100% Building Purchase or Construction Financing
Long term fixed rate financing is available for owner occupied medical, dental and veterinary buildings for 100% of the building costs – including construction – for existing, profitable practices.
This program is a 2 loan structure where the first mortgage is a 25 year fixed rate for 90% of the purchase price (or construction costs) and the second mortgage is typically a 10 year fixed rate in the amount of the 10% down payment.
The key to making this program work is that you must have “lend-able” equity in your practice against which you can borrow the down payment.
The “lend-able” equity calculation is typically pretty straight forward: 70% of gross revenues minus any existing practice debt = equity. (In some cases, it may be possible to go above 70%).
As an example, if you have have $600,000 in collections and $150,000 in various practice debt, your lend-able equity is $270,000. ($600,000 x 70% = $420,000 – $150,000 = $270,000).*
The rates for this program are currently (June 2014) in the low to mid 5’s for both the 90% first mortgage and the “down payment loan.”
Both of these programs are also available independent of each other. In other words, if you have a down payment and are just looking for a long term fixed rate of 25 years, then the fixed rate loan option is an extremely good deal…and if you are just looking to tap the equity in your practice for some other reason or to consolidate practice debt you can opt do that as well and the same equity calculations would apply.
*Please note that the new practice equity loan needs to be in a 1st position on the practice, so any existing practice debt will need to be paid off with the proceeds, so keep that in mind as you make any calculations. Also, keep in mind, that most loans are attractive 10 year fixed rates with multiple, reasonable prepayment options.
Another 100% Option
If you do not have enough equity in your practice to qualify for the above program(s) but your practice has enough cash flow to service the new/proposed debt on a building, then you may be able to borrow 100% in one loan (fixed for up to 5 years) with a 25 year amortization. This other option is less aggressive but still better than most when you consider that you do not need a down payment.
The rate for this 5 year fixed rate program is a little higher at approx 6%.
Please contact me at jking (at) green commercial capital (dot) com or 1-800-414-5285 for more info.