Always be conservative and not aggressive when analyzing a property. If you use your worst-case scenarios, you can avoid issues further down the road. Keep in mind, your rate is not locked, and you are subject to rate fluctuations. Also keep in mind your budget and expenses. The budget will need to be in-line with market or the lender will adjust to market expenses.
Do not forget your tax increase! Deals have fallen apart because the investor did not analyze the proper projected tax number. When you acquire a property, the property taxes will most likely increase based on the new purchase price, so you want to make sure you are using a good projection. We always suggest you consult a tax professional for help.
Remember 90 for 90! A property is considered stabilized after it has maintained 90% occupancy for 90-days. There are some nuances to this, but this is a rule of thumb.
Closing a deal is a team sport! Always remember to be responsive and get your requested documents in expeditiously.
If you are analyzing a property for an agency loan, use in-place income and proforma expenses. Only when you are analyzing a property for a bridge loan will you use proforma income and proforma expenses.
Liquidity requirements are 1:1 net worth to loan amount and 10% post-closing liquidity. Keep this in mind as you choose your partners.
Give yourself enough time in the contract! Make sure you have enough time for due diligence as well as enough time for closing. Typically for bridge loans, we need 30 days or less. For agency debt, we need 45-60 days.
Sending us a deal to analyze? We need the OM (if available), updated TTM, updated rent roll, and your analysis. We realize all these items are not always available, send us what you have and we will let you know if we can underwrite it or if we’ll need additional information.