List of Lender Denials for Inexperienced Multifamily Syndicators
Many of the people here on BP are inexperienced when it comes to multifamily syndication. I thought it would be a good idea to begin a list of reasons that a lender may deny someone a loan due to their inexperience.
Here are the main two:
Objection 1)
Denial Reason: No experience managing an asset with a large number of units
Ways to Overcome: Hire an experienced property management company with a solid track record in the asset class you are seeking. In addition, you will need to bring someone on your team with experience not only managing the units but also managing the financials/asset once you close. No lender is going to lend you money if you have never managed a large multi-million dollar budget before.
Objection 2)
Denial Reason: Low net worth and liquidity
Ways to Overcome: The answer here is simple...find someone with the proper net worth and liquidity to allow you to close the deal. This one may seem like an uphill battle when trying to find the right person. However, when you start networking and attending events you will be able to find these people. In exchange for their high net worth and liquidity, you will need to give them some equity. The equity you give will be totally worth it because you wouldn't be able to take down the deal without them.
Calling all experienced syndicators! Please list additional denial reasons here for others to learn.