If Marc, Fred and Bill can talk about it – so can I

That would be Marc Andreessen, Fred Wilson and Bill Gurley (if you don’t know who they are Google them).  As venture capitalists’ they are seeing an environment amongst technology companies who have raised money and are burning through it because they have no understanding that money doesn’t grow on trees.  While I am not in the venture capital business I see an amazing comparison to in my every day activities.

When Lisa and I applied for our first mortgage our interest rate was

Did you read the fine print in your mortgage? This client didn’t

We recently completed a mortgage for client that was refinancing his property to get a larger mortgage and use the additional funds for investment purposes.  The bank that he was looking to pay out had a clause in their mortgage that basically read “you cannot payout your mortgage unless the property has been sold”.  This means that the bank would not allow the client to payout the mortgage unless he produced a sale agreement showing that someone unrelated to him was purchasing the property.  Needless to say the client was extremely upset and couldn’t believe this clause was not explained to him when he took the mortgage.

Wow – this is not only innovative but really pushes the envelope

From time to time I read a great article (defined by me to be innovative and creative) and feel the need to share it.  For those of you who are aware of Uber this article may be of interest to you.  For those of you who do not know of Uber you should know that they have been disrupting the taxi industry in a big way.  They built a platform for people who need a ride and for people who can provide the ride they need.  The cost is more than that of a taxi but the experience is apparently incomparable as the owners of the car get rated for the service they provide meaning you are able to get a “private driver” as you need it without paying the full time wage of a driver.  As a result of not only their popularity but also their expansion they are now looking at helping 100,000 entrepreneurs get onto their platform in countries around the world (see “Financing 100,000 Entrepreneurs“).

Do lower interest rates really stimulate anything?

DISCLAIMER:  I am not an economist nor to I pretend to be.  What I am is an entrepreneur who has owned and operated a business for more than a decade.  Further, over my career I have been deeply involved in helping people and businesses with mortgages and loans.  In thinking about the statement “lower interest rates are being kept low to stimulate economic activity” I was struck by the thought “do low interest rates do anything for the people I work with each day?”.  If you have followed this blog over the past while you would know that getting money from the banks is tough.  It’s tough to be approved, it’s tough to meet their conditions and it is very tough to get them to fund.

Why do private lenders matter?

The year was 1996 and I was sitting across the desk from the man that would not only teach me about private lending but would become a mentor, investor and friend.  The question was asked “do you know what a mortgage is?” to which I nervously replied “no”.  I had heard the word before but at the ripe age of 18 years old I had not yet had a mortgage nor did I understand what they were or why they were needed.  The man went on to share with me that he and his friends were providing money to people that were not able to get the money they wanted from a bank for a variety of reasons.  These people would provide a piece of real estate as security and they would borrow money at interest rates that were 1.0% per month to 2.75% per month plus fees.  He went on to share with me that these opportunities were considered high risk and were generally less than 6 months in length.  From from time to time he would have to foreclose (another foreign term to me at the time) but because he was always lending less than what a property was worth he had never lost his money or the money of his friends.

Should I get a second mortgage?

This is a great question that we often get asked and often consider when someone really needs cash but may not qualify to refinance their existing mortgage OR they do not want to pay the penalties associated with paying out an existing mortgage.  There is no perfect answer or a “one size fits all” solution, however here are some things to consider if you are evaluating a second mortgage.

If the end was near are you ready?

Two articles grabbed my attention this morning – one from the National Post (Krugman warns Canada vulnerable to a ‘big deleveraging shock’) and one from the Globe and Mail (Electric wave jolts car parts maker to innovate).  One article points to the impeding crash that many speak of with respect to Canadians and their level of debt and the other speaks to good old fashion entrepreneurship and taking advantage of opportunities.  For some, paying attention to level of debt in their personal finances or business may not be an issue they focus on each day but there is something to be said about getting out in front of whatever impact will be had once interest rates begin to increase.

Where do I start?

It is not unusual for someone to contact us with the question: “Where do I start?” or “I need to know a few things about commercial mortgages”. Commercial mortgages come in all different shapes and sizes and unlike residential mortgages, each transaction is approved on its own merits and the interest rate and fee for the approval will be different for each mortgage as well. This can be frustrating for commercial mortgage clients. Some of the questions we get include:

– how much down payment do I need?
– what documents will I need to give to the bank?
– how much income do I need to prove?
– can I get a pre-approval?
– I want to buy a property but don’t know when to make the offer?
– what will the interest rate be?
– can fees be included in the mortgage?
– how long will it take?

To answer the questions above, someone has to look at what you have and provide you with direction so you know how to move forward. We have different services that assist clients with these challenges. We have a Bridge Capital MAP that will provide you with the basic outline of a commercial mortgage and what is required. If you have a deal you want to have someone review for you our Options Package might be your best option. For those borrowers that really don’t want to pay a broker a commission but need help presenting their deal to a bank or lender we have a Discussion Document service that will structure your transaction and put it in a format that will allow banks and lenders to understand what you are looking for.

Brokers are important but sometimes you don’t need a broker – you need information. Please visit www.bridgecap.cato learn more about how we can help.