How to Package a Loan Request for Construction, Rehab, and Commercial Loans
1. FINANCING REQUEST TEMPLATE
2. Americap Direct Corp. requires that a Financing Request Package accompany all loan requests.
This template focuses primarily on residential rehab, construction, and development loans and provides a consistent process for borrowers to streamline the financing process and accelerate the funding timeline to meet the closing deadlines.
Timely submission of a completed Financing Request Package can mean funding in as little as 5–7 business days.
Summary
3. We aim to review and respond to loan requests within 48 hours of receiving the Financing Request Package
Criteria for a loan request to be considered:
Borrower must have real estate experience with a proven track record
Borrower is required to have a minimum of 20% equity into the deal and business financial, and Profit and Loss statement
The loan-to-value (LTV) may not exceed 80-85%.
Summary
4. Americap Direct Corp. seeks to establish long-term relationships with experienced real estate investors, owner operators, developers, and brokers that are built upon trust, client service, and executional efficiency.
Submit your Financing Request Package or any specific questions related to your particular transaction to
[email protected]
COVER PAGE II.
EXECUTIVE SUMMARY III. PROPERTY DESCRIPTION IV. LOCATION & MARKET ANALYSIS V. FINANCIAL ANALYSIS VI. ABOUT BORROWER VII. APPENDICES
6. The Financing Request Package should include a Cover Page with the following information: Picture of the Property Full Property Address Timing for Funding (Closing Date, etc.) Borrower(s) Complete Contact Information, which should include: Name of Company (or entity that will own the investment) Name of Owners & Principals involved in the transaction Business Address Phone Numbers of Related Parties Email Address Website Information
I. COVER PAGE
7. is a brief narrative of the financing request, which summarizes the transaction, including the property and loan specifics should be clear and concise, and gives the borrower the ability to sell the deal to the lender.
II. EXECUTIVE SUMMARY
8. The Executive Summary should include the following information for the lender’s review: 1. Brief description/background on the deal How did you source the opportunity? What is the purchase price and timing of the transaction? Why are you utilizing private money?
II. EXECUTIVE SUMMARY
9. 2. Purpose of the Loan Request Purchase, Refinance, Bridge, Construction, Development, etc. 3. Exit Strategy What is your exit strategy and timing? How do you plan on repaying the loan? Sale, Refinance Briefly justify your exit strategy
II. EXECUTIVE SUMMARY
10. 4. Loan Proposal Request (Summarize loan terms you are requesting) Closing Date / Timeframe Loan Amount Amount of Borrower Equity Term of Loan Interest Rate Any additional loan specifics
II. EXECUTIVE SUMMARY
11. 5. Sources & Uses of Funds (see Appendices section for examples) Sources – where capital is coming from on the deal Uses – how the capital is being utilized in the deal Sources of Funds must equal Uses of Funds 6. Brief summary of Borrower and/or Company Quick write-up for lender to identify borrower and/or company
II. EXECUTIVE SUMMARY
12. should provide a complete physical description of the land, improvements, and the property, as well as any additional visual aids, such as photos, site plans, etc. For development and construction financing, the borrower should include a detailed scope of work, broken out line by line, regarding the proposed improvements to the property and associates costs with those improvements.
III. PROPERTY DESCRIPTION
13. 1. Property Information Property Name and/or Physical Address Property Type (single-family, 1-4 unit, apartment, retail, mixed-used, office, etc.) Number of Units & Net Rentable Square Feet • Breakdown of units and sizes Year Built/Renovated/Remodeled III. PROPERTY DESCRIPTION
14. 2. Site/Land Details Purchase Price Total acreage or SF Zoning Ingress and egress Utilities Easements or deed restrictions Roads / shared driveways Excess land
III. PROPERTY DESCRIPTION
15. 3. Construction Details Configuration, design features/utility Type of roof, foundation, mechanical/electrical systems, heating/hvac systems Public Utilities Parking Deferred Maintenance III. PROPERTY DESCRIPTION
16. 4. Proposed Scope of Construction / Improvements Detailed line-item list of all proposed improvements and associated costs Construction Schedule A construction budget/draw schedule spreadsheet template is available III. PROPERTY DESCRIPTION
17. should educate the lender on the property’s particular location/neighborhood, as well as the general market information and economic drivers for the particular area/city should include comparables (active and sold) that justify and strengthen the exit strategy proposed.
IV. LOCATION & MARKET ANALYSIS
18. The Location & Market Analysis section should generally include the following: Brief write-up on the property’s location as well as the local market information Justify why good area/market for your investment Demographic Information (pull from US Census or local city authorities) Additional Facts & Figures Pricing trends, valuations, Zillow, Trulia, etc. Map showing subject property and location of relevant comparables
IV. LOCATION & MARKET ANALYSIS
19. Borrower should also provide a one-page summary of the comparables, preferably in excel, justifying the market value. The specifics of the comps will vary based upon the type of property, but the analysis should provide the lender with simple layout justifying the exit strategy and valuation.
Summary of comparables should include the following:
Criteria used for comparable analysis
4 Active/UAG Comps
4 Sold Comps
4 Rental Comps
IV. LOCATION & MARKET ANALYSIS
20. The lender will want to be able to easily compare the following information from this summary: Purchase Price Analysis PSF, Per Unit, Per Acre, Cap Rate, etc. Verify true comparable to the subject property Size, type, # bedrooms, # baths, land size, # units Market Timing How long on the market? Sale Price to List Price?
IV. LOCATION & MARKET ANALYSIS
21. The lender is looking to review the assumptions made by the borrower when conducting their analysis, as well as any additional financial documentation that can be provided to prove out the analysis.
V. FINANCIAL ANALYSIS
22. The Financial Analysis should include the following information for the lender to review:
Detailed Financial Analysis Pro-Forma
Detail assumptions made about analysis
Loan Terms, Cost Breakdown, Residual Valuation
Include particular model or excel spreadsheet utilized
Flip Model Monthly Cash Flow Analysis
Development/Construction Model
Net Profit Analysis
Rental Pro-Forma (for refinance exit)
Shows sufficient debt coverage
IRR Analysis
V. FINANCIAL ANALYSIS
23. This section should is a brief description of the company and the associated borrower(s), manager(s), or principal(s).
The borrowing entity that is purchasing the property should also be included in the section. The lender is looking for company history and track record, as well the backgrounds of the individuals in the transaction.
The general format should be as follows:
Description of the Company
Track Record
List of current/historical real estate transactions
Resume of owners, principals, etc.
Can be included in the Appendices, if applicable
VI. ABOUT BORROWER
24. The borrower should provide all relevant additional documentation related to the particular transaction. The lender will typically request this additional information after initial review, but always good to already have the information ready for the lender to review in order to expedite the underwriting process.
VII. APPENDICES
25. The typical items that the borrower should make available to the lender for review (if applicable) are as follows: VII. APPENDICES Property Information Listing Sheet Purchase & Sale Agreement Copy of Deed Appraisal (if applicable) Pictures of the property (interior & exterior) Tax Assessor Card Photos of the property and site (interior and exterior) Site plan, survey, or recorded plat Floor plans Aerial photographs Construction Budget & Timeline Plot plans, permits, approvals, conceptuals, floorplans, sketches, zoning, elevations 3rd Party Reports PCR, Environmental, Zoning Sources and Uses of Funds (example below)
26. VII. APPENDICES PURCHASE (EXAMPLE)
Sources of Funds Amount % 1st Lien Mortgage $800,000 80.0%
2nd Lien Mortgage (Seller/Private) $0 0.0% Equity (Borrower's Cash) $200,000 20.0% TOTAL SOURCES $1,000,000 100.0% Uses of Funds Amount %
Purchase Price $650,000 65.0% Closing Costs $30,000 3.0% Hard Costs $200,000 20.0% Financing $100,000 10.0% Soft Costs (Carry Costs) $20,000 2.0%
TOTAL USES $1,000,000 100.0% REFINANCE (EXAMPLE)
Sources of Funds Amount % 1st Lien Mortgage $1,000,000 100.0% TOTAL SOURCES $1,000,000 100.0% Uses of Funds Amount % Payoff Existing Loan $600,000 60.0% Renovations / Rehab Costs $250,000 25.0% Buy Out Partner $100,000 10.0% Mortgage Broker Fee $10,000 1.0% Lender Fee $10,000 1.0% Appraisal, Phase I, Structural $10,000 1.0% 1st Lien Mortgage $800,000 80.0% 2nd Lien Mortgage (Seller/Private) $0 0.0% Equity (Borrower's Cash) $200,000 20.0%
TOTAL SOURCES $1,000,000 100.0% Uses of Funds Amount % Purchase Price $650,000 65.0% Closing Costs $30,000 3.0% Hard Costs $200,000 20.0% Financing $100,000 10.0% Soft Costs (Carry Costs) $20,000 2.0% TOTAL USES $1,000,000 100.0% REFINANCE (EXAMPLE) Sources of Funds Amount % 1st Lien Mortgage $1,000,000 100.0%
TOTAL SOURCES $1,000,000 100.0% Uses of Funds Amount % Payoff Existing Loan $600,000 60.0% Renovations / Rehab Costs $250,000 25.0% Buy Out Partner $100,000 10.0% Mortgage Broker Fee $10,000 1.0% Lender Fee $10,000 1.0% Appraisal, Phase I, Structural $10,000 1.0% Refinancing Costs $5,000 0.5% Legal Fees $5,000 0.5% Title, Survey, & Escrows $10,000 1.0% Earn-out $0 0.0%
TOTAL USES $1,000,000 100.0% The borrower should also have the following personal financial information available if requested by the lender for further review: Personal Financial Statements 2 years of Tax Returns List of Real-Estate Owned Properties (REO Schedule) Bank Statements Credit Report