All Forum Posts by: Doug Smith

I'll cut and paste what we send out for the initial approval for a loan on multi-family, but it's similar to what we ask for for a MH Park. I hope it helps:

Items Needed To Submit Your Loan To Processing

• Guarantor Application: Complete one application for each Guarantor. Fill in all boxes the best you can. Each owner of the entity with a 20% or more interest must complete this application, but you can do it separately. We do not share information with the other partners.
• Personal Financial Statement If you already have a form with all of this information, that’s great. We can use that, but I need one for each and every guarantor.
• HUD or Sales Contract: For a refinance please provide the HUD from when the property was purchased. For purchases please providefully-executed sales contract complete with all addendums. If you are getting the property from a wholesaler or other assignor, we need a complete, fully-executed copy of the assignment as well.
• 3 Months Asset Statements: Please provide 2 months bank & brokerage statements, all pages (even if they are blank).
• Survey: The title agent will need a copy of the survey. If you have one, great. If not, we’ll need to have one ordered for you.
• Entity Documents (NEEDED FOR PREAPPROVAL):
  1. LLC/LLP

i.Copy of Articles of Formation/Incorporation

ii.Copy of fully executed Operating Agreement/Partnership Agreement (all pages & amendments)

iii.Certificate of Foreign Qualification (if applicable)

1. Corporation

i.Copy of Articles of Formation/Incorporation

ii.Copy of fully executed Corporate Resolution designating authorized signer(s) for the Corporation

iii.Copy of fully executed Corporate Bylaws

iv.Copy of stock certification

v.Certificate of Foreign Qualification (if applicable)

• Identification (NEEDED FOR PREAPPROVAL): Copy Driver’s License or Passport for each Guarantor.
• Rent Roll (NEEDED FOR PREAPPROVAL): We’ll need to get an understanding of the current cash flow of the property. Part of that is to get a rent roll showing current rents, square footage of unit, expiration of the lease, and the current status of the tenant payments.
• Profit/Loss Statement and Balance Sheet for the Property: At a minimum, we would want a profit/loss statement and a balance sheet for the most recent complete year as well as year-to-date for the property, but we would prefer to also get the last 2 years of tax return pages for the property.
• Experience – (NEEDED FOR PREAPPROVAL): A big portion of how aggressive we can be with our terms is your experience. We need to show underwriting what your experience level looks like. Please provide us with a list of properties that you have flipped in the past including dates, addresses, amounts, outcomes, etc. Please provide us with no more than the last 8 Settlement Statements from your past transactions.
• Insurance Information: We will need a copy of the binder or declarations page for the property hazard insurance and, if applicable, the flood insurance. Be sure to get us the name, phone number, and email address for your agent(s). Also, for properties of 5 units or more, we need to get a copy of your general commercial liability declarations page.

 Actually, for the good of the group I'll post this here. This is cut-and-paste from our doc request packet...

PREPARE YOUR ENTITY DOCUMENTS: The great thing about investor loans is that once we have the basic documents from the borrower, we simply need to make sure they are current and updated periodically. In a DSCR loan, the borrower is an entity like an LLC or S-Corp. We need to get the following information regarding the borrowing entity:

• ARTICLES OF ORGANIZATION: This is pretty easy to get in states like Florida. The articles are simply a form showing that the entity has legally filed in the state. 
• IRS SS-4 FORM: When you first sign up for your Tax ID number, you’ll get a letter stating what your Tax ID number is. We need a copy of that letter. Let me know if there is an issue getting it. Perhaps we can find a work-around.
• CERTIFICATE OF GOOD STANDING (aka Certificate of Status): I hate this requirement as it’s simply a way for the state to make money. Very few entities get this for themselves unless they are doing something like getting a loan, but it’s pretty cheap to do and can be done on line usually. It simply is something that states that the business is in good standing with the state authorities.
• OPERATING AGREEMENT OR BYLAWS: This is the document that usually throws investors for a loop as most LLCs (Operating Agreement) and S-Corps (Bylaws) don’t have these done at formation. Unfortunately, we need them for the loan. They will show who owns the entity in what percentages as well as who can sign on behalf of the entity. Sometimes a borrower will have their attorney draft them. On other occasions, they will simply get them with an on-line template through sites like Law Depot or Legal Zoom. We will, however, need a signed and fully-executed operating agreement or bylaws (depending upon entity type) to proceed.

What State are you setting it up in? PM me and I can email you a laundry list of exactly what we lenders require when doing a bridge loan for a real estate investor. I'm happy to help. 

Its pretty straight forward. Underwriting will want to see some progressive experience in renovations, but as long as your not taking a quantum leap, it should be do-able. You can use the cost of the land and the other costs you have already spent toward the down payment, so I suspect you won't have to inject anything else into the deal. I would, however, need to know a bit more. I'll PM you. 

Its pretty straight forward. Underwriting will want to see some progressive experience in renovations, but as long as your not taking a quantum leap, it should be do-able. You can use the cost of the land and the other costs you have already spent toward the down payment, so I suspect you won't have to inject anything else into the deal. I would, however, need to know a bit more. I'll PM you. 

Other than a roofer that will wait for a real estate closing. I've not heard of that. We do have programs where we finance renovations. Perhaps you could be more specific with what you seek. 

My wife is an agent. I got my RE license just so I can go to appointments that creep her out. She's very attractive and quit posting her picture on her card, ads, or signs. We kept getting calls asking to have her show the guy a house. She would often say "sure, my husband will meet you to (click)...hello...hello. If someone refuses to allow us to copy an ID so the police can have a lead to go on when our bodies are found in a ravine off of I4, then it's not worth the risk for us to show the house. 

 I own a mortgage company in Florida. I watch the 10-Year Treasury constantly as that will track in lock-step with mortgage rates, but you can always download "Mortgage News Daily" from your Ap Store. That rate is going to be a "national average"...not the rate that all lenders will offer. Rates are going to have "loan-level pricing adjustments" (LLPAs) that will have different rates depending upon Loan-to-Values, Credit Scores, Property Type, and many other factors. Also, keep in mind that although most lenders start with similar "Costs of Funds", we all have different "spreads", or "mark-ups" built into the pricing. I would be a bit apprehensive about locking that far out. The premium you would have to pay for a lock is going to be like a whip. The farther you get away from your hand, the more the whip moves. Similarly, the farther out you lock, the bigger the premium that is built in. I would think it would eat up a big chunk if not all of your buy-down. The other thing to keep in mind with new construction is this...does the builder own the lender? Big builders will build in tons to the price of the house to offer "closing cost concessions" or buy downs. They also don't use standard contracts. They have their attorney's draft them and they stack many of the fees that the seller would normally pay and push them off onto the buyer. The builder-owned lenders usually have higher spreads built in as well. Personally, that far out I would float. I don't think the lock premium will be worth it until you get within 45 days or so. Good luck. 

First of all, if you haven't done this before, I highly recommend partnering with someone with some experience in ground-up spec construction for 3-4 deals before breaking off on your own. We finance ground-up spec, but we want to see that the operator has done similar deals before. We also have an investor arm that does build these projects. We have a person on board with a degree in design, so we usually tweak the floor plans for sight lines and function. I think if you don't jump ahead of yourself and partner with an experienced person, you're learning curve will be exponential and you'll be able to answer your own post. I wish you well in your endeavor. 

We finance these types of deals, so from our perspective, make sure you're getting a partner...even if they are a GC...that has done similar projects before. If they have done three or four $250K deals, a jump to $3M might not go over as well when we underwrite it. One of the biggest things we look at is the experience of the operators. With respect to the "reasonablness", what do you own against the property? That value, if owned for more than 6 months, can be used as the down payment for a loan. If you can find someone with experience that brings that amount to the table and then you do a small loan for the remainder of what you need, then I think it's more than reasonable. You might not need a loan at all. Good luck to you.