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Co-Broker Commercial Loan
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If you have a commercial
loan request you can refer it and still make .50% to 1% depending on
loan parameters.
We do all of the work and you get paid at closing from the Title
Company. Supplement your income by referring 1 or 2 deals per month and
adding another $10,000- $20,000 income to your bottom line.
INTRODUCTION to COMMERCIAL LENDING for RESIDENTIAL MORTGAGE
PROFESSIONALS
1. Review the “State-of-Affairs” in Commercial Lending
- Recent History – It’s “Booming” for THIS Year and NEXT
- Portfolio Product – NO ‘Fannie-Mae’ nor ‘Freddie-Mac’ at road’s end.
- Strictly a FINANCIAL Decision – Income (or equivalent) Based ONLY.
- Deals take “Forever” – Spend time ONLY on those YOU can Close.
2. Customer/Realtor “SHOCK-FACTORS”
- Prepayment Penalties (“Soft” vs. Rock-Hard)
- Up-Front Appraisal Costs
- Higher Interest Rates
- Origination Fees
3. Typical Deal “Time-Line”
- Magic Questions
- Proposal – Terms Sheet
- Letter-of-Intent
- Required Documents
- BINDING Loan Commitment Letter
- Appraisal and Appraisal Review
- Documents, Closing and Funding
4. Marketing and Sales Opportunities
- Current Client Base
- Current Realtor Contacts
- Title Company Lists – “Owner of Record” for Comm. Zoned Parcels
- Local Bank Turndowns (FICO/Low Deposits/Ratios/etc.)
- Commission Recommendations
- Key Competitors – Nationally and Locally – Our Advantages!!
5. “OPTIONAL” Commercial Calculations Introduction
- Many Deals are OVER-Priced by “New Realtors” or for “Newby” Buyers
- KEY Number
– Net-Operating-Income
- KEY Ratio
– Capitalization Rate
- Prepayment Penalty Options
- Basic Terms, Basic Math
- Example Property Transaction
– Purchase Price of $1,000,000
- Loan Amount of $650,000
- Gross Rents/Yr. of $100,000
- Owner Cash Exp. of $15,000
- Loan Interest Rate of 8.375%
- P.I. Payment of $5,180/mo.
- Net-Operating-Income = Gross Rents/Yr. – (minus) Owner Cash
Expenses
N.O.I. = $100,000 - $15,000 = $85,000
- Capitalization Rate = N.O.I./(divided by) Purchase Price (or
Appraised Value IF seasoned 24mos.)
Cap. Rate = $85,000 / $1,000,000 = 0.085 -or- 8.50%
- Debt-Service-Coverage-Ratio = N.O.I. / (divided by) Total
Annual Mortgage Payment (P.I. x 12)
DSCR = $85,000 / $62,160 = 1.36x
- Business Environment
- Big Deals are Dead for now – over 10 stories and/or over
$25,000,000. These are tied to T.Bills
(usually financed at 10 Yr. T-Bill plus 2.5 to 3.0 points) and “don’t
work” above 5.00% or so.
- Land and Development for Resale are Dead – highly speculative
and just can’t finance right now.
- Greatest Opportunities are in YOUR Current “Place”!!
- Residential Investors “Moving-Up” to Commercial Deals (1031’s too)
- Small Business Owners wanting to BUY a building or office space
rather than lease
- Small Business Owners needing to ESCAPE a rapidly escalating loan
(SBA, Prime, etc.)
- Local Bank “Turn-Downs”
- DO the ‘Deals’ We can Get Done Easiest and Quickest
- Existing Buildings
– Most All Income Producing Commercially Zoned Property
- Construction/Development for Long-Term Hold (NOT Resale)
- Building Types (see loan grid on our Rate Sheet)
- “Softest” Prepayment Penalties in the Business
- Protect Your Client’s Financial Flexibility!
- Add to the Original Loan Amount in the Future without Penalty
and WITH Commission (Add’l Fee)
- 1.50% Loan Assumption (and Optional Loan Amount Add-On) Makes Selling
the Property Easier.
- Waive the Prepayment Penalty in the last year (or two) of the
Fixed Term as part of a refinance.
- Our Competitors (especially Silverhill, Interbay and Velocity) -
“Lock-Out” YOUR Borrowers
- Lock-Out, Income Replacement, Guaranteed Interest and Defeasance all
Mean “1 Thing”:
- Borrower (YOUR Client) is “Locked-Out” of Selling and/or Refinancing
the property.
- IF they want to sell or refi. they have to pay ALL of the Interest
that would have
been charged during the Lock-Out Period (5, 7, 10 or 15 Years) - plus
Principal.
- This could be as much as $400,000 on a $750,000 loan!!
- YOU want Repeat Clients - NOT enraged borrowers with “Dead Money”
Properties!!
“MAGIC Questions”
– Commercial REAL ESTATE Loan Price Quote Request
Originator Name: ______________________________________
E-Mail: ___________________________
Broker Co. Name: ______________________________________
Phone: ___________________________
Address: ________________________________ City: __________________
State: ____
Zip: ________
Ref. Our Questions for OWNER-OCCUPIED/OPERATED Transactions: Your
Answers
1. IF PURCHASE – Purchase Price
2. If Purchase – Targeted Closing Date
3. IF REFINANCE – Purchase Price when Bought by BORROWER
4. If Refinance - Purchase Date for this BORROWER
5. If Refinance – Approximate Current Value
6. If Refinance – Total Amount of ALL Current Liens on Subject Property
7. Property TYPE– Office; Warehouse; Anchored-Strip Center;
Industrial; SFR
Conversion; Mixed-Use (comm./retail with apts.above); School; Day-Care;
Auto.Service; Funeral Home; Non-Anchored/Retail Store; Salon; Spa;
Laundromat;
Dry-Cleaner; Lube Center; Metal Building; Golf Club; Bowling Alley;
Restaurant.
8. Property Location (City and State)
9. Loan Amount in dollars (55%-90% LTV for Purchase OR 55%-65% for
REFI)
10. Nature of Business Using the Property (Owner of Property Controls
Business)
11. Gross Company Revenue (Owner Occupied Tenant) as Reported on 2009
Taxes
12. Net Company Profit (Owner Occupied Tenant) as Reported on
2009 Tax Return
13. Experian (only) FICO of ALL Guarantors (650 Minimum/720 for
Construction)
Ref. Our Questions for NON-OWNER-OCCUPIED Transactions: Your Answers
1. IF PURCHASE – Purchase Price
2. If Purchase – Targeted Closing Date
3. IF REFINANCE – Purchase Price when Bought by BORROWER
4. If Refinance - Purchase Date for this BORROWER
5. If Refinance – Approximate Current Value
6. If Refinance – Total Amount of ALL Current Liens on Subject Property
7. Property TYPE– Office; Warehouse; Anchored-Strip Center;
Industrial; SFR
Conversion; Mixed-Use (comm./retail with apts.above); School; Day-Care;
Auto.Service; Assisted Living; Funeral Home; Non-Anchored Retail Store;
Salon; Spa;
Laundromat; Dry-Cleaner; Self-Storage; Metal Building; Restaurant.
8. Property Location (City and State) NOT in
AL,AR,AZ,CA,FL,GA,IN,LA,MI,MS,NV,OH
9. Loan Amount in dollars (65% for Multi-Use -or- 60%-55% for
Special-Use)
10. Nature of Business of Primary Tenant – IF one Tenant Occupies OVER
45% of Space
11. Gross Annual Rents as Collected in 2009 (and verified on 2009 Tax
Return)
12. Owner-Paid OPERATING Expenses for 2009 (do NOT include
depreciation/interest)
13. Experian (only) FICO of ALL Guarantors (650 Minimum/720 for
Construction)
Ref. Our “Add-On” Questions for CONSTRUCTION/REHAB. Projects Your
Answers
1. Original Cost of Land or Property when Purchased by Borrower
2. Actual Costs of Capital Improvements made (and paid) since
Purchase
3. Estimated Costs of Pending Improvements (and unpaid Improvements). |
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