Mortgages & Creative Financing

The Five “C’s” of a Perfect Loan Proposal

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Loan Proposal

One of my favorite songs as a child up was “C is For Cookie, It’s Good Enough For Me.”

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Yes, I’m talking about the Cookie Monster song from Sesame Street. That song could get stuck in my head for hours, and I would annoy the rest of my family as I ran around the house singing it. “C IS FOR COOKIE, IT’S GOOD ENOUGH FOR ME!”

(You are welcome for getting it stuck in your head for the rest of the day. Carry on.)

But today, although I’m now hungry for a chocolate chip cookie, I don’t want to talk about sweets; I want to talk about loans.

I know, bummer.

But trust me, loans might not be as delicious as cookies, but they'll serve you better in the long run. When you hear that sweet ‘ol "yes" from the bank, you'll be able to buy as many cookies as you like.

So today we’re going to sing a new song. C is no longer for “cookie.” C is now for loan acceptance. And we’re not just going to talk about one “C,” we’re going to talk about the “five C’s" of a perfect loan presentation.

Want to hear your lender say yes? Then start incorporating these five C's in your loan requests.

***As a side note, and totally unrelated to this post, I wanted to invite you to this week’s BiggerPockets Live Video Webinar – where I’ll be teaching on “How to Invest in Real Estate While Working a Full Time Job.”  Sign up here!  Okay, back to your blog post…*** 

Related: Confessions of an Ex-Banker: How to Get Your Next Loan Approved, Guaranteed

Confidence

When you present your loan to a lender, whether it's a bank, a private money lender, a hard money lender, or someone else, how confident are you in the strength of the deal? Are you sure it’s a good deal you are buying?

If someone came to YOU and asked to borrow $20, and when you asked why, they stuttered and stammered and looked at the ground while talking… would that make you nervous? Of course it would! So why would you assume a lender is going to treat you any differently? Be confident!

Notice I’m not telling you to “act confident.” This isn’t false confidence. You should actually be confident in the deal because you’ve run over the numbers a hundred times, and it IS a great deal.

When you are confident, your enthusiasm for the deal will rub off on the lender and help them get to “yes.” After all, no one knows your deal like you do, so be sure you’ve run your numbers and have the confidence to say “this is an amazing deal.”

Clarity

How clear are you when pitching your deal?

Are you handing over a pile of loose papers, unsure what is what? Are you throwing dozens of numbers out there, hoping a few of them stick? Is your presentation easy to follow?

When they ask you a question about the property, are you able to share the answer in a clear, easy-to-understand manner? Make your presentation so clear that a five-year-old could understand what you have, what you need, and how you are planning to get there.

Concise

Lenders are busy.

Don’t try to impress a lender with how deep and complicated your loan presentation is. Be concise when you build your case for why they should lend to you. Yes, you should be thorough and supply all the information they need to make a decision. However, do so in as concise a manner as possible, or include a “summary” for them to quickly look at. They can dig into the details if they want, but they’ll love to see all the main points summarized and easy to follow.

Again, if you hand them a stack of 200 loose papers, guess where those papers are going to end up? Yep, probably over in the “I’ll do it when I have time” pile, which may never get looked at again. So be concise and help them make quick decisions.

Convenience

Don’t make your lender work for information.

If you want to hear a “yes,” make it easy for them to look at the data and approve your loan!

This means they should not have to chase you down for paperwork because you’ve already given it to them. It means they should not have to try and find the gross monthly income on page 58 of your presentation because you’ve conveniently summed up the pertinent numbers on page one.

Help a lender say yes by making it convenient to do so.

Creativity

Finally, put some effort into presenting your deal creatively.

I’m not suggesting you hire a plane to write “fund me” in the sky (though, that would be pretty creative), but I’m talking about finding ways to make your presentation stand out.

Related: The Loan Application: A Complete Checklist of Documentation Investors Need for Approval

For example, on a recent refinance I applied for (and got accepted), I went to Staples and bought a simple binder with a laminated cover and color-coded separators to put all my loan docs into. On the front, I included a summary of exactly what I was looking for. I included a section with photos, another section with tax returns, another section with my credit report. I went over-the-top because I wanted my loan to stand out in the pile of his 1,000 other boring, black-and-white loan proposals.

Loan ApproveOf course, I also included all the numbers of the property and showed the strength of the deal using the BiggerPockets Rental Property Calculator. I printed out the PDF report and put it in the first section of the binder. This way, the lender could immediately see the income, the expenses, the net operating income, the future projections, and much more — all in a confident, clear, concise, convenient, and creative presentation (with color… the 6th “C!”).

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Of course, none of the five “C’s” alone are going to get your loan accepted. The deal still has to be solid, and you still need to fit within your lender’s requirements. However, by presenting your deal in its best light, you are able to increase the odds of hearing a “yes” by helping the lender do their job easier.

Do you have any other tips you’d like to share? Any questions on the above information?

Share your thoughts below!

(This blog post was brought to you by the letter “C!”)

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He is a nationally recognized leader in the real estate education space and has tau...
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    Bill Gulley Investor, Entrepreneur, Educator from Springfield, Missouri
    Replied over 5 years ago
    Good, here’s another “C”, complete. Give complete information but don’t over do it with graphs or fill-in or fluff, especially fluff, give the meat and not sizzle it up. You are “marketing” to conservative thinkers, not investors, a seller or a buyer. Know what they need, include it and stop, know when the presentation is done. Too much information is as bad as not enough information and too much can show that you’re doing a “hard sell”, a distraction that can take away the lender’s confidence. Small loans don’t need that much beyond the basic requirements, the more you ask for the more you might include. Good stuff Brandon!
    Brandon Turner Investor from Maui, HI
    Replied over 5 years ago
    Very true, Bill! Now you are going to make me change it to the “6 C’s” (it started with just 4 😉 ) Thanks for the comment and addition. As always, you are spot on!
    Brandon Turner Investor from Maui, HI
    Replied over 5 years ago
    Very true, Bill! Now you are going to make me change it to the “6 C’s” (it started with just 4 😉 ) Thanks for the comment and addition. As always, you are spot on!
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied over 5 years ago
    Clarity is really important I think. A confused mind says no. We have several, interconnected branches and our tax returns are massive. We finally merged all of the P&L’s into one to create a company-wide P&L (Rentmanager makes this tough because you can’t split up partnerships based on ownership percentage when pulling a report, so we had to manually enter it all). Then we wrote some brief letters explaining the key points of our tax returns. This seems to have aided us greatly when it comes to approaching lenders.
    Brandon Turner Investor from Maui, HI
    Replied over 5 years ago
    “A confused mind say no” – I love that Andrew1 100% true. Thanks for the comment! I’m looking forward to your podcast episode coming out this week 🙂
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied over 5 years ago
    I think I heard that from David Lindahl, but it’s certainly true. And I am absolutely looking forward to the podcast coming out as well!
    Ayodeji Kuponiyi Investor from King of Prussia, Pennsylvania
    Replied over 5 years ago
    Those 3 Cs are definitely important that have in this business. Thanks for sharing!
    Brandon Turner Investor from Maui, HI
    Replied over 5 years ago
    THanks AyodejI! And looks like I’m going to have to make this “The 10 C’s” pretty soon! Good stuff here in the comments. Rock on!
    Joel A.
    Replied over 5 years ago
    You forgot about two very important C’s. Credit – as in score Cash – as in reserves. Good article. I’m guessing this applies more to commercial/portfolio loans?
    Brandon Turner Investor from Maui, HI
    Replied over 5 years ago
    Rock on! Thanks Joel – great additions!
    Chris Payne Rental Property Investor from Miami, FL
    Replied almost 5 years ago
    @Brandon Do you have a sample presentation that you can share? I’d like to know exactly what to include in a loan ask presentation.
    Michael Sobotka Real Estate Agent from Buffalo, NY
    Replied over 4 years ago
    Does anyone have a Commercial loan request binder or presentation to share?
    Omar Kohgadai
    Replied over 3 years ago
    Would really appreciate getting a commercial loan request binder. It would provide color and help everyone to reach the high standards set by you guys.
    Leonard Keitt
    Replied over 1 year ago
    Great information!