Gas Station Financing in California and the SBA

One of our associates sent me  the following on SBA loans, and I used it when giving a lecture to agents on gas station financing.  SBA is pretty well known in the industry for financing gas stations, but this is well put and understandable. Part of it is from the government office that deals with SBA…but this is “translated” for all to understand.

Throughout the years, SBA loans have become the only choice of financing for gas station dealers and operators. Since the overall economy has worsened within the last number of years, the gas station retail businesses have become even more difficult. With the constant change in fuel prices and our failing economy, foreclosures on service stations and convenience stores are already at record highs.

Back in 2008 or so, the SBA had made financing for gas stations virtually impossible. The SBA had required all gas stations older than 5 years to get a Phase II environmental and all transactions required a seller indemnification, whether or not there had been an environmental concern or otherwise. To make it more difficult, the SBA also demanded a different business valuation from an impartial and independent evaluation company as well as the appraisal.

What do you think SBA was intending to do with all these requirements? Yes, they didn’t want to do gas station financing and I think they were just not sure how to say it.

There should not be any surprise that the SBA adhered to this position. With some non-bank lenders committing fraud cases in past few years, record default and foreclosures, it’s no surprise they made them difficult at the least to get financing. The truth is, the gas station asset class wasn’t considerably worse than other types of properties.

So with no practical secondary market, many gas station lenders have either discontinued doing SBA loans or any other gas station loans or significantly reduce the volume of SBA gas station financing they’d do. Just the larger banks could lend and portfolio their loans which they choose not to do anyways.

Fortunately with the Government stimulus during 2009, a great deal, but not all, of these conditions have changed. First, the SBA will no longer require indemnification agreements on all transactions except those where environmental conditions exist. And secondly, the SBA won’t demand a Phase II environmental except in situations where environmental conditions exist. It is recommended that buyers check the State’s DEP or DEQ to ensure that there isn’t any environmental issues such as spillage or migration reported so the possibility of decline will be reduced considerably. Of course SBA still has issues with some Oil companies deed restriction and agreements with their dealers so what we recommend and what we usually do for our clients is provide the deeds and dealer agreement to the SBA to check first.

Furthermore, the SBA is currently allowing capital providers to base their loans off of LIBOR as well as Prime, giving financial institutions more options to make loans more profitable.  Of course with the current capital market, almost all gas station lenders would finance gas station properties through SBA 7A loan program which is adjustable rate based on prime.  This way, SBA guarantees 75% of the loan which means less risk for lenders and more profit as well.  There are almost no conventional lender that would do SBA 504 loan for gas station with exceptions of few non-bank lenders.

With the streamlining of SBA operations, SBA financing is still a great source of financing gas stations, car washes and other special purpose business properties. As usual, you should have a good financial package together in order to increase your chances.

Another thing to point out is that the waving of the SBA guarantee fee is over and now borrowers would pay the guarantee fee of 2-3% of the loan amount.  This is a substantial fee to pay for obtaining financing however, as many know, SBA loans are almost the only source of conventional financing with relatively high leverage amount.

Regardless of what type of financing you choose, make sure that when are getting gas station loans, you work with people that specialize in this specific market and know both the lending and gas station business. And, when I get an inquiry on gas stations, I will send them to my associate, as he does a very good job. So, when thinking of buying or selling.,…please contact me at   http://www.gasstationsamerica.com   or call   530-941-0444.

Shell Station for sale in Redding, CA

• Shell Gas Station for Sale in Redding, CA..offered at $2,500,000

  Why buy a Shell Gas Station? Great brand with one of the largest credit card followings in the nation; Consistently quality fuel for excellent repeat business; Opportunity for fleet sales versus unbranded stations and gas; Excellent reputation and branding benefits the local owner; Superb management assistance from company; profitable with good mark up and margins.

  Highlights: Great Location-66,000 gallons/month; Very High Inside Sales-$74,000/month average; Subway Sandwich Shop on Premises; Huge pump access area for RV’s and Boats; Excellent condition both inside and out; Priced to sell based on recent bank appraisal.
  Description: This is one of the most impressive gas stations-convenience stores, with Subway in the building, in the North State. Great location on I5 just north of downtown Redding, and opposite planned Regional Shopping Center. The station has been modernized and is in excellent shape. e-mail for complete listing package.

  Best location on Interstate 5 at the Oasis Road exit just 3 miles north of downtown Redding, CA., which is 165 miles north of Sacramento and is the last major city before Lake Shasta and on over the Cascades into Oregon. Extremely busy location with a great deal of added Lake traffic, including boats, motor homes, and interstate travelers. Subway is a huge draw for business. Additional detail, photos, narrative, and financial info at   http://www.oasisshell.com
  
  http://www.oasisshell.com     Offered at $2,500,000.

Reverse Mortgage..what is it?

A reverse mortgage is a loan for senior homeowners that uses a portion of the home’s equity as collateral. The loan generally does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away. At that time, the estate has approximately 6 months to repay the balance of the reverse mortgage or sell the home to pay off the balance. All remaining equity is inherited by the estate. The estate is not personally liable if the home sells for less than the balance of the reverse mortgage. Eligibility for a reverse mortgage To be eligible for a HECM reverse mortgage, the Federal Housing Administration (FHA) requires that all homeowners be at least age 62. The home must be owned free and clear or all existing liens but be able to be satisfied with the reverse mortgage. If there is a mortgage balance, it can be paid off completely with the proceeds of the reverse mortgage loan at the closing. Generally there are no income or credit score requirements for a reverse mortgage. Outliving the reverse mortgage A reverse mortgage can not be outlived. As long as at least one homeowner lives in the home as their primary residence and maintains the home in accordance with FHA requirements (keeping taxes and insurance current) the loan does will not become due. Estate inheritance In the event of death or in the event that the home ceases to be the primary residence for more than 12 months, the homeowner’s estate can choose to repay the reverse mortgage or put the home up for sale. If the equity in the home is higher than the balance of the loan, the remaining equity belongs to the estate. If the sale of the home is not enough to pay off the reverse mortgage, the lender must take a loss and request reimbursement from the FHA.No other assets are affected by a reverse mortgage. For example, investments, second homes, cars, and other valuable possessions cannot be taken from the estate to pay off the reverse mortgage. Loan limits The amount that is available generally depends on four factors: age (older is better), current interest rate, appraised value of the home and government imposed lending limits. If you have further questions….. ronlargent@shasta.com and thanks,

Hard Money – Private Money…as low as I have seen!

Earlier today, one of my wholesalers sent me this memo on Hard Money-Private Money loans…these are the lowest that many of us have ever seen for hard money….so if you are in need of someone that needs a loan like this…or know of someone, please get in contact with me…as this “special” has a limited time frame. Here it is:

……… is running a 2-Week Special with rates in the 7-9% range on Hard-Money. The special applies to SFR’s, Townhomes, Condos, and 2-4 Units, as well as some 5+ Units . This special makes sense for a huge number of borrowers so get your submissions in ASAP.

Our current wholesale submission requirements are as follows. We will respond with a written approval within 24 hours but usually before the end of the business day:
• Submission Form (see attached)
• 1003
• Credit Report
• Purchase Contract (if applicable)
• Current Rent Roll (Multi-Family 5+ Units)

This is about as easy as it gets….and now we are getting thes

Self Storage Financing

I am frequently called to ask what is considered in order to get financing for Self Storage-Mini Storage properties. Like all commercial property, a number of factors are considered and there is no one aspect of the application that is more critical than another…all are important.

Evaluation by the lender will include the location of the property. Is it in an area that will continue to be a good area for customers to get access to; to be a safe area; and one that is in an area that is not affected by community problems. What is the history of the property? How old, what has been the traditional rental-lease pattern, and does it have a pattern of stability of tenants? What is the condition of the property? Does it show good and current maintenance…or a lot of deferred maintenance? Are the streets paved and in good condition? Are the buildings well maintained, or showing considerable management neglect? Is the security system old, or new, and if new, does it have security video, controlled gate access, and internal property safeguards, such as closed circuit cameras?

Then they look at the buyer….and all of the factors considered in a typical commercial loan application are important. Credit history, income history, experience with managing commercial income property, and overall business background are considered. What is the projected future of the business based on this borrower owning the property? All of this is included.

So, it starts with finding that right property, and when you find it, start the process of determining if you can qualifty…and give me a call.

Commercial Equipment Leasing Now Available

Although our primary emphasis is on commercial real estate financing, what we have found is that many of our clients, once they purchase their investment or income property, often are in need of commercial operating equipment. Through our affiliates in our national lending programs, our commercial equipment lease programs cover a wide variety of industries. Whether you are looking for aircraft leasing, transportation equipment leasing, medical equipment leasing, or any other equipment and accessories needed for your business, rest assured that with our knowledgeable and professional team by your side you are certain to obtain the financing you need without all the hassle.

For more information regarding equipment leasing in your industry, we have a variety of financing options that include start-up businesses.  Getting approved is quick and easy regardless of your personal or business credit situation, we can help!

• Aircraft and Aircraft Equipment
• Fitness Center Equipment
• Health Center Equipment
• Automotive Equipment
• Agricultural Equipment
• Computers & Networking Equipment
• Construction Equipment
• Dry Cleaning Equipment
• Heavy Equipment
• Industrial Equipment
• Medical Equipment
• Metalworking Equipment
• Office Equipment
• Oil and Gas Equipment
• Printing Equipment
• Restaurant Equipment
• Telecommunications Equipment

We also offer software leasing and have special programs for start-up business leasing.

What is a Lease? A lease is a contractual arrangement-agreement in which a leasing company, known as the Lessor, gives a customer, known as a Lessee, the right to use equipment for a specified length or time, referred to as the lease term, and a pre-agreed upon payment plan, which is usually monthly. Depending on the equipment, the nature of the lease, and the needs of the customer, the customer may have the opportunity to purchase the equipment, return the equipment, or continue to lease the equipment by executing a new lease or a lease extension.

The overriding positives of leasing include the general application to almost every business that has a need for some form or kind of equipment to conduct its daily business operations, which includes every part of the business from capital equipment to computer hardware and software, and can include both installation and follow on management assistance and consultation. Irregardless of the legal structure of the lessee, including churches and other non-profits, leases make a lot of sense if only for the cash savings realized.

Hard Money-Private Money Loans Now Available

I have just expanded my real estate financing business to include Hard Money and Private Money Loans on both residential and commercial real estate. I am associated with one of the best companies in the nation; a sterling reputation; and one that produces loans…not just a “talker”.  Many have asked me, “what is a hard money loan”…so here is my answer. Please call or e-mail me if you are in need of one of these loans:

A hard money loan is a specific type of real estate based loan through which a borrower receives funds secured by the value of a parcel of real estate. Hard money loans are typically issued by private investors or companies. Interest rates are typically higher than conventional commercial or residential property loans because of the shorter loan durations associated with hard money loans. Most hard money loans are used for projects lasting from a few months to a few years. Hard money is similar to a bridge loan, which usually has similar criteria for lending as well as cost to the borrowers. The primary difference is that a bridge loan often refers to a commercial property or investment property that may be in transition and does not yet qualify for traditional financing, whereas hard money often refers to not only an asset-based loan with a high interest rate, but possibly a distressed financial situation, such as arrears on the existing mortgage, or where bankruptcy and foreclosure proceedings are occurring….which are very present in the current economy.

The qualifying criteria for a hard money loan varies widely by lender and loan purpose. Credit scores, income and other conventional lending criteria may be analyzed. However, most hard money lenders primarily qualify a loan amount based on the value of the real estate being collateralized. This is a key factor in an economy such as we are in now. Typically, the biggest loan one can expect would be between 65% and 70% of the property value. That is, if the property is worth $100,000, the lender would advance $65,000 – $70,000 against it. This low LTV (loan to value) provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property.

This kind of says it all…so let me know if I can be of service…for both residential and commercial real estate loans.

In 2012….is refinancing an option?

As we approach a new year, I get questions on where I see real estate going in the next year. Who knows? The guru’s were wrong 5 years ago when they said, and I was probably among some of these….downturn would be over in a couple of years, and here we are 6 later and still seeing some of the lowest prices of real estate in 25 years. But, one thing is also very evident, namely the unbelievable low rates to borrow money. The next question is “should we refinance our property?”.  This is a very individual option, but if one is an owner-investor in commercial real estate, it might be worth the time to check this out. During the “boom time” some 6-10 years ago, a lot of commercial development was taking place, and money was plentiful but the interest rates were consistently higher than the residential rates. Because of this, the timing might be right for an owner to consider re-financing now, for the commercial rates are almost where the residential rates are, which is a first time occurrence. And, it might be a “slam dunk” process for many.

With a new loan, the lender has to take an in-depth look at all aspects of the transaction, from the value of the property to the credit-worthiness of the buyer. All aspects of the transaction has to “make sense”. With a re-finance, there is a track record of performance for the property. And, there is a history of maintenance and improvements, and all of this is considered by the appraiser, and the lender.  It is easier for the lender to consider the positives and negatives of a property when a pattern of success in the management of the property has occurred.

If re-financing is something that you have been thinking about, let’s talk.  A number of factors has to be considered, from the cost of the new fiance to the savings over a period of time. You may want to involved your CPA for advice. But, contact me and we can start the conversation. And,   www.largentfinancial.com   has info on rates and the various programs that might fit for your particular property.

About Commercial Real Estate Funding ….and Ron

If you are seeking funding for a large commercial project, you have come to the right place.  Ron Largent is a financing consultant with Ocean Pacific Capital. He has the requisite experience and knowledge in real estate and finance to assure your success.

First licensed in 1971, Ron has built on decades of real world experience as an agent or broker in four states. He knows and understands all aspects of residential, commercial, and investment-income properties in the North State.  He has achieved significant sales results in residential sales, Mobile Home Parks and apartment complex sales, along with self mini-storage complex and convenience store sales.

He partnered with his son, Curt, and other associates in the Largent Team, one of the largest real estate teams in the North State, which is now part of Sheldon Largent Realty.  During 2011, Ron gave back to his community, serving as President and Executive Officer of the United Way of Northern California on an interim basis, managing the United Way in the nine northern counties of California.

Ocean Pacific Capital

Ocean Pacific Capital is 30 year old real estate finance corporation specializing in all types of residential and commercial mortgage loans. With a core focus on apartment loans, ranging from loan amounts of $500,000 to $800 million plus, we can create a custom financing solution for you.

We have a variety of the best apartment loan products, allowing us to offer the most competitive rates to our clients, whether they need an apartment loan for construction or refinance..

Our access to over 130 different lenders allows us to offer flexible apartment financing with fixed, low rates amortized over 30 years with higher loan-to-values. Acquiring an apartment loan doesn’t have to be a slow, inefficient process. We have assisted countless real estate developers and investors through this process to quickly and efficiently close their loan.

With over 31 years of experience, we have the knowledge and experience in selecting and fine-tuning the best apartment loans to suit your needs. We will work hard to help you through the application process and assist in acquiring the necessary documents to secure the best apartment loan