One of the biggest hang ups for commercial real estate loans is the documentation. Learning how to avoid this issue can make the process much faster and smoother.
Who wouldn’t want to close on commercial real estate loans more quickly? One of the number one complaints of new commercial borrowers, and even the seasoned pros, is that it can take literally three months to get a loan application processed and the funds delivered. But you must understand that the lender is making a decision about your creditworthiness based in a large part on the documentation that you provide. So why not save yourself some time and heart ache and simply submit a complete and professionally assembled application packet? Use the following tips as a guideline when preparing your application for commercial real estate loans.
One critical area that most borrowers fail to document completely is the condition of the property that they are planning to purchase. They assume that the lender will hire an appraiser and that is all that is needed. But often the person reviewing your application will not have a completed appraisal and will then be forced to wait to review your packet until the appraisal is submitted. But if you include photos of the inside and outside of the property as well as any appraisal information that you have obtained on the property, the loan can begin to process more quickly. Also include documentation for any leases that are current on the property and any leasing history that you might be able to obtain from the current owner.
Having your financial documents completed and in order can be a huge time saver when processing commercial real estate loans. You will need two years of personal and business tax returns, complete copies of three months of all bank statements, a personal financial statement which lists any property that you own and detailed P & L statements. On the P & L statement be sure to indicate which expenses are recurring and which are one-time expenses so that the underwriters can easily determine cash flow and NOI.
Know What to Expect
It is also a good idea to pull a copy of your personal credit report prior to submitting your application. Even if you believe that your business has sufficient credit to qualify for the loan, the lender might pull a copy to review. If there are issues try to clear them up before applying or if time does not permit a full resolution and removal from your credit report, submit a letter of explanation with your report.
You Will Get out What You Invest
Much like any long detail driven project or process, you can expect a much better result when you nvest time in your preparation. Taking the time to carefully compile all of your personal and business financial documentation will save you a great deal of time during the review process and will also show the lender how well prepared you are for the loan that you are requesting. Invest the time and present a professional packet to make the process less stressful and less time consuming.
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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