Questions about an offer

[Mike Reynolds]

Made an offer on a portfolio yesterday. It is 54 doors. It was accepted but they want proof of financing first. Then (and only then) they will release the tax returns and maintenance reports and allow me to inspect them. My question is this: How can I get pre-approved for a loan when I cant give the bank any pertinent info as regarding the risks they will take? This is my very first loan like this so I dont even know if my banks will even lend on it. I am sure I can find one but how to approach them with this property?  

"Hey Banker buddy? Can you loan me a few million please? I promise it's a good deal. Give me the money and you'll see." 

 Every lender I know wants to get some financials on the property. I hope maybe BP Nation can give me a little advice. 

[Charlie MacPherson]

@Mike Reynolds I see this a lot as a business broker. 

The seller doesn't want to release sensitive information until they know that you can pay for the business.  The lender needs those docs to approve the loan, which is how the buyer will pay for it.  Catch 22, right?

Here's how I approach this.

Get the buyer (not the deal) pre-approved by the lender.  Have the lender run the buyer's credit and then give the lender the summary.  (We call it a Brief or a CIM).  The lender should have enough information to run a Term Sheet that describes the loan they will issue if everything checks out.

Have the sellers prepare 3 years tax returns and P&Ls, plus YTD for 2021.  Redact SSNs and EINs for security and submit those to the lender.  The seller needs to agree to this if they want to sell the deal.

Be prepared to show proof of funds sufficient to cover whatever down payment is required, plus working capital.

If the seller still refuses to provide the tax returns, rent rolls, leases and any other docs the lender asks for, wish them the best of luck in selling their deal and go find another, because without those docs it's not going to sell.

Good luck!