Most lenders see dozens of loan packages every month. For your loan request to stand out it needs to be prepared in an organized, professional manner.
Putting together a loan package is not an easy task, and we recommend you seek the help of a qualified consultant or broker. The cost you pay to have a great presentation and timely funding far outweighs the cost (and time) you put into doing a package yourself, shopping it, negotiating the deals, and taking a chance that your project may not even be fundable.
There are certain elements that need to be included in every loan request. These are the most basic items that a lender will need to analyze your request and make an educated decision on whether or not to lend you money.
Without those required elements the package will be promptly deposited into the round file under your lender's desk, otherwise known as file 13, or in laymen's terms...the garbage.
What are those elements you ask? Great question. Hereâ€™s the answer:
* Executive Summary â€“ A short written summary including the loan request, investment type, and some of the financial numbers like LTV, LTC, your investment horizon, and your exit strategy.
* Income and Expense Data â€“ for income producing properties youâ€™ll want to breakdown your numbers on a yearly basis and provide DSCR information.
For construction projects, youâ€™ll put your proforma numbers here. Make sure you use realistic numbers for vacancy, reserves, and management because the bank will likely account for these even if you donâ€™t.
* Financial Statements and Resume â€“ itâ€™s important to let the bank know that you have experience with the type of property for which youâ€™re making a loan request. If this if your first venture into that property type highlight other experiences that lend to this type of investment. Include your current financial statement and if your levels of liquidity or credit are low, consider partnering with someone who may be more financially sound than you are.
* Maps and Pictures â€“ These are not make or break documents as they will be included in every appraisal once in the diligence phase, however, they will separate your package from those that donâ€™t have maps and pics.
* Support Documents â€“ These are any documents that will help the lender underwrite, or pre-underwrite, your deal. They could include leases or rental agreements, purchase and sale contracts, title reports, appraisals, zoning approvals and permits, construction drawings, etc.
In general, we recommend you overcompensate for your underwriter. Prepare as much support documentation as you can. As the title of this article suggests, professional packages get attention. Seek professional help if youâ€™re having trouble making sense of your project. A qualified consultant can help make sure your numbers, and your thoughts, are arranged in a concise, logical manner.
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