Stated Income Financing And The Independent CRE Investor
Independent commercial real estate investors can have a very challenging time getting adequate financing for projects ranging from acquisitions to ground-up construction. Bank requirements are usually designed to preclude independent CRE investors, because there is “too much risk involved,” while a real estate company with the same collateral and earning will get approved. In order to sidestep a string of rejections from traditional lending sources, CRE investors have been using stated income financing.
Why Banks Reject Independent CRE Investors
Since the market crash a few years ago, banks have been employing very conservative lending practices. In order for commercial real estate investors to meet the requirements for bank loans, they must submit to a credit check, provide a healthy financial record, and supply proof of drawing a regular paycheck from an employer. The last point is the one which prevents most CRE investors from making the cut, since most investors get their income from flipping properties or getting rent from single and multifamily residences.
How Stated Income Financing Works
Stated income financing – much like the name implies – is commercial real estate funding structured around a statement of income. Despite misconceptions, this is not the only qualification – otherwise anyone could walk into a commercial lender’s office and claim to make X amount of money and get financing on good faith. Stated income financing also requires a decent credit score, bank records to support the income claims, as well as the most recent tax return. Additionally, it is easier for CRE investors to get approved for stated income financing if they have a robust borrowing history. Considering most commercial real estate cannot be purchased without loans or other forms of commercial funding, having a strong borrowing history is usually a given with most investors. Stated income financing can be arranged quickly for time-sensitive CRE opportunities, and the agreement can be customized based on the size and scope of the project.
Learn More About Stated Income Financing
If you do not want to get caught in the red tape of traditional bank loans, or if you would like to avoid waiting on numerous bank loan rejections, contact Vantage Commercial Capital, today. We work directly with commercial real estate investors to get them the financing they need for property acquisitions and construction projects of all sizes. We have the capital resources and expertise to get you funding when other lenders cannot.