How to Squash Your Competition - Commercial Financing Case Study
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How to wow your financing client and squash your competition at the same time. Learn the process and steps required to evaluate quickly and get your loan approved in very short timeframe (from pre-approval to final commitment in 72 hours). Competing commercial mortgage broker had the deal for nearly 3 weeks and he dropped the ball. Learn how to quickly recognize, analyze, research and package it "bulletproof" to get that final approval. Remember, a discussion letter is almost as useful as a pre-approval on the residential mortgage.
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How to Squash Your Competition - Commercial Financing Case Study
- 1. The information contained herein (the “Information”) is intended for general informational purposes only and should not be relied upon by recipients hereof. Although the Information is believed to be correct, its accuracy, correctness or completeness cannot be guaranteed and has not been verified by either ACP Corp, MortgagesLab Financial Inc or any of its affiliates. Views expressed in this presentation are based on research materials available from sources that Mortgages Lab (and associates) considers reliable but neither guarantees, warrants nor assumes any responsibility or liability of any kind with respect to the accuracy, correctness, completeness, or suitability of, or decisions based upon or in connection with, the Information. All real estate opportunities come with varying degrees of risk and past performance is not an indicator or guarantee of future results. Prices can go up or down and current performance may be lower or higher than any performance data quoted for comparisons.
- 3. * Father of 2 Awesome Daughters * Commercial Financier * Broker Trainer * Real Estate Investor * My Why
- 5. 1. Applies to commercial properties only 2. Rates are much higher than residential 3. Too complicated & difficult 4. Takes too long & too much work 5. Property does not self debt service 6. All banks offer the same 7. Don’t know where to start
- 6. 1. Can finance residential even recreational 2. Rates are as low and even lower - MUR 3. Complicated = More Options ie JV,VTB 4. Warehouse = same time, paid faster 5. Corporate Guarantee, PG, Acc Receiv. 6. 15-25 Yrs AM, 3 Rates from same lender 7. Client pay the price or you ?
- 7. *Qualifying for that $325K townhouse vs warehouse? *With 25% down payment *2012 NOA - $10K *2013 NOA – Zero income *Which residential “A” lender would approve? *Commercial Lender Approved the warehouse *3.15% 5 years fix term
- 8. •75% LTV •Appraisal required •DCR calculations •Property & business •Credit personal & Co •Story & experience •Max 95% LTV / 80% •Appraisal optional •TDS/GDS •Income (employment & debt) & 50% of rents •Credit of personal •Character of applicant
- 9. • Not advertised – “overall risk” • “A” business is 1%-2% higher • Amortizations max 25 years *** • Lender fee of 0.50 - 1% avg • Application/broker fee of 1-2% avg • Extensive documents required
- 10. • Legal fees – higher than residential • Appraisal fees – up to 5X higher than residential • Environmental assessment (Stage 1-3) • Property Transfer Tax (Corp deferral only) • Annual review and renewal fees of $250- $2,500 (hidden in contract - beware)
- 11. • Much longer process (2-12+ months) • Reports can take up to 6-8 weeks • Longer time required for analysis • 4-6 weeks for realtor subject removals • Requires personal guaranty/corp guaranty • Same lender offer 3 different rates
- 12. *Assessment – Strength, Other broker *Existing Client *Complete Financials, PNW, Bureau *Background story, OTP
- 13. *Other broker / My Point of View *Existing client relationship *Other offers? CIBC / Blueshore *Timeline – Nov 24 – SR Dec 15 *Complexity (Assignment Fees) *ROI & Risk Analysis
- 14. *Class 1, 2 or 3 type of financing? *Financial Statements *Background Stories *Strength of covenant / File
- 18. *Blueshore offer: *$3.4M @ 3.75% - 5 Yrs (25 years AM)
- 21. Attempting to finance “assignment fee”
- 22. Submitted Thursday, Nov 24, 2015
- 23. How much do you save on $3.4M over 5 years? >>>$64,656 in interest!!<<< Final Approval - Tuesday, Dec 1, 2015
- 25. Find a mentor Refer or co-broker to commercial mortgage broker Start small and simple Be prepared to do more work Be paid 50-100% more per file!
- 26. I used to be terrified of heights and public speaking
- 27. Got Questions, want these slides? Text or Email me. info@SuaTruong.com