It typically takes 30 to 60 days to close a loan. However, just because you went under application doesn't mean your loan will be approved at the quoted loan terms. An unfortunate part of this business is that there are many lenders who will retrade on the loan terms they originally offered. Some of these retrades are unacceptable and a bait-and-switch tactic. Other retrades are not really retrades at all in the malicious sense. The loan terms were adjusted based on doing ful

When you’re underwriting a mixed-use property, it is good practice to break out each income stream and evaluate it on its own. Not all revenue is created equal, and it shouldn’t be valued that way. Take a property with apartments, retail, and a parking garage. Instead of blending everything together, underwrite each component separately and assign risk accordingly. Let’s analyze a hypothetical property and business plan. Apartments: The units have not been upgraded in 20 year

One of the questions I'm regularly being asked by lenders for multifamily refinances is, "What's the cost basis?" ⚙️ FORMULA (1) Purchase price + (2) Capital improvements made since purchasing the property = Cost Basis While closing costs (soft costs) are part of your total costs at acquisition, many lenders will exclude closing costs from their cost basis calculation, as they are more interested in hard costs. WHAT'S CHANGED In 2022, many lenders would ignore cost basis if

I have learned a few things about interest rates after 15 years in lending. Nobody knows what’s going to happen to rates. 📉 2012-2017: The year 2012 was when I started in banking. The expectation was that long term interest rates (specifically 5 year fixed rates) were going up.  They stayed pretty stagnant.  📈 2018: Rates finally go up, and many thought that trend would continue.  📉 2019-2020: Rates dropped dramatically.  📊 2020-2021: Expectation was for rates to be low f

If you are ever getting a commercial real estate loan with a bank or credit union, they will almost certainly run a global cash flow analysis. And if you don't meet their requirement, this is a showstopper. What is it? A global cash flow analysis looks at: All of the cash flow you are generating (W2, business income, real estate income, etc.) All of your debt payments. Typically, banks wants to see a 1.25x DSCR. How is it underwritten? This is what makes this difficult. There

How can you apply Warren Buffett's "Margin of Safety" to lending?   Be your bank’s favorite customer.   📢 PART 4: Margin of Safety THE NEED When you are projecting future cash flows for your real estate investment, you will be wrong somewhere. The only question is: by how much? That's where "Margin of Safety" comes in. M.O.S. = giving yourself cushion  when you are wrong . APPLIED TO LENDING The lending world applies this idea already. Which is why you'll get: 65-80% LTV ins

When I was a commercial banker, I only had a handful of experiences working with commercial mortgage brokers. It was not a primary source of business for me. But the experiences I did have ranged from "good" to "I'll never do this again." My biggest issues came down to... poor communication. 📢 Whether you're a broker or a borrower, do these things to improve your relationship with lenders : Transparency. Let them know you are talking to other lenders and the level of due

This discussion is relevant to refinances, when there is not a looming loan maturity. 🔍 Should I postpone closing my loan, because I...

Banks will give their BEST customers better deals than everyone else.   So how do YOU become one of their best customers?   📢  PART 1:...

Want better loan terms and faster approvals?   Be your bank's favorite customer.   📢  PART 2: REPORTING. This is very important to...