Learn the language of lenders
The primary focus of the Lender Language program is to empower commercial real estate investors through insight and theory regarding the mindset, guidelines and hot buttons of commercial real estate lenders.
Establishing a foundation of knowledge through the Lender Language study course and staying current on the lending markets through a lender language web subscription will allow commercial real estate investors to develop and maintain a real world understanding and applicable working knowledge of the lending market. Investors should be able to quickly determine what type of finance terms are available for a specific commercial real estate opportunity.
This will not only save time but the value of the credibility you will establish with industry professionals and your investors/partners is immeasurable.
LL offers theory, guidelines and detailed insight into the entire commercial real estate lender bucket. Recourse, non-recourse, permanent & bridge lenders are all discussed in detail in this course.
Typically a lender want to see historical figures as well as borrower projections. Historical financials will carry the most weight in underwriting. However, proformas are considered as well.
A typical permanent loan should take between 45-60 days to close. A bridge loan can close in as little as 7-10 days. However, the norm is between 20–30 days.
A pre-qualification letter or “Prequal” letter is a term that bled over from the residential world and typically not applicable to the commercial properties because the property needs to service its own debt. A Suitability Letter is more appropriate for a commercial transaction.
Yes, even though there s no personal guarantee, the lender will still consider the key principles personal credit score.
No, multi-family properties with 5 or more units are considered commercial from a lending standpoint.
Interest rates are determined differently based on the lender. Agency lenders and conduits based there interest rates off of a certain index. Portfolio lenders typically base their rates off of an internal cost of funds.
This is a ratio used by lenders to determine how much they will lend on a particular property. It encompasses the ratio of the loan amount to the value of the property. For example, let’s say that an investor/borrower wants to purchase a property that is valued at $5,000,000. He/she pays $1,000,000 as a down payment, meaning this individual would be seeking a loan amount of $4,000,000. Thus our ratio of loan-to-value would be $4M/$5M, or 80%. Generally, a lender prefers to see an LTV no greater than 75%, but most will go higher if the quality of the property is exceptional and/or the borrower has a substantial net worth.
When we are talking about financing, the term “point” essentially means percent. For example, one point on a one million-dollar loan is equal to $10,000, or 1% x $1,000,000
When a rate is locked, the lender is being asked to guarantee interest rate of your loan, even though the index continue to fluctuate. Rate lock is when the lender negotiates the “Spread” or margin over the index by which the interest rate is determined.
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