Your Guide to Real Estate Financing for Southern California

Commercial Lending Tips

Below we have compiled some basic lending tips. Remember, these are just the basics, so don’t hesitate to contact us with any questions!

Find a Commercial Mortgage Broker

To obtain the best financing programs that fit you and your property we recommend locating a qualified commercial mortgage broker that specializes in commercial real estate loans. A Broker has access to both Community Banks for unique situations and Institutional lenders that often have the best long term fixed interest rates and many offering loans on non-recourse terms (subject to traditional carve-outs).

Determine the purpose of your financing request

When talking with a commercial mortgage broker discuss your economic objectives and your long term vision for holding the property. What are you trying to accomplish with your new loan?

  • Purchasing a property to investment or occupy for a business
  • Refinance for a lower debt service
  • Cash out for a determined purpose
  • Solve a financial need or problem

Your mortgage broker can place a loan with a lender whose loan terms won’t end up economically hand cuffing you and more importantly meet your needs.

Key Documentation to submit to your mortgage Broker to review

Be prepared to discuss your loan request with the following documentation:

  • Current rent roll for investment property
  • Description of Property (lot and building size, condition, photos)
  • Two years of reported profit and loss (investment property)
  • Current Year to Date Profit and Loss Statement (investment property)

A detailed current rent roll will be used to forecast future income and to analyze future tenant rollover. Submit photos of the exterior and interior of the subject property, include a brief narrative of the improvements and amenities, your resume and if you wish to expedite the process submit your personal financial statements and last two years personal tax returns.

Review loan proposals (Letter of Intent)

Your commercial mortgage broker will process your information and match you to the best lenders that offer the best terms for your purpose. The broker will walk you through the differences of the proposed terms (LOI) to help you make the best decision. Once you determine to proceed, expect to apply with an application fee for the underwriting, third party services and reports such as an appraisal report. The mortgage broker should explain any special reserves the lender will require, review with you other conditions and covenants expected with the loan. Before reaching for your checkbook the commercial mortgage broker should clearly identify who the lender is, the specific loan terms and provide an estimate of the closing costs.

Execute the loan documents

Once the loan completes the underwriting process, you will be in a position to execute your loan documents. The mortgage broker will help coordinate a signing time and location, follow up to make certain you have a copy of the related loan documents, third party reports and contact details for the lender.

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