5- Not considering all of the currently available loan products for your situation-

Lots of owners know one or two lenders and fall into the habit of calling the same one or two lenders with whom they are comfortable when it’s time to refinance an old property or to finance the acquisition of a new one. This is a good habit to overcome. The financing marketplace is ever changing. To get the best result you need to scan (or have a good broker scan) the overall landscape in order to determine your best move. There may be players and products that an owner/borrower is unaware of that may turn out to be the most logical fit, and the smartest business move. For example: Perhaps you own 10 apartment buildings and have always tended to choose typical “5 and 5” type loans. This time, take a fresh look. The marketplace is fluid, as are the interest rates. With the 10-year Treasury currently (as of June 16, 2003) at 3.17%, a 10 year fixed rate deal at 4.25% might be worth a close look. With 30-year fixed rates available below 5%, a long term, fully amortizing loan might well be worth considering. If you’re planning a sale in the near term, a LIBOR-floater might be a good idea, as it will have an amazingly low rate (perhaps below 4%), and no prepayment penalty.

6- Using the wrong lawyer -

Sometimes a borrower feels compelled to use a lawyer who is a friend, or perhaps his brother-in-law (who happens to be a matrimonial or estate attorney) to close a commercial Real Estate transaction. My advice is simply: Don’t!
Most borrowers will end up saving money and perhaps shaping the terms of the deal far more to their liking if they hire a seasoned pro. Using a lawyer who is inexperienced in this very specialized area will only run up the bank attorney’s bill, and may well cause the borrower to need to extend the time to close, which may result in additional fees and penalties, etc. The best advice to achieve a smooth closing is to choose a real estate lawyer who is a seasoned pro in this very specialized (commercial vs. residential) field.

7- Failing to give adequate notice –

One possible consequence of choosing the wrong lawyer or broker might be failing to give adequate notice to the CURRENT lender that their loan is soon to be paid off. Make sure to check and act upon the notice requirement on the outgoing loan BEFORE locking the rate on the new mortgage.

Half the battle is simply taking the appropriate action at the right time. Good timing can help you win almost every deal point the next time you negotiate a commercial mortgage.

© 2008. Gregg Winter. All Rights Reserved.
Unauthorized use of this material may violate copyright, trademark, and other laws.

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