Apr
28
These are not the best of times for commercial lenders or for developers of commercial real estate projects. But life goes on, and you can be sure that the current downturn will eventually bottom out. Confidence in the financial system will once again be restored, and commercial real estate projects will once again be front and center as the mainstay and stable core of the real estate market.
Most commercial real estate lenders require the same information to arrive at a sound investment decision, but they will inevitably have different questions based on their specific investment requirements or attitudes. Some investors will request more detail than others. And you can be sure that everyone will have their pencils sharpened considerably more than over the past decade or so.
Serious mortgage bankers who spend their days negotiating deals and vetting proposals will do sufficient research to avoid future questions. This research happens on both sides of the transaction. He or she must fully understand every aspect of the developer’s proposal, at the same time as being completely familiar with the commercial lender’s underwriting procedures.
As the person putting the proposal together you must do your best to put yourself in the lender’s shoes. Understand what they are looking for, and have a complete grasp of the criteria they will be using to evaluate your proposal and make their final decision.
The length of the completed submission, as well as its content are quite important. Lenders are primarily concerned with the facts essential to the financing decision they are being asked to make. A dressed-up loan submission with lots of fluff but little substance will not impress nearly as much as a quality investment proposal that reflects a keen understanding of the elements of lending.
A loan submission that is clean and concise will be much easier for lenders to analyze. It also gives them the immediate impression that you understand what is at stake for them – the elements of safety and risk for their overall portfolio.
Most commercial mortgage lending submissions reach the underwriter’s desk without the submitter being able to make a personal presentation. That means that every component of the proposal must be clear and concise and speak for itself. This further emphasizes the importance of creating a loan submission with clear, well-written and succinct language that leaves no important questions unanswered.
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