Equity Preservation®

Can't Qualify For a Large Enough Bank Loan? Are You Short Paying Off Your Current Loan? General American’s “Equity Preservation®” Will Bring in Cash to Pay Down Your Debt.

Let’s say you own a small commercial building. You have a $700,000 balloon payment coming due. In refinancing the property, because of the current market conditions, valuations, qualifying etc., you only qualify for an $650,000 loan, which means you will be short $50,000.00 plus closing costs of at least $12,000.00.

If you don’t have an extra $62,000.00 in cash to bring into escrow, the refinance may cancel and the property may end up in foreclosure.

Equity Preservation® can advance the $62,000.00 you need. This is not a loan. We would be investing in the property alongside you. This money would be used to pay down the existing mortgage. The property will transferred into an LLC that will be owned by you and our company. Because of our credit standing and cash infusion, we may actually be able to close the loan at a more attractive rate. This could substantially improve the cash flow of the property.

Assuming the property was appraised by the new lender for $1,050,000. The equity in the property after our investment would be $400,000.00 ($1,050,000- $650,000.00=$400,000.00). We would require that our ownership be 1.75 times the amount of our investment or $108,500.00. Therefore after our cash investment of $62,000 and the $650,000 new loan from the new lender, you would own 72.87% and we would own 27.13%.

If we hadn’t invested you would have owned all of the equity or $350,000.00 in a property that would be on the verge of default. If a default notice is filed you would probably never receive a realistic offer. Every buyer will try to take advantage of your situation and low ball the value.

Instead you own 72.87 % of the equity in a property that now cash flows and has a low fixed interest rate. The interest savings alone over 5 years could total $39,660.00*, plus the loan pay would have increased the equity to $441,529.00 after 5 years (assuming no appreciation in the property’s value). Do you really think the property won’t appreciate over 5 years?

Your share of the extra cash flow and faster pay down of the mortgage alone is $59,162.00 over 5 years.

There are no fees, or costs involved. We don’t charge anything for our involvement. The property’s debt coverage ratio must be at least 1.25 and you continue to control the property.

*650,000.00 loan @ 8% APR, 30 year amortization due in 10 years | VS | 6.5% APR, 30 year amortization due in 10 years.

If you wish to submit a property, please fill out our Equity Preservation form here. Or, you can download the form below and fax it to (775) 327-4600.