As I continue to hunt for a (bigger) apartment building deal, I am interviewing lenders and brokers to better understand their underwriting requirements.

This is critical if I want to successfully close deals I get under contract.

In this article I will share with you the most common underwriting requirements and terms you can expect from a commercial lender, and also how you can satisfy their lending requirements even if you don’t qualify  yourself.

Imagine a scenario where you did everything right: You found a good deal and put it under contract, maybe you raised some money from investors, you did the due diligence and are still happy with the deal.

Now, you start the loan process. Your lender requests your personal financial statement but then tells you don’t have the net worth and liquidity to get financing.

Suddenly you realize you’re in trouble. While you pride yourself in the nest egg you’ve built up over the years, you also know that you don’t have the net worth to match the loan amount, and you certainly don’t have 9 months worth of liquidity in reserves.

Wouldn’t it have made sense to ask your lenders about their lending requirements before hand?

You betcha!

As I sat down with each loan broker/lender the last few weeks, I gave each one multiple scenarios and asked what they are likely to require to approve the loan and what the terms would be. What would the terms look like for a stabilized asset? What about one that is not? What would a bridge loan look like?

The answer will vary, of course, depending on the situation, deal size, and the lender you speak with. You won’t get any guarantees, but you will see patterns emerge that you can use as you put together the financing.

Watch the video below and leave me your comments or questions!