Posted by Lin (NC) on August 19, 2011 at 12:13:33:
Portfolio lenders keep their own loans in-house rather than selling them, so they can be a little more flexible in their lending requirements and may look more favorably on smaller local projects that big banks don’t want to do. Once I got my foot in the door with a small local bank (many are portfolio lenders) they were very interested in my subsequent projects and began funding both the acquisition and fix-up with pretty decent terms.
When I got a property under contract I would put together a “package” on the property that includes (but is not limited to) plat maps and basic facts, traffic counts, area demographics, pictures inside and out, repair estimates, a bio on my company, a personal financial statement, two years’ tax returns, a cash flow analysis and summary page that gives them the financial facts on the property in a nutshell. I used Ray Alcorn’s “Dealmaker’s Guide to Commercial Real Estate” to help me. He’s got a great template, and I don’t recommend anyone be without that book. It’s really excellent.
I think of the package or proposal as a marketing piece for potential partners or lenders that shows you can do your homework, and you’re thorough and organized, and also as tool for the underwriters that helps expedite the underwriting process. I had a number of bankers tell me they were very impressed and had never had such a nice proposal and asked if they could keep a copy as an example for other borrowers. (Just make sure you remove the personal info if you share it.)
Hope that helps.
Lin