Category Archives: Finance

Soft Costs in Construction and Their Importance in Completing Projects

soft cost

 

Soft costs in construction are those costs in the early stages of development of construction projects that are normally not easily noticeable. However, these costs are not negligible as they comprise a significant part of the construction cost. The other important thing to note is that without soft costs, no construction project would be possible. They are an integral part of the total cost of a construction project which includes the hard cost and land cost in addition to the soft cost. Soft costs make up around one-third of the total cost of a construction project. Here’s a look at the different soft costs that get added to a construction project.

 

Cost of land

 

This includes the cost of real estate research, survey of plots, assessment of lots, as well as transaction costs for easement and ROWs. It also includes cost of land acquisition legal processes, appraisal, assessment and improvement of land among others in addition to the cost of land for temporary staging areas.

 

Cost of credit

 

The cost of interest on loan taken from banks including bank transaction costs as well as construction loan commitment fee, mortgage broker fee and permanent commitment fee all come under soft costs. Commercial bridge loans from Park West Capital are available at competitive rates that allow construction companies to control the cost of credit.

 

Construction equipment costs

 

Construction equipment is usually hired or leased in most projects and the cost of rentals in this case is a soft cost. Items like construction office equipment, office trailers, cellphone, radio communication systems, staging area equipment are also included in soft costs.

 

Cost of architecture and design

 

These costs normally cover feasibility studies, master planning and design costs among others are a vital part of soft costs. These costs are lesser when the projects are large in size.

 

Cost incurred by payment of local and state taxes

 

In any construction project, taxes become applicable for various transactions e.g. material and labor costs as well as fees paid to local and state agencies.

 

Cost of fees paid for inspections

 

Without permissions and authorizations from different government agencies, no construction project can even start. The fees charged by these different government agencies are substantial when added up and they are another major soft cost.

 

There are many other miscellaneous costs that are incurred in construction projects that also get added to the soft cost.

 

This update has been brought to you by Park West Capital specializing in the debt and equity markets for land acquisitions, horizontal construction, vertical construction, and permanent financing in the commercial real estate sector. Please feel free to contact us to further discuss your development financing needs at info@parkwestcapital.com and/or you may visit us for more information at parkwestcapital.com. Our services are provided globally for projects exceeding $5MM+.

EB-5 Financing is a Viable Option but Commercial Bridge Loans from Established Mortgage Lenders are Better

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About three decades ago in 1990, the United States Congress launched the EB-5 Program which allows foreigners to invest their capital in the US and help in stimulating the economy of the country by creating jobs and wealth. A couple of years later in 1992, Congress consolidated the initiative by creating the Immigrant Investor Program (IIP), which is also known as the Regional Center Program (RCP). Under this program, the government issues EB-5 visas to investors who commit their money in commercial enterprises based on proposals for promoting economic growth. Such commercial enterprises should be associated with regional centers approved by United States Citizenship and Immigration Services (USCIS).

 

The EB-5 Program requires the foreign investor to commit a minimum of $500,000 in a commercial enterprise associated with regional centers approved by USCIS and this investment should create at least 10 jobs. The benefit of investing via a USCIS approved regional center is that it enables computation of indirect and induced jobs toward the job creation requirement mandated by the EB-5 Program. Today, EB-5 financing has grown as a viable funding option along with the well-known options mortgage lenders offered by Park West Capital.

 

Developers across several industries in the US have made very good use of EB financing which has strict compliance norms especially with regard to the number of jobs that a particular investment creates. That’s not the case with other more conventional sources of credit like commercial bridge loans from Park West Capital. It is true that there is a huge rush of migrants from different parts of the world to put their investment capital in projects approved USCIS but it normally takes up to nine months for a deal to close. Commercial bridge loans from reputable Park West Capital are way ahead in terms of speed and efficiency in closing deals.

Is The Student Housing Sector Impacting The Commercial Mortgage Lenders Bottom Line?

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Needs for amenity packages get real including the best that technology has to offer

 

Over the last five years the student housing sector has witnessed an overflow of amenities in properties and this trend has continued to this day. One is likely to see amenities like rock-climbing walls, lazy river pools and spas among others. There’s actually no real demand for such amenities although many developers seem to believe that students find these fancy things, cool. That’s not the case though. One can expect good sense to prevail and developers will realize before long that such amenities only end up escalating the construction cost which finally means that only affluent students are able to afford such housing which is not how it is supposed to be.

 

Technology Based Facilities are in Demand

 

Owners of student housing units need to take up the matter with property developers and offer them some insights into student preferences in a house. The students don’t come looking for the ultimate in luxury and high end amenities and certainly not if it inflates the cost of their lodging. As young people, they are more interested in working hard to get good grades in whatever line of education they are pursuing. What they really want in their rooms is the best Internet and information technology facilities as they usually have three to five devices connected to the Internet at any given time.

 

Owners of student homes need to understand that these students get annoyed when Internet service is inconsistent and they want every unit to be well-equipped for wireless Internet connections. Property owners must avoid buying cheap Internet services and stop considering these as expenses more than investments. Internet services are a vital necessity today especially for students who rely on such services to augment their knowledge base. Therefore, student home owners should make efforts to understand Internet technology better and learn more about the service providers. They need to make sure that they are providing their tenants with top-quality Internet services rather than fancy luxury amenities.

 

Investors Getting Wiser on Student Housing

 

Today, commercial mortgage lenders look at the student housing sector more favorably as they’re now better educated on how properties located close to large, tier-one universities usually show strong net operating income growth over time. This realization has helped to create premium pricing for such properties and yet, up to some years back, the average property buyer was unwilling to offer commercial bridge loans for student housing properties. They didn’t show any interest even in strong locations in markets that serve tier-one universities, let alone markets close to tier-two universities.

 

How far the perception of commercial mortgage lenders about the student housing market has changed can be understood from the large number of student housing firms that now take a more serious approach to owning and managing their properties than they did a few years ago. In fact, these investors now look around for meaningful information on the performance of existing student housing properties as well as the new developments that are in the pipeline. There is realization among lenders offering commercial bridge loans that student housing is an attractive asset class that performs well even in tough economic times. During the Great Recession of a decade back, it was the student housing sector that was least affected compared to the overall real estate market in the US.

 

Park West Capital is among the commercial mortgage lenders that look favorably at the student housing sector and offers its commercial bridge loans to investors interested in the sector.

Commercial Real Estate Owners Need to Know the IRS Depreciation Schedule Better

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Did you know that the Internal Revenue Service (IRS) considers commercial real estate an asset and not an expense? That’s exactly why you don’t get to write off the cost of your property in the year you buy it. In order to make good the gradual loss of your property’s value while it deteriorates, you will have to decrease its value by a small amount every year, which is what depreciation, is all about, as per the IRS. Although commercial buildings generally have a lifespan of around 39 years, you have the option of speeding up the process of depreciation in less time in order to claim the compensation.

 

Depreciation Applies Only to Commercial Buildings

 

According to the IRS land doesn’t deteriorate over time and hence commercial land cannot be depreciated. However, people buy land and building together which makes it necessary for owners of commercial property to allocate the value of the property proportionately between the land and the building because commercial buildings older than 39 years fall under the depreciation rule. This is where things begin to get complicated and the need for expert advice is felt. You can speak to the experts at Park West Capital to know how to allocate the value of your property in a way that not just maximizes your depreciation but also ensures that it complies with IRS requirements. In case you just buy land on which you later construct a building it will be depreciable over 15 years.

 

Depreciation on Leasehold Property

 

The 15 year depreciation rule also applies when you build space to lease out to a tenant since the property will require periodic changes with a change of tenants since the changes don’t last as long as the building. You need to make sure though, that the changes are done only to the portion that has been leased out and no structural changes are made to the building. You can contact Park West Capital for a bridge loan to carry out the changes to your leasehold property at competitive terms. Aside from the option to speed up depreciation in 15 years, the IRS allows you the option of writing off the remaining leasehold changes with a one-time payment if your tenant decides to move out before completing 15 years.

 

Divide your Cost to Enable Faster Depreciation

 

Not all parts of your building have a lifespan of 30 years which allows you to divide it into different parts. For instance, there would be fixtures and electrical and electronic equipment installed in the building on which the depreciation can be speeded up. Therefore, it is advisable that you divide the cost of the different segments of your building. This is easier said than done and you will need expert advice to help you know how and where such depreciation is applicable. When you speak to us at Parkwest Capital for a bridge loan to fund the changes in your property you also get valuable insights on how to utilize your credit and asset value in the most optimum way. You can avoid claiming more depreciation going forward when you take more depreciation in the initial stages.

Financing An Industrial Property? Here Are 8 Different Types Of Properties To Consider

Multifamily Hard Money

 

Are you in the market to finance/purchase an industrial property but aren’t sure the differences between the types of properties? Here we describe the eight major industrial property types:

 

1. Warehouse/Distribution Buildings

 

These buildings range from 50,000 to hundreds of thousands of square feet in one single-story structure used mainly for warehousing and distributing business inventory. They also have up to 60-foot ceilings, as well as numerous loading docks, truck doors, and large parking lots to accommodate semi-trailers. They may have a small amount of office space and may be served by rail cars.

 

2. Manufacturing Buildings (aka heavy industrial buildings)

 

These facilities are intended to house specialized equipment used to produce goods or materials. They typically have three-phase high capacity, electric power, these properties might also include heavy ductwork, pressurized air or water lines, buss ducts, high capacity ventilation and exhaust systems, floor drains, storage tanks and cranes.

 

3. Refrigeration/Cold Storage Buildings

 

These specialized industrial properties are equipped to hold a large capacity of cold storage and/or freezer space, and are typically used a distribution center for food products.

 

4. Telecom/Data Hosting Centers (aka Switching Centers, Cyber Centers, Web Hosting Facilities, Telecom Centers)

 

These highly specialized industrial buildings are located close to major communications trunk lines to allow for access to an extremely large and redundant power supply capable of powering extensive computer servers and telecom switching equipment. They typically have reinforced floor slabs to support the weight of the equipment, as well as backup generators and specialized HVAC.

 

5. Flex Buildings

 

This building type is capable of housing wide range of uses, typically more than one in a single facility, including office space, research and development, showroom retail sales, light manufacturing research and development, and even small warehouse and distribution uses. They typically feature lower ceilings (under 18 feet) and a higher amount of office space than other industrial property types.

 

6. Light Manufacturing Buildings

 

Light manufacturing that doesn’t require extensive physical plant and space requirements typically provided by heave industrial buildings can take place in flex buildings.

 

7. R&D Buildings

 

High technology industries, such as computers, electronics, and biotechnology, prefer flex buildings because they offer a wide range of uses in one location, including office, manufacturing, and warehouse space. Nowadays, many of these spaces are converted to campus-like business parks with landscaping, shared architecture design, and lots of surface parking and open space.

 

8. Showroom Buildings

 

Showroom buildings combine retail display space with extensive onsite storage and distribution. These buildings typically include up to 50% of space dedicated to sales.

 

This update is provided to you by Park West Capital. With over a decade experience specializing in real estate financing and commercial lending opportunities. We have assisted numerous clients with growing their real estate portfolios and providing the funding resources. We firmly believe in accountability, excellence, integrity, entrepreneurship, and teamwork. Contact us at 800-969-4901 to learn more about how we can professionally assist you with your investing needs or fill out our hard money loan application and we’ll get in touch with you.

Value-add Commercial & Apartment Financing

Bridge Loans

Park West Consulting Group DBA Park West Capital has significant experience helping mid-level investors with the financing of their real estate investments through the implementation of value-add financing strategies. Since 2007, we have executed hundreds of value-add Bridge Loans and short term interim commercial real estate loans valued at over $200 million on behalf of mid-level clients.

 

  • Value-add: purchase of poorly leased properties or those with substantial near term lease rollover, typically at prices below reproduction costs, then renovating or repositioning them to a stabilized, core status
  • Development: ground-up development of new properties, ranging from strong pre-leasing to speculative development

 

Value-add strategies
Our clients employ the following strategies to help add value to their investments

 

Renovate
Underperforming due to lack of capital investment and/or poor management by prior owner
Properties with functional design that can benefit from upgrading
Capital budget – typically 10% or more of total investment
Achieve LEED® certification if economically viable

 

Reposition
Undermanaged properties that may have below-market rents
Curing deferred maintenance
Improve the quality, diversification, or average lease duration of tenant profile
Capital budget – typically less than 10% of total investment

 

Develop
Experience and track record ranges from land banking/entitlement process through construction/lease-up
Substantially all new construction will be LEED certified
Typically higher risk than renovation and repositioning with opportunities for higher total returns

 

Leasing: The key to value-add success
Securing tenants to lease an upgraded or newly constructed property at or above targeted rental levels is the true test for any successful value-add investment.

 

This update is provided to you by Park West Capital. With over a decade experience specializing in real estate financing and commercial lending opportunities. We have assisted numerous clients with growing their real estate portfolios and providing the funding resources. We firmly believe in accountability, excellence, integrity, entrepreneurship, and teamwork. Contact us at 866-289-9607 to learn more about how we can professionally assist you with your investing needs or fill out our hard money loan application and we’ll get in touch with you.

Three Types of No Income Verification Loans to Spice up Your Commercial Investment Portfolio

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Obtaining a mortgage for commercial purposes is a big decision to make, be it small/large businesses, multi-national corporations, reputed financial institutions, well-known investors, property owners or real estate developers.

 

In most cases, borrowers opt for conventional loans for meeting their financial needs. It is not easy to provide proof of income or employment for someone who is self-employed or retired or any individual who doesn’t have a fixed source of income. Some of the documents required for an approval of traditional commercial finances are a paycheck, 2 years taxes, including business and personal, salaries, and financial statements.

 

Types of no-income mortgage finance

 

Three basic types of no-income loans are: 1) No document loans 2) No ratio loans and 3) Stated income finance.

 

1. No income/no asset verification/ no documentation mortgages
For the approval of no income/no asset verification/ no documentation mortgages, borrowers require least documentations. The demands of the lenders of the borrowers are restricted to the name, social security number, loan amount, and down payments. Such type of financing depends on good credit score.

 

2. No ratio mortgages
The borrowers don’t require declaring their income when they avail no ratio financing solutions. In addition to this, there is no requirement of W2 form, paychecks and tax returns. The no-ratio finance doesn’t calculate debt to income ratio of the borrower. But this “no income verification loan” requires the borrower lists their assets such as stocks & bonds, bank balance, business, property, and ownership.

 

3. Stated income finance
It (stated income finance) is ideal for those who work and effectively draw wages, but not regular wages like that from an employer. This no income verification loan works for self-employed people. In addition to this, such type of financing is ideal for people who live on commissions and tips.

 

Why choose no-income verification finances?

 

Although you have high income and assets, it will be hard for you get a traditional loan approved by the banks or other lending agencies, if you don’t have proof of employment and income or you simpy exercise your write to deduct various business expenses decreasing your taxable income which will not qualify for financing via traditional means with a retail ban oryour local community banks. Many lenders require at least two to three years of employment proof, for the approval of their finance. A no income verification mortgages can effectively counter this situation when the borrower cannot adhere to conventional loan demand.

 

When investors should not apply for no-income finance

 

Low or no documentation finance refers to a mortgage that does not require borrowers to provide documentations of their personal income. Such type of financial products is commonly used by Park West Capital for the investors who don’t qualify for traditional loans due to lack of proper documentations or taxable income.

 

Investors should not apply for low/any doc financial solutions if they don’t want to pay a moderately higher rate of interest. In addition to this, investors should not apply for no-doc mortgage if they don’t want to provide a moderately larger down payment, which is typically about 25%-30% of the purchase price of the property or pending equity of the property being refinanced.

 

Are you interested in obtaining a no-income verification loan for meeting your financial needs? If your answer is affirmative, then get in touch with Park West Capital. It offers no doc/income verification loans, which are considered the best way for the borrowers to borrow money without any financial statements or recent tax returns.

 

This update is provided to you by Park West Capital. With over a decade experience specializing in real estate financing and commercial lending opportunities. We have assisted numerous clients with growing their real estate portfolios and providing the funding resources. We firmly believe in accountability, excellence, integrity, entrepreneurship, and teamwork. Contact us at 800-969-4901 to learn more about how we can professionally assist you with your investing needs or fill out our hard money loan application and we’ll get in touch with you.

Top Tips To Get A Commercial Loan

Commercial Mortgage Bridge Loan

 

Securing a commercial property loan isn’t that easy. Rather, the entire process can be a downright difficult. Nevertheless, you’ll have a lot of different steps that you can take to make the process pretty simplified and streamlined. And if you follow the tips, which we’ve mentioned here, you may even find the best commercial mortgage deals. So without wasting any more time, let’s get started.

 

Plan your business well

 

So you’re applying for a commercial loan. That’s great but don’t expect any great results if you don’t have a specific business plan by your side, property operating expenses for the last two consecutive years, buy / sell agreement or an executed LOI, and a rent roll if non-owner occupied. For many commercial mortgage lenders, a full-fledged business plan matters a lot. And while preparing your business plan, you’ll have to make sure that it has financial records and statements, forecast, and other related projections.

 

Putting the money down on the table

 

Ok, while securing a commercial loan, you’ll have to put down a lot of money. Yes, that’s true because to get such a loan, you’ll have to make sizeable deposits. Most of the times, the deposit needs to be of 25 percent of the total loan value. However, sometimes the percentage can go up to 35 depending on the commercial building and risk imposed on the lender based on the opportunity and market comparables.

 

When it’s about loans, time is of the essence

 

Whenever you get a loan requirement, you shouldn’t sit on it for long. Rather, you should do everything possible to get the loan and start the process. That is, apply for the loan as and when you get the requirement because loan processing can take up to three months with most traditional financial institutions but as little as 30 days with alternative lenders.

 

So here are the top three tips that you should keep in mind while buying a commercial loan. If you have found these tips helpful, then do share it with other borrowers and spread the word. And if you aren’t eligible to secure a traditional loan, then pick a Commercial Mortgage Bridge Loan or any other alternative financial solutions to start your commercial project for a more streamlined and hassle free process.

 

This update is provided to you by Park West Capital. With over a decade experience specializing in real estate financing and commercial lending opportunities. We have assisted numerous clients with growing their real estate portfolios and providing the funding resources. We firmly believe in accountability, excellence, integrity, entrepreneurship, and teamwork. Contact us at 800-969-4901 to learn more about how we can professionally assist you with your investing needs or fill out our hard money loan application and we’ll get in touch with you.

Park West Capital: Your One-Stop Destination To Fund All Your Real Estate Investment

Bridge Loans

Are you looking forward to developing or acquiring or renting a real estate property? If so, you’ll surely need a couple of suggestions that only an expert, like Park West Consulting Group L. L. C. T. A., Park West Capital, we make sure that your commercial or residential real estate development projects never face cash crunch at any time.

 

We offer a rich portfolio of financial solutions that include bridge loans and no-income verification loans. Being an alternative real estate finance lender, we find and analyze your financial needs first. Then, based on the analysis, we suggest you a powerful financial solution to make sure that your real estate projects see the light of the day. We’ve applied this approach of need analysis with countless commercial and residential property developers.

 

We have the expertise and experience to ensure that you get the best real estate advice. This advice lets you enhance and optimize your real estate investment portfolio. One of our financial products, such as short-term loans, that’ll ensure your investments yield the best returns. Now, we’ll let you know all the other different factors that make you want to hire us as your real estate advisor and partner.

 

Why should you pick Park West Capital?

 

Count on our experience and expertise

Thanks to our rich experience and deep domain expertise, we’ve been able to make sense of the complex real estate landscape in the US. We put to use our skills so that you make the wisest real estate decisions. This experience and expertise have helped our clients, which include real estate development companies and even individual investors, to grow by leaps and bounds.

 

Access our rich variety of financial products

Whether they’re bridge loans or foreign national loans, our selection of financial loans will have one thing or the other to make sure your loan-requirement needs are met well. For more info on this topic, you should explore our entire range of products and pick the one that suits you the best.

 

So here are the top factors that have driven countless real estate project developers and investors to get associated with us. Give us a call on 800-969-4901 or email us at info@parkwestcapital.com.

 

This update is provided to you by Park West Capital. With over a decade experience specializing in real estate financing and commercial lending opportunities. We have assisted numerous clients with growing their real estate portfolios and providing the funding resources. We firmly believe in accountability, excellence, integrity, entrepreneurship, and teamwork. Contact us at 800-969-4901 to learn more about how we can professionally assist you with your investing needs or fill out our hard money loan application and we’ll get in touch with you.

Is a Multifamily Bridge Loan Right for You?

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Here’s a hypothetical scenario: you’ve found a lucrative multifamily property but you currently lack the funds to transition ownership within the timeframe requested by the seller. On top of that, your options when it comes to financing are limited due to whatever reason.

 

A number of investors have had to let these investment opportunities disappear because they were ignorant of their alternative financing options. There is a silver lining however. These opportunities do not have to pass you by just because you can’t scrounge up the financing by the time someone else says you should.

 

We’ve extensively discussed bridge loans as a useful interim financing option, and they can work very well for a multifamily property while you’re busy ironing out a permanent loan solution. They may carry higher interest rates, but having to pay more up front should not be the concern as much as the long-term profit you can potentially generate on that lucrative investment.

 

Do you have a few issues with your credit, a lack of consistent cash flow, or do you need to close in as little time as possible? These are all worthwhile reasons to consider a multifamily bridge loan as they overlook delays and address borrowing ability challenges.

 

This update is provided to you by Park West Capital. We have over a decade of experience specializing in real estate financing and commercial lending opportunities. We have assisted numerous clients with growing their real estate portfolios and providing the funding resources. We firmly believe in accountability, excellence, integrity, entrepreneurship, and teamwork. Contact us at 888.808.9417 to learn more about how we can professionally assist you with your investing needs or fill out our hard money loan application and we’ll get in touch with you.