Distressed properties litter most real estate markets across the country, as large banks are sitting on large amounts of foreclosed properties. Owners who know that the process is underway are also eager to sell, creating incredible opportunities for speculators everywhere. However, the outlook in real estate isn’t all sunshine and roses, as the same banks that hold many of these deeds refuse to lend, fearful of the issues that caused the first real estate bubble to burst.So, with this dynamic in mind, what is a buyer to do? The answer comes as a surprise to many, though the days of stated income lenders are just beginning.What is a Stated Income Loan?Stated income loans are those that are given based on the applicant’s CLAIMED income, without the invasive digging into W-2s and the like. When submitting an application for such a loan, the buyer can claim their income and the lender takes them at their word.We already know what you’re thinking: How is this possible?The answer is simple: loan security. Hard money commercial lenders offer up loans that are secured by the deed to the property being purchased with the capital. By offering a loan that is 70% of the property’s appraised value, the capital investors know that their money is protected against default.Why Are Hard Money Loans Gaining in Popularity?The sharp increase in hard money loans can be attributed to the reluctance to lend on behalf of the large institutions. Additionally, the lengthy process associated with such loans doesn’t work well given the fast pace of the current real estate market. Properties that are primed for a “flip”, for example, are getting snapped up at a record pace, creating the need for fast approvals and even faster disbursements of capital.Further, because stated income lenders understand that not everyone came out of the recent financial depression unscathed, many who cannot secure funding through traditional means are learning that they are not completely shut out of the industry. These lenders are helping to get many commercial speculators back on their feet.What Does the Future Hold in Commercial Real Estate?As the country continues to move towards recovery, the availability of distressed property will continue to fuel the investment dreams of many real estate speculators. Hard money commercial loans will likely gain momentum during these periods of growth, as they pick up where the larger institutions have left off. Buyers who have a keen eye for properties don’t have weeks or months to close the deal, leading many to turn to the secured hard money loans as a viable alternative.Secured loans are a great way for those with capital to generate a solid return on its use, while giving real estate buyers the ability to turn profits of their own on well-priced locations. Businesses are recovering, and with this, so will the commercial real estate market. Are you in a position to secure quick capital? If not, it may be time to research stated income lenders in your area!
Everyone agrees on a broad level that small businesses are vital to the American economy. However, most people would be surprised to know just how important. The United States Small Business Administration keeps records and statistics on small business in the United States and some of their findings are surprising.First, the typical perception of a small business as a mom and pop operation with just a few, if any, employees is not the entire picture. The Small Business Administration defines a small business as an independently business with less than 500 employees. There are an estimated 23 million businesses in the United States that meet that classification. In some smaller towns in the United States, these businesses represent a major source of employment.In fact, small businesses as defined by the Small Business Administration represent 99.7 percent of all the employers in the country and employ half of all private sector employees. More than 45% of the private sector payroll is generated by small business. Over the last decade small businesses have accounted for 60 to 80% of all new jobs created on an annual basis.Although a large percentage of small businesses are in the retail and service sectors, small businesses are rapidly making gains in the technology sector. 41% of high tech workers like engineers, scientists and computer programmers are employed by small businesses. Employees at small businesses produce 13 to 14 times more patents than those employed by larger companies.The Small Business Administration also offers some interesting observations on small business survival. Two-thirds of small businesses survive for at least two years declining to 44% after four years. Most of the factors that support a small business surviving are well known, such as access to capital and owner’s education level. However, a lesser known factor in small business survival is that the business is large enough to have employees.Similarly, barriers to starting a small business include lack of access to start-up capital and lack of education. However, the number one barrier to small business start up and a primary concern of existing small business owners is access to private health insurance. Individual health insurance for sole proprietors is much more expensive than receiving coverage through an employer. If a small business owner is able to offer health insurance to its employees, the administrative and premium costs are often much higher than those for larger businesses.