we’ve helped create in Illinois. Pay close attention to the issues each borrower faced before they sought our help. Perhaps you will discover a tactic that will help you quickly secure the funding you need.
Success Story in Berkeley, Illinois
Investors commonly refinance their commercial properties so that they can access a portion of the equity they’ve built up over time. They can then use that money to either improve their properties or make another investment.
While the need is common, many investors find it difficult to actually execute their cash-out refinance strategy. This is due in large part to the typical bank’s lending guidelines.
Some banks don’t do cash-outs as a general rule. Others restrict the amount of cash borrowers are able to access in the transaction.
These limitations are one of the main reasons why investors seek non-bank financing for their cash-out requests.
Our team at Commercial Direct recently worked with an investor who was experience a different set of cash-out concerns.
This investor needed to refinance in a short amount of time. Unfortunately, many traditional lenders can take several months to complete a commercial loan transaction.
The other problem for this investor had to do with tax return documentation. The prospective borrower was hoping to get approved for a loan without having to provide the documentation most lenders require.
Thankfully, our team was able to help this investor with both of their issues.
By reviewing the property’s appraisal and cash flow, we were able to approve the borrower without ever seeing their tax returns. The team then worked diligently to complete the transaction in less than 30 days!
Our loan programs are designed to give borrowers more flexibility on cash-out refinances. The investor in Berkeley benefited from this flexibility – perhaps you could as well!
Success Story in Rockford, Illinois
One loan factor that often creates challenges for investors is the loan-to-value (LTV) ratio. An LTV ratio is calculated by dividing the mortgage balance by the value of the commercial property, and multiplying that number by 100%.
Lenders establish maximum LTVs based on their risk profile. Borrowers can then use that figure to see how much they are able to borrow based on the value of their property.
The next investor under review wanted to buy a multifamily property in Rockford but had difficulty working with local banks. In particular, they were not able to secure a high enough LTV for the loan to make sense.
One of the benefits of we offer at Commercial Direct is a maximum LTV of 80%. This allows investors to borrower a greater amount of money relative to the value of their commercial property.
In this case, the investor was able to borrow $176,000 to help purchase the multifamily property they had in mind.
Success Story in Chicago, Illinois
Some investors have trouble securing any type of loan for their commercial property purchase or refinance. Others are able to obtain financing – just not the best solution for their needs.
Consider this investor in need of a rate/term refinance. Rather than settle for a short-term, variable rate loan, they wanted the security of a more permanent financing solution.
The catch? They also wanted a solution that would not require tax return documentation. Since traditional banks typically won’t offer reduced documentation loans, borrowers often feel like they have to settle for high-priced loans from private or hard money lenders.
Thankfully, this investor decided to keep looking before they settled for a loan that didn’t meet their needs.
They took their request to the team at Commercial Direct and found that they did qualify for a reduced documentation loan program. Our team helped secure a permanent financing solution that fell in line with their long-term financial goals. The best part is that the borrower never had to provide tax returns to get approved.
As this case study shows, investors in Illinois should not settle for a financing solution that fails to solve their unique problems. A better solution may exist – and that could make all the difference as you work to build your investment portfolio.
Connect with a mortgage expert today!