We’ll cover that in this video plus:
- Yes, cash flow is good, but appreciation is great.
- Investing in multiple cities.
- What moves markets.
- Why markets emerge.
- Rapid appreciation.
- Retaining equity.
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Mini-perm financing is short-term financing typically used to pay off income-producing construction. Or commercial or multi-family properties, usually payable in three to five years. In this case, "perm" is short for "permanent", alluding to permanent financing.
Commercial properties often cannot qualify for long-term, permanent financing until they've established operating histories.
Mini-perm loans, therefore, are used to pay off the construction loans. And bridge the gap until the property can qualify for permanent financing.
During the last year it seemed as though mini-perm financing has tended to be more prevalent in some parts of the United States.
Generally, mini-perm loan financing is used to pay off construction or commercial property loans. Either at the beginning of a particular project or investment. Once a project is producing income, the borrower can begin to look for a more long-term financing solution.
The loan carries a balloon payment at the end of the term. With the anticipation that the loan can then be easily refinanced due to the fact that the property now has an operating history on which to successfully obtain permanent financing.
There are two types of mini-perm financing available, namely:
A hard mini perm is a project finance structure where legal maturity is set typically around 7 years. Forcing the borrower to refinance before maturity or face default.
A soft mini-perm is a structure without this default risk. Where the loan maturity remains long-term but whereby increasing incentives are in place to encourage the borrower to refinance.
Advantages of the hard mini-perm include the obligation on the borrower to refinance. Refinancing would be at prevailing market rates, and the fact that funders will be able to price on a short-term basis which also allows the repayment of their upfront fees over a shorter period.
The main disadvantage is of course the introduction of default risk potential for all parties (funders, borrower and Government).
Upon default, the funders may lose control to an administrator and have to allocate more capital to the project. In contrast, a soft mini perm sets out the contractual remedies available to funders and no additional capital is required. Unsurprisingly, the soft mini-perm is the structure more favored by the market generally.
Long-term funding is still available in the banking market.
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If you want to be successful in any endeavor, follow the lead of the Mayans. Learn the
laws of success in your “field” whether it’s a cornfield, or the outfield. Then follow
them diligently. Don’t just sit back and wish for success. That’s like waiting to win the
lottery. Enter it if you want to, but never count on it. That’s the chance world
approach. If you live with unearned wealth as you goal in life, you’ll end up with only
dreams in the bank.
How much corn do you think the Mayans would have grown each year if they had
depended on luck to give them a crop? Probably not much, and in those days, the
price of failure was your head, literally. Napoleon said luck was the ability to exploit
accidents. Very few people become successful accidentally. Try to think of one you
know right now. Can’t, huh? That should be no surprise.
You must understand that every success is governed by a set of recognized success
principles, not by chance or luck or the stars that were shining when you were born.
Master the laws that apply to the area you want to succeed in, and you never have to
depend on luck.
Even in failure people are totally predictable. The laws of failure are just as immutable
as the laws of success, and unfortunately, just as powerful. If your goal is failure, you
can discover the laws and follow them to reach that objective. It’s far more likely,
though, that you’re living those laws by default because it’s easier than working
Success is a science and an art. Everybody has to develop their own style of attaining
it. You can’t buy it, you can’t inherit it and you can’t steal it. It knows no divine right.
Success is “non transferable.” It can only be acquired by the personal mastery of its
rules by each person individually. And most important of all, it can never be acquired
by wishing and hoping. Wishing and hoping are the currency of fools, and the first
laws of failure.
Human nature is very complex, but in many ways very predictable. People who let
chance pervade their lives can never make predictions about the most important thing
in their lives—their own future. They just go along and hope for the best, and often
their best is another failure in a long line of failures. Life does not have to be that
People go to school for years to study medicine so they can be healthy, both physically
and mentally. They study science to find out what makes the world work. They study
history to learn from the mistakes of the past. And some study religion to gain
spiritual health. Is it so difficult, then, to understand that studying success is just like
studying anything else? Having a faculty of coaches who are experts in different niches of real estate is a significant competitive advantage to growing your business.
But people get in a rut. It’s easy to do. There are lots of places where ruts block the
road to success. And if you’re not careful, that rut in front of you can turn into a grave
with openings at each end. Education is the key to avoiding those ruts. With
education, you can learn to be predictable with them. By being predictable with
predictable laws, you will always achieve predictable results. It’s really quite simple.
Think about a brand new compass for a moment. All compasses start with no
predictability. Their needles point in any direction until they are magnetized. When
they’re magnetized they point only to the north. That’s one of those natural laws
we’ve talked about.
Another magnet, or a piece of metal may affect a compass for a few seconds, but the
magnetized needle always returns to face north. People can become magnetized in a
similar way—magnetized by the purpose that they have chosen in life. To be
predictable, you must magnetize your conscience, your brain, and your muscles so
that they constantly revert to the direction of success, no matter the distractions.
When you focus yourself this way and fully support your focus with physical and
spiritual powers, nothing on Earth can stop you from becoming successful.
Just imagine what can happen when your life is magnetized by a firm conviction in
what you’re doing. Think how a strong conviction about your goals enhances the
functions of your mind and stimulates all of the other functions of your body. When
you really dedicate your life to its mission, distractions lose their power. Nothing and
no one will have the power to distract you from the north your compass is set on.
But what about those people who have no magnetism? Every little problem causes
their compass needle to spin. Their success, if they have any, is determined by
whoever talked to them in the last five minutes, by whatever they had for breakfast,
or by whichever program they watched on television last night.
The power of the laws of success will be lost in your life if you don’t learn which laws
will work for you and then use them accordingly. The golden rule, “do unto others
what you would have them do unto you,” is meaningless if you don’t use it as a
foundation of the laws of success. Your compass will lead you nowhere if you don’t
have the proper direction to begin with.
You must learn all the laws of success—and they are all here in this material. But you
also need to learn the governing laws. If you don’t know that water freezes at 32
degrees, you’re likely to have pipes bursting under your house this winter. Likewise,
even though we keep all the other laws of the universe, we may bring serious
consequences upon ourselves if we do not seek to understand the laws of our own
The most basic of these laws, applicable both in personal development and in business
success, is the law of the harvest. It says that, “as you soweth so also shall you
reap.” All the other laws rest on this single premise. If you keep all the laws of
success and then sow greed, hatred, envy, and dishonestly, you will reap nothing but
the same. It’s as predictable as gravity: If you jump off that chair, you hit the floor;
if you sow misery, you reap misery.
The law of the harvest is a lot more than that to a person who seeks success. In
essence, the law says, “If you sow success, you shall reap success.” Now that sounds
silly, doesn’t it? If you already have success to sow, you don’t need to sow something
to reap it. If you had your first million dollars already, you wouldn’t need to do
anything to earn it.
Luckily, we can sow success without actually having it first. You see, when you sow
corn, you don’t sow whole ears, you just sow the seeds. And where do you get the
seeds? From somebody who has already had a successful crop, that’s where.
Success seeds work just like corn, and you’ve got a whole batch of good seeds right in front of you. Sow them to reap your success. That’s your first law of success.
Every law of success is a seed that will sprout until you have a whole field full of it.
Then you can reap your harvest and continue the process, because now—guess what?
You’ve got your own seeds, and you can help others plant their crops, and replant
your own for another yield.
When you’ve helped others to succeed in their lives and
their ambitions, that is when you know you have truly succeeded in your life. Nothing
is more satisfying than that feeling of success.
There is no finer vindication of your
efforts than someone else succeeding with your help using your seeds of success, and
that is what we strive for at RE Mentor.
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Listen to real insights for real estate investors from real estate professionals on this week’s Real Insight’s Podcast