Commercial real estate investors frequently face big challenges when seeking funding. Banks and similar traditional lending institutes often have prohibitive requirements for commercial real estate investors, forcing them to seek other alternatives or drain their personal savings to complete projects. To remedy this, the world of commercial finance offers stated income financing as a viable funding solution for independent CRE investors. However, not many people understand exactly how stated income financing works, and there is a lot of misinformation available. To this end, we have compiled the Stated Income Financing Questions and Answers List.
Why Do CRE Investors Need A Statement Of Income?
Most loan applicants – including business owners – draw a regular paycheck from their employers or companies. This is one of the basic requirements banks have in order to apply for loans. CRE investors, rarely draw a regular paycheck. Investors get their income from flipping houses, or from monthly rent checks. Even if the income totals hundreds of thousands of dollars annually, banks are looking at the bottom line, and if a check cannot be placed in the box for regular paychecks from an employer, then the loan process cannot begin.
Can't People Just Make Up A Dollar Amount?
No one can walk into a commercial lender's office, hold out their hand, and simply state, “I make $30 million a year, so give me a loan.” This type of misinformation has given stated income financing a bad reputation, with traditional lenders giving it the unfair moniker of “a liar's loan.” A statement of income needs to be reinforced by other documentation, such as bank statements and the most recent tax returns. Commercial real estate investors also need to have an established history of using loans and other financial products to complete projects in the past.
What Are The Advantages Of Stated Income Financing
Stated income financing can be arranged quickly, so commercial real estate investors can take advantage of time-sensitive opportunities. These loans can also be customized to fit the CRE investment at hand – whether it is an acquisition, remodeling project, or large-scale ground-up construction.
If you would like more details about stated income financing, or if you would like to learn about our other commercial real estate financing solutions, contact the Lavan Financial Group at 203-308-4547. Our team of financial experts are ready to help commercial real estate investors around the country to get the financing they need.