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Tips to Fast Closes!

Has this ever happened to you?

Scenario: You have a partner in a commercial real estate project who suddenly wants out. He/she offers you an incentive to close quickly.

Scenario: You found a great property under market value. The seller accepted your offer and you need a quick close.

Scenario: You have a huge tax bill that has just caught up to you. You need money to pay taxes before they government puts a lien on your property.

Need a loan fast?

All of these scenarios are possible, and the happen frequently. There are private lenders who can close quickly in these situations — if the deal is right for them.

The KEY to getting a lender to look at your deal, make a decision on your deal, and close quickly is simple – be super prepared!

When closing quickly, all commercial real estate lenders are lending against the value of the property most heavily and may not consider the cash flow at all. In fact, most of these scenarios involve a situation where there is little or no cash flow currently.

What the lender looks for is lots of equity; so for the borrower, the loan is going to be low LTV. Depending on the type of property and type of situation, you can expect the lender to offer 45% LTV to maybe 65% LTV. This leaves lots of room in the deal for the lender to liquidate the property if they have to take it back from you.

Secondly, expect to pay for the fast close in terms of higher interest rate and lender points. There will also be due diligence fees, including processing, appraisal and inspection that will have to be paid in advance of closing.

Be Prepared!

So being prepared means:

  1. Have all the information you need to complete your loan application quickly.
  2. Have all the supporting documentation gathered, prepared, digitized, clearly labeled and ready to submit.
  3. Have a recent appraisal or broker’s price opinion. Recent is within the last 6 months -preferably within the last 30 days.
  4. Have your own credit report, personal financial statement and P&L from any other businesses you won. Make sure these are current and ready to go. Write letters of explanation for any oddities.
  5. Have a full package on the property, including photos, narrative, past financial performance and projected plans (pro forma and executive summary.)
  6. Put your own request letter together briefly describing the situation, the loan request, and the exit strategy. Be clear on your numbers and your timeframe.
  7. Be ready to comply with the broker’s and lender’s paperwork requirements, including non-disclosures, letters of intent, etc. Don’t get into a legal quibble and demand wording changes.

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Sofia Capital Ventures is your Concierge for Private Commercial Lending. We have lenders standing by who can close in 10 days or less. If you are ready to go, and your loan request makes sense, contact us immediately and we’ll get you the best placement possible for your situation. Make the call today!

By |March 24th, 2017|Private Commercial Lending|Comments Off on Tips to Fast Closes!
Barbara Leuin, Commercial Lending Expert
Barbara Leuin, Ph.D., Commercial Lending Expert, Colorado Springs, CO, is a serial entrepreneur and real estate investor, with over 30 years of professional experience, including 13 years of university teaching in business and economics; 16 years of business consulting; and 5 years as a full-time real estate investor. Since 1996, she has helped start-up businesses access millions in private capital. As CEO, Barbara brings visionary leadership, team-building and leadership to Sofia Capital Ventures. She is responsible for lender relationships, broker training and identifying market opportunities.

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