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Shawn Shayestehfar's Blog

By Shawn Shay | Mortgage Broker
or Lender in Los Angeles, CA
  • Mortgage financing for real estate – Facts you should know

    Posted Under: Financing in California  |  December 3, 2012 9:56 PM  |  1,656 views  |  No comments

    Real estate investment happens to be one of those avenues that has helped investors build up wealth for years. If you wish to get into the whole business of real estate, then it actually might not prove that easy. Most importantly, you can find it extremely difficult to find a loan that’ll get you started in this entire zone of real estate investment. You need to explore all the options available as well as the various loan criteria, if you’re looking to get commercialreal estate financing. Read on to find out more.


    5 Key facts of mortgage financing for real estate investors


    5 key facts that you should know when out to get mortgage financing for real estate investment have been discussed below.


    1.   Function of mortgage financing


    The basic function that mortgage financing serves for real estate investors is to provide adequate money that’ll enable you to purchase a particular piece of property. This helps you to buy an investment without really putting up too much of your own money and that reduces the risk involved too.


    2.   The requirements involved


    There are a few requirements involved with mortgage financing. For instance, if you go on to obtain a traditional loan from a bank, then obviously your credit score should be high. Again, there’s the requirement for a larger down payment when it comes to real estate. As for the interest rates, then they’ll be a notch higher than your residential mortgage rates generally are.


    3.   The cash flow


    You should take into consideration the cash flow involved with each deal. Take note of how much money can be brought in when you rent out the property. After that you should look at your mortgage payment amount and how much you’ll have to pay as maintenance cost. Now, if you see a positive cash flow here, then the deal can be worth it. However, if there’s a negative flow, then you might like to look at some other deal.


    4.   Seller financing option


    There’s the option of seller financing that isn’t considered by many investors. However, it can actually work in your favor as this actually finances your purchase. You begin by making a down payment and then go on to make the monthly payments. For this you’re not required to have good credit and the down payments can be smaller too.


    5.   Other considerations


    In case you can’t get mortgage financing through any of the conventional methods, then you’ve got to think creatively to make the necessary property purchase. There are other options like making use of the home equity loan on your house and lease options for securing a property.


    If you keep in mind the 5 facts discussed above, then it shouldn’t be a big deal for you to obtain the necessary mortgage financing for real estate investment.

    For more information about commercial mortgages please visit http://www.citycapitalfinance.com
  • How to Choose a Ocean View Property

    Posted Under: Home Buying in Los Angeles, Investment Properties in Los Angeles  |  December 3, 2012 9:42 PM  |  1,429 views  |  No comments

    Oceanfront property is perceived by most to be the nobility of the housing investment world, but in the greater universe that is economics, there are no bulletproof investments. Strategy needs to exist in every `risk free` venture if profitability is to soar. Before imagining sipping cosmopolitans at sunset while watching the bikini-clad beach goers walking by, it is wise to consider your location, purchase strategy and tactical options.

    Whether your goal is to achieve personal pleasure for yourself or some high-paying tenants, location is everything. Every golden sunset, lush palm tree and mile of ivory sands carries a cash value. The sea is nature`s sedative and the world`s favorite place to winter, which tends to send values in tropical locations soaring. If it were as simple as selecting a beautiful stretch of beach, however, every home with an ocean view would generate massive returns. Instead, micro economies have their own sway over values and the consequences are not always positive.

    Every location has its own niche economy, which is affected by, but different from, the economic climate of the wider surrounds. Local industries, trade and natural resources contribute to infrastructure and the generated revenue of an area. In turn, this has a domino effect, influencing the rise and fall of local property values. Choosing an exquisite view may have promising effects on profitability, but the rising economy of an expanding region has far more power to hike up returns.

    An investor`s ultimate fantasy is to buy in undervalued locations immediately before valuations become more realistic. Attempts to buy in an underrated urban hub that is on the cusp of a boom will generate the ideal buying and selling environment for maximum returns. Buy-to-rent investments benefit as significantly, since rentals climb in response to value hikes. The green light that indicates a pending boom, in many cases, is a development explosion. When developers begin to shift their attention to a specific resort area, the area is probably about to become flooded with tourists. Governmental focus on a region`s tourism sector is another early sign of a potential recovery.

    It may be a property buyer`s dream to purchase a cottage miles away from the buzz of traffic and city life, but urban centers provide the infrastructure and financial support so imperative to oceanfront housing`s value stability. Adjacent cities, nearby urban hubs and transport systems all support optimized returns. Accessibility is an ace up the sleeve of the buy-to-rent investor.

    Few property values are as profoundly affected by supply and demand as beachfront investments are. Administrative centers, scenic backdrops and location trends can cause demand swells that will put more returns in your pocket. Supply can diminish demand in some cases, as shrinking inventories give property owners the power to choose their asking prices. Similarly, expansive housing inventories can shrink demand and thus, value. Direct flights, highways and public transportation services attract vacationers and retirees. When more feet are drawn to a desirable area, supply shrinks and demand hits the ceiling, which leaves property owners with increased potential for lofty rentals. World Heritage Sites and world-class destinations are tourist magnets for surrounding areas. Natural assets such as virgin beaches and national parks act as more subtle draws for cash-rich buyers and tenants.

    Tourist migration habits will affect the monthly income of a rented home, which will impact on the affordability of the property. It is wise to estimate the likely occupancy the property will achieve by assessing visitor trends. This should be measured against the local in-season and off-season rental amounts being charged for similar properties. Mortgage calculators, offered by City Capital Finance, help you to assess what you can afford to buy by taking terms and interest rates into account.

  • Most Common Misconceptions For Foreclosure Real Estate Investment

    Posted Under: Financing in Los Angeles County, Foreclosure in Los Angeles County, Investment Properties in Los Angeles County  |  December 2, 2012 4:57 PM  |  1,059 views  |  No comments

    With thousands of investment opportunities around every corner, consumers with a little extra funding often find it hard to choose the right way to increase their money. All investments involve some amount of risk, but some types offer greater rewards than others as well. Purchasing a foreclosed property can help you build a portfolio of investments that are worth more than you have spent on them. However, investing in real estate foreclosures is not as simple as some experts claim. Understanding the risks and returns of this investment system will allow you to make an informed choice before spending any money.

    All Foreclosed Properties Are Damaged

    Many homes and offices fall into a state of disrepair when the mortgage holders begin to slip on payments. If there are no funds to cover the loan payments, it`s also unlikely that the occupants can afford roof repairs or foundation improvements. However, not all foreclosures are damaged or in need of serious renovation. This is why it is crucial to have properties inspected by a professional before you make an offer. A great deal can turn into a nightmare if you become the owner of a home that isn`t fit for habitation.

    Foreclosures Are a Quick Route To Big Money

    These two misconceptions are usually intertwined in the minds of potential investors. Buyers are motivated to purchase homes that were rehabilitated by investors, but this demand is not spread equally throughout the country. Some very inexpensive properties may sit for years while you wait for a buyer, or it may be snatched up in just a few weeks. It can be hard to predict the demand for property in a specific area if you are dealing with homes or buildings that are not already on the open market.

    There`s No Competition

    Many beginning investors spend a lot of time searching for a market that isn`t already saturated with competition. While the world of foreclosures is still relatively new, a lot of large and small investment groups have moved into it. The biggest profits come from high demand properties, but competition will be fierce for these buildings. The bank itself is allowed to make offers on the foreclosure. You will need a keen eye and a deep understanding of real estate trends to enjoy consistent success and profits in this field.

    The Buying Process is Simple

    Foreclosure processes and requirements can vary from county to county. Each area may require different types of bidding or certain waiting periods to allow the original owner to pay off their debt. You may end up spending money on a home that doesn`t legally become your property for six months or a full year. Short sales and auctions work differently in each region of the country. Be sure to check your local rules to save time and minimize losses during the buying process. You can find information on websites like Los Angeles foreclosure and City Capital Finance to plan your finances. Sticking to the rules will ensure the entire process runs smoothly from the beginning to the end.

  • Advantages of NNN Single Tenant Properties

    Posted Under: Financing in California, Investment Properties in California  |  December 1, 2012 2:56 PM  |  792 views  |  No comments
    In today`s commercial real estate industry, one of the most discussed topics may be the advantages or disadvantages of owning and managing triple-net, or NNN properties. A triple-net property is a single tenant retail property that is typically leased to tenants who have extremely high ratings. These high ratings, in fact, account for the "net, net, net" or "triple-net" designation.

    A triple-net property may look like a win/win situation. After all, these properties are generally new or in new condition. The tenant takes over the management responsibilities on a long-term lease and thanks to the triple-net status of the tenant, you can be assured of a continuous cash flow that you can depend upon. There are, however, a few facts you`ll want to consider before investing in a triple-net property deal.

    Investment Returns

    With a triple-net property, you`re going to pay for convenience. After all, you`ll have that magical combination – a reliable tenant and a perfect property that doesn`t need any maintenance, but these advantages don`t come cheap. If you have a tenant with a high credit rating, you can expect to pay approximately a six percent cap rate, which is the percentage of return on the investment.

    Conversely, if you had a property that required more maintenance, you would actually get higher immediate returns, although you`d undoubtedly get more headaches as well. For most investors, it`s well worth it to accept this type of compromise in order to have a hassle-free property leased by a reliable, worry-free tenant.


    No matter what type of property you`re investing in, there`s always a risk, even with triple-net properties. Contrary to what investors may think, credit ratings don`t always tell the whole story. This is due to the fact that company credit ratings are determined by three different rating firms: Moody`s, Standard and Poor`s and Fitch. Although these firms are consistent with one another in their ratings, it`s important to realize that they consider any company with a BBB- rating or higher as an investment grade company.

    As an example of grading, Wal-Mart is considered AA/Stable, as is Home Depot. If you`re lucky enough to get a tenant with an AA rating, you probably won`t have to worry too much. Nevertheless, a BBB- rating, while far below AA, is still considered investment-worthy for a tenant.

    When it comes to default rates, the numbers tell the story. An AA company tends to have a 1.31 percent default rate, while a BBB tenant can have as much as a 6.64 percent default rate, which isn`t really that high compared to the lower-grade/higher-risk tenants you would get with other types of leases. For example, a B tenant may have a default rate of 35.76 percent, while a CCC tenant may have a default rate of 54.38 percent.

    Given these numbers, you can clearly see the advantages of a triple-net property investment. Leasing to a client with an excellent rating may bring lower immediate returns, but it`s arguably the best long-term type of investment you can possibly make.

    Whether you`re considering your financial planning options or whether you`re trying to decide on whether or not a triple-net property investment is right for you, it`s crucial that you do your homework before making your final decision. Once you`ve learned about the advantages of triple-net leases, you`ll be able to rest assured that you`ve made the right decision for your financial future.

    To learn more about single tenant financing and commercial loans, please visit http://citycapitalfinance.com or call us at 310-598-5939

  • All You Need to Know About Commercial Mortgages

    Posted Under: Financing in California  |  November 22, 2012 10:03 PM  |  613 views  |  No comments

    In the 21st century, the age of capitalism, private properties are everywhere, in our neighbourhoods, cities, on nearly every corner. Simply just as the large number of business buildings, there are furthermore lots of private loans taken every day. Like residential properties, business buildings are constructed or bought with borrowed finance. Borrowed coinage utilised for the construction, purchase or refinance of a commercial building is usually called a business mortgage. Countless enterprises rely on it because the only option of finances. On the other hand, getting it really is rather difficult - it involves a considerable investment , a good businesses history, a robust business strategy and a large amount of paperwork. 

    Prior to applying to get a commercial mortgages you must be conscious of no matter whether the building you have set your eyes on can indeed be utilised for business purposes. Considering the mass array of properties accessible; you ought to ensure that you have the right facts and appropriate program in an effort to retain credibility and understanding when speaking to a lender. 

    When speaking to a mortgage brokers it is crucial that you remain aware of every detail behind the location; its age, condition and so forth as this will probably be your only collateral and if deemed unfit your chances of obtaining financial help will quickly disappear.

    As with all economic aid; you has to be aware that your own credit history will play a significant part in figuring out the results of getting a mortgage, Your debt service cover ratio is going to be acknowledged and help a brokers service to decide if repayments are going to be produced.
    Even if you can prove that you will have enough earnings to cover the fees of a financial loan, you might not be in a position to find it unless you place down a big deposit. Business lenders generally require 20% to 30% down payments. Some of them could accept much less, around 10%, if your additional finances appear sturdy, but you will have to pay out a greater interest rate instead. 

    Regardless of whether or not you qualify to get a loan will furthermore depend on exactly how risky your own business is. Though apartment complexes and office buildings remain regarded by private mortgage lenders as comparatively secure investments, companies like gasoline stations and brand new restaurants are viewed as much more risky and therefore can be far more hard to fund. Such purchases may perhaps need you to show that you have efficiently run these types of organizations in the past. Additionally, you will have to pay out for pricey environmental tests and in depth research so the lending company can ascertain if your own business can succeed in the imminent years. And if you are authorised for any financial loan for a high-risk property, you will most likely have to pay a much larger rate of interest. Make sure yo fully grasp the dangers involved and that your business is actually equipped to overcome them.The overall results degree of receiving a mortgage will naturally be determined by the capability of your business and mortgage brokers will regard some organizations as greater dangers than others, Plan out every thing to a t and take the economic climate and long term dips into account to remain ready that whatever your own business you make the right economic choice.

  • Different Types of SBA Loans

    Posted Under: Financing in California  |  November 14, 2012 9:41 PM  |  715 views  |  No comments

    The U.S. government has a number of programs to help individuals who want to start their own business. Opening a small business can be tricky if you don`t have extensive savings to use. Securing a loan to start your business requires a high credit score. Business owners who need some financial support can request assistance from the Small Business Administration. The SBA offers a number of loan options for entrepreneurs who have a solid business plan and some management experience. Learn more about each option before sending in an application to the SBA to ensure you receive funding as quickly as possible.

    The Microloan Program

    Microloans are short-term, low amount loans that can be used for a range of small business purposes. Many loans in this category are granted to childcare agencies that are designated as not-for-profit. Other microloans are made to existing businesses that are ready to expand. Microloans are distributed to local lenders that work on a community level to send out the funds. These lenders provide education and interview candidates to determine which businesses can use the funds effectively. Anyone receiving this type of loan can use it to buy inventory, equipment and fixtures. The money can`t be used for paying off another debt or for buying property. No microloans can be given for more than $50,000, but most businesses only borrow about $15,000.

    The 7(a) Program

    Business owners with unusual needs can apply for a 7(a) loan from the Small Business Administration. These include businesses operating in rural locations where few jobs are available. Business owners in small communities can use the Small/Rural Lender Advantage program to secure funding without a lengthy application process. If your business has been impacted by recent pollution control laws or NAFTA agreements, you can apply for a Special Purpose Loan. The 7(a) program also includes lending for companies that send American goods into the world through exporting.

    SBA7(a) loan can be used for starting a new business or buying a successful one. The proceeds are also approved for securing real estate, financing for new construction, refinancing of existing business debts and the acquisition of inventory. The main limitations involve changes that would fail to improve the business. Businesses cannot pay off tax debts or reimburse their owners with the funds either.

    The CDC/504 Loan Program

    The SBA provides business owners with one last option for financing. Funds are given to Certified Development Companies, or CDCs, located in the community. These groups are non-profit organizations that find small businesses that can support their region and local community if they can expand, improve or modernize their equipment. The CDCs focus on providing SBA 504 loans to business owners that can create local jobs. The SBA reports that this lending program has created more than two million jobs alone.

    If you are interested in growing your business or starting a new one, a convenient loans calculator can help you determine the best rate and the amount you can borrow from the Small Business Administration.

    For more information about commercial, multifamily and SBA Loans, please visit our website at www.citycapitalfinance.com or call us at 310-598-5939

  • $1,200,000 Multifamily Acquisition Loan in Hollywood Submarket of Los Angeles

    Posted Under: Financing in California  |  November 13, 2012 9:57 PM  |  594 views  |  No comments

    City Capital Finance arranged a 65% LTV multifamily loan for purchase of a 12 unit apartment building in secondary market of Hollywood in Los Angeles.  The borrowers were doing a 1031 exchange and had to close on time.  Built in 1960s, property was a flip and seller did substantial rehabilitation and renovation.   The loan is fixed for 7 years at 4.2%.

    Challenges: One of the sponsors was foreign national and they both didn't show much income in their US tax returns.  Additionally, they had substantial carry over loss which made it more difficult for lenders to consider this loan.  They were also new multifamily investors and had no management experience. Property was a flip so the seller evicted all the tenants to do the renovation which created unstable operating history.  Seller leased all the units at above market rent which caused concerns for lenders as appraisers would evaluate this propery with market rent.

    Solution:  City Capital identified a lender that got comfortable with the sponsors' U.S residency and wouldn't consider the borrowers tax returns as primary source of underwriting.  We highlighted the buyers' cash injection into this deal and property manager that sponsors engaged to manage the asset.  We explained rental increase and showed the amenities that warranted the high rent.

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