Banks will give their BEST customers better deals than everyone else.   So how do YOU become one of their best customers?   📢  PART 1: DEPOSITS   🔎  Why?   The more deposits you bring to your bank, the more PROFITABLE you are as a customer.   The cheapest source of funding for banks is non-interest bearing (or low interest bearing) Deposits. Banks take these deposits and lend them out to commercial borrowers at 6-8% interest.   Put another way: banks borrow money from you at 0% and earn 6-8% (before operating and other expenses).   You can be a good depository customer if you have a: Checking accounts (non-interest bearing) Savings account (Low interest) CD (Medium-interest) Money Market (High-interest)   The less interest they pay you, the more profitable your deposits are to them.   💡  But will this always get you a better deal on your next loan?   Generally, yes. But it depends. If your bank is HUNGRY for deposits: YES. If your bank is FLUSH with deposits and is having a hard time deploying all its capital into loans: maybe yes, maybe no. However, in 2025, at a time when banks are generally hungry for deposits, the answer is: most likely yes.   ⚠️  Caution When Negotiating   The best approach in business is to create win-wins . You need to win, your bank needs to win. Everyone needs to win.   As soon as someone starts to lose, the relationship can go sour.   You lose if : your bank is charging you too high an interest rate on your loan. You aren't going to be happy when you find out you could have gotten 1.00% better on your deal.   The bank loses if: You beat them up too much on the loan terms and their margins are razor thin. You become a lot less valuable of a client to them. And when you aren't that valuable and times get tough or you need a special request, they might start to wonder why they are doing all this work and not making any money. 💰 Know Your Value All that said, if you know that you are going to bring a lot of deposits to your next lending relationship, tell your banker.   They should give you a better deal on your next loan request.     ▶️  Upcoming   This is Part 1 of a series where I'll be going over: "How do YOU become one of your bank's best customers?"   This will help you know your value, which should: 1. Get you better loan terms 2. Exceptions that other customers at the bank don't get.

📖 Bible Reading: Ecclesiastes 11:1-6 1 Ship your grain across the sea;     after many days you may receive a return. 2 Invest in seven ventures, yes, in eight;     you do not know what disaster may come upon the land. Henry Holt 💬: Diversify your investments, because some could go bad. I find it interesting that it says 7 or 8 investments, and not 2 or 3. If one investment goes bad out of 2, that’s 50% of your invested capital at risk in that one investment. 3 If clouds are full of water,     they pour rain on the earth. Whether a tree falls to the south or to the north,     in the place where it falls, there it will lie. 4 Whoever watches the wind will not plant;     whoever looks at the clouds will not reap Henry Holt  💬 : There are things outside of your control, like rain and wind. Don’t sit there watching things outside of your control, focus on the things you can control. In this example, planting and reaping. 5 As you do not know the path of the wind,     or how the body is formed[a] in a mother’s womb, so you cannot understand the work of God,     the Maker of all things. Henry Holt  💬 : Don’t get over-confident in a single investment. God is ultimately in control. I also think that we should be in prayer over our investments. Pray that God would bless our efforts. And seek to glorify Him with these investments, as apart from Him we can do nothing. 6 Sow your seed in the morning,     and at evening let your hands not be idle, for you do not know which will succeed,     whether this or that,     or whether both will do equally well. Henry Holt  💬 : Put in the work and diversify your investments, as you cannot know for sure what's going to be successful and to what degree. 💡 Who is this advice coming from? The Bible in the inspired Word of God, written by humans. First and foremost, God knows best, which is why we should take these verses to heart. Second, it is believed that the human author of these verses was Solomon. It is believed that Solomon wrote Ecclesiastes 3,000 years ago, around 1,000 BC. If you have heard of King David (the same David who killed Goliath), Solomon was his son. Solomon prayed to God for wisdom, and it was granted to him (1 Kings 3:5-12). His wisdom was greater than all the Kings of the earth. He was also the wealthiest king in his lifetime. 📖 Bible Reading: 1 Kings 10:23 23 King Solomon was greater in riches and wisdom than all the other kings of the earth. Given that this advice is the Word of God and written by Solomon who was the wisest and richest of his day, the principle of diversification should be strongly considered when you invest. Note: God might call you to deviate from the path above. But the general principle stands.

Background Lenders underwrite loans based on net operating income (NOI), and one of the largest line items affecting NOI is insurance expense. If insurance comes in higher than expected, your NOI drops—and so does your loan size. Lenders typically fall into two categories: Non-recourse lenders  (e.g. agency, CMBS, debt funds): Can’t pursue the borrower personally, so they focus heavily on the property’s financials and risks. Full-recourse lenders  (e.g. banks): Can pursue both the property and the borrower personally (guarantor), so they underwrite the borrower more deeply than the property. The difference really shows up in how insurance costs are treated during underwriting. How Insurance Estimate Change- and Why it Matters When a lender begins underwriting, they typically use one of these three starting points to estimate insurance costs: Seller’s historical expense  from the trailing 12-month (T-12) financials Lender’s market assumption , based on property type, location, and recent deals Borrower’s underwritten estimate , if the borrower has already obtained quotes But here’s the key: 🔁 These are just preliminary figures.  The actual cost of insurance may only be known weeks into due diligence , after the borrower: Receives loss runs  (claims history) Reviews lender insurance requirements Gets formal quotes from insurance brokers And if the final insurance premium is higher  than the initial estimate, then NOI falls—and loan proceeds get cut . Let's Look at the Math Scenario A: Insurance Comes In as Expected Gross Income: $600,000 Operating Expenses (Excl. Insurance): $350,000 Insurance Estimate (from T-12): $50,000 NOI = $600,000 - $350,000 - $50,000 = $200,000 Loan sizing at 1.25 DSCR, 6.5% interest, 30-year amortization: Monthly debt = $200,000 ÷ 1.25 ÷ 12 = $13,333 Max loan = Payment of $13,333 supports a loan of ~$2,090,000 Scenario B: Insurance Comes in $20,000 Higher Than Expected Insurance (final quote): $70,000 NOI = $600,000 - $350,000 - $70,000 = $180,000 Loan sizing at same DSCR/terms: Monthly debt = $180,000 ÷ 1.25 ÷ 12 = $12,000 Max loan = Payment of $12,000 supports a loan of ~$1,880,000 🔻 Result: Loan proceeds drop by $210,000 due to a $20,000 increase in insurance. That’s a 10% swing in loan dollars over one line item. How Non-Recourse Lenders Handle This Non-recourse lenders almost always reconcile actual insurance costs before finalizing loan proceeds. That means: If insurance ends up higher, they reduce the loan. If it ends up lower (less common), they may increase it, subject to LTV/LTC limits. Why are they strict? Because the property alone is the collateral—they need precision. 🧠 Borrower Tip: Get ahead of this by working with your insurance broker early—ideally between LOI and PSA. Provide early insurance quotes to your lender. Underwrite conservatively to avoid surprises. If costs come in lower, that’s a win. If higher, you’re already prepared. Real-World Win A borrower of mine was refinancing with Fannie Mae. We initially underwrote to a $20,000 insurance quote. But Fannie required much more coverage—quotes came in at $30,000. That $10,000 increase would’ve reduced loan proceeds by almost $100,000. We asked the lender for a recommended insurance broker who understood Fannie’s requirements. They connected us with someone who secured a compliant policy for $20,000/year. ✅ Result: NOI went back up Loan proceeds increased by nearly $120,000 We hit the borrower’s cash-out target The deal closed cleanly What About Full-Recourse Lenders? Full-recourse lenders like banks typically don’t re-underwrite your final insurance premium —at least not formally. They focus more on: Guarantor’s personal tax returns Global cash flow Debt service across all owned properties Liquidity and net worth Because they can chase the borrower personally , they often accept more risk on the property-level financials—including insurance. ⚠️ Important: Some bank lenders do  check final insurance binders before closing, especially on large or complex deals. But it’s less common than with non-recourse lenders. Key Takeaways: Insurance can make or break your loan size. Don’t trust the seller’s T-12 blindly—get your own quotes. The earlier you bring your insurance agent into the process, the better. If you're working with a non-recourse lender, expect a true-up of insurance costs before closing. If you're working with a full-recourse lender, expect more underwriting on you—and possibly fewer questions about the insurance.

Background I had been working with a client for over a year and a half to plan for the refinance of his multifamily property. He originally purchased the asset with a bridge loan, and it was time to transition into permanent financing. The Analysis A s part of our underwriting process, I put together a detailed sources and uses chart. We concluded that a new loan would not only pay off the existing bridge loan, but also allow him to pull out equity to pay off several other unrelated loans. Everything penciled out cleanly—on paper, we were ready. The Surprise at Closing Prior to closing, we hit an unexpected snag: the equity cash-out was going to be $70,000 less than anticipated. What happened? The loan was through Fannie Mae—which was the best execution available. It offered the highest loan proceeds, lowest interest rate, and longest amortization. However, Fannie Mae requires a Property Condition Assessment (PCA) , which evaluates the physical condition of the property and identifies any “immediate repairs”  that need to be addressed in the near term (typically within 1–12 months). In our case, two major items flagged by the PCA were: Parking lot repairs Foundation work To ensure these repairs are completed, Fannie Mae holds back a portion of the loan proceeds in a repair escrow. Once the borrower completes the repairs, any unused funds may be released. This holdback structure incentivizes borrowers to make repairs quickly and cost-effectively. The Lesson Learned I was already familiar with this requirement from Fannie Mae. What I could have done better was prepare the client  for this possibility. While the exact amount of the required repair escrow is unknowable until the PCA is completed, I could have better managed expectations. The property was in good shape—fully renovated units, well-maintained overall—but even properties in good condition can require immediate repairs by the PCA. What I’ll Do Differently Going forward, I plan to include a placeholder line in the sources and uses chart  titled “Immediate Repair Budget” with a value of $0. I'll explain to the client that: This amount is currently unknown It could end up being $0— but probably not They should expect that something might be flagged, and that there may be a corresponding holdback This simple adjustment will help clients be more emotionally and financially prepared for last-minute adjustments at closing. Final Note: Context Matters Bridge lenders also typically require a PCA and identify immediate repairs. But since borrowers using bridge loans are usually planning value-add improvements anyway, these repairs often overlap with the borrower’s renovation budget. As a result, the immediate repair holdback doesn’t come as a surprise—it’s often already baked into their strategy. With a refinance, however, the borrower already owns the property and may not believe anything needs to be repaired at their property. If they weren’t planning to make additional improvements, a lender-required repair holdback can feel like an unexpected cost. That’s where proactive expectation-setting becomes helpful.