Tips on building connections - Lenders and Insurance Brokers

Austin, Texas
Multi-Family and Apartment Investing
3moFollow

Tips on building connections - Lenders and Insurance Brokers

Shawn Benteti
Member since 2024 · 35 posts · 7 votes

Hi there,

I just founded a syndication firm (Tradewind Investments Group) with a buy box for small commercial properties (5-30) units. Coming from the large commercial space specialized in acquiring deals sized 200+ units, I know that debt sizing and terms is not exactly the same as to what I am used to.

I am open to connections and tips for meeting lenders who can help service my firm as I try to takedown deals. What banks and agencies have you had experience with that have provided the most favorable terms and ease of use? Are there bridge products for this buy-box that are competitive? Are there specific metrics banks with underwrite and look for that differ from large commercial loans?

Similar, in my professional space, I recently helped secure a master policy across 5 assets in one of our portfolios and Tradewind's thesis was too small for this particular brokerage when I asked for a referral. Anyone had any good experiences with any brokerage in particular? Anything to look out for when choosing insurance for this size asset?

Thanks so much for helping in my entrepreneurial journey.

Shawn

0Reply
125 views

1 Reply

Jump to latestLatest
  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    3mo

    Pay attention to the lenders who are funding similar transactions to the transactions you pursue in your market. They are generally the banks with the greatest appetite for your collateral. This is all information that's public record. 

    As for insurance, your objective is to secure the best insurance coverage and equally as important maintain coverage without unnecessary premium escalations. To address the first part, I highly highly highly (can't emphasize this enough) recommend connecting with a knowledgeable insurance broker who has relationships with carriers that insure the types of properties you acquire. Don't fall for the trap of obtaining the most cost-effective coverage. There are so many carriers that are essentially re-trading terms after coverage is bound by sending out an inspector and then the property owner gets hit with a coverage compliance letter which may terminate coverage if the items aren't addressed, lead to coverage gaps or lead to a non-renewal meaning more effort and work on the back end of the initial policy term. This is becoming an increasingly common practice.

     A good broker takes the time to understand the property beyond the basic insurance application and knows how various carriers will respond to certain conditions etc. Also not all carriers respond equally to claims should they arise and knowing the most likely claims to arise and what carriers are going to be most responsive and helpful should be considered. Again, a knowledgeable broker should be able to articulate these items clearly to you.

    The second part is keeping your coverage as cost effective as possible. That's done by you. Operate your business in a manner that is designed to deter liability events from occurring, understanding additional insured requirements, and other risk shifting strategies that can be incorporated into your contract management system are incredibly powerful tools when used properly. Those who do look far more marketable to insurance carriers, particularly once you have operating experience and as a result you have the opportunity to work with the best carriers and receive the best pricing. As you get underway with your capital raising emphasizing how you prioritize this part of the process has become increasingly marketable to investors because it demonstrates risk mitigation is a valued part of your process. With so many GP's acting carelessly, this is a refreshing take.

    Best of luck

    [email protected]
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free