Joseph V. Scorese shared on LinkedIn what he constitutes as the perfect commercial real estate loan package…it included these 7 items:
1) Make sure your two most previous years – both personal and business – tax returns are complete and filed
2) Prepare year-to-date personal financial statements and business operating statements – no more than 60 days old
3) Locate your 3 most recent month’s bank statements – all pages
4) If you are refinancing a commercial mortgage loan: make sure you have your payoff statements, survey, title policy, and appraisal in hand
5) If you are purchasing, the sales contract must be valid. If the contract will expire prior to the closing of your commercial real estate loan, get an extension upfront
6) For investment properties, make sure all tenant leases are valid.
7) Ensure lease terms match rent roll
I agree with Joseph with only one major addition I believe would make this a grand slam perfect commercial loan package…include a cost segregation study. Doing so does 4 major things: 1) reduces or eliminates federal income taxes for a period of time, 2) increases cash flow by, on average, 5% – 10% of the loan amount over the first 5 years, 3) reduces real estate & use taxes by reclassifying “real” property assets (§ 1250) to “personal” property assets (§ 1245), and 4) with the increased “cash” available, it allows the borrower to negotiate a lower interest rate, thereby decreasing the overall out-of-pocket expense of ownership and increasing the chances of successful loan payout. Cost segregation is definitely a win-win-win for all parties involved.
