First Commercial Deal in Progress

[Erik Browning]

Here's the story and the numbers. Also, this is my first commercial deal.

My client owns an insurance company with his sibling and he is selling his equity position to the sibling and then staying in the company as an employee. He stands to make about $800k from the deal. 

Capital gains taxes will take out a big chunk of his earnings, so his financial advisor suggested he buy some real estate to help offset the tax burden.

I'm a lender that almost exclusively deals with residential purchases and SFH investment properties. I'm an investor myself, but that's besides the point. The point is, it's my first commercial deal!!

The buyer is looking for multifamily properties between 5-10 units.

Here's the thing though: Even though I've contacted account executives and lender to learn about the process and their products, I'm certain there is more to the deal than just getting the client a property. I'm going to list what I've learned after speaking with people, but I'm curious as to what other things I need to consider in order to give the highest and best quality service?

Things I've been told to consider (specifically for multifamily >5 unit residential): 

Have the agent get you the rent roll and any other documents the seller is willing to provide.

90-180 day escrows

Processing of the deal is similar to residential, but the actual lender will want to take on more responsibility vs residential lenders.

Project Type: (First Mortgage, Construction Loan, Bridge Loan, Mezzanine Loan, Second Mortgage, etc.)
Do you want to use an SBA loan? (Must be 50% owner used.)
Do you believe this loan will require a hard money lender? (More expensive but more lenient)
Do you need a bridge loan? (Very fast, Short term, More expensive loan)
Amount of loan requested in USD Completed value of the project in USD Amount of the down payment (if applicable)

Property address
Property address 2
City, State, Zip, and County (required)

Type of property (agricultural, land, office, multi-family, hospitality, etc.)
Gross rentable area in sq ft - 5 - Net rentable area in sq ft
Number of units
Number of vacancies if known
Vacancy rate for area Description of Building(s)
Age of Building(s)
Last Renovated?
Purpose of Loan (Cash out, maturing loan, new construction, renovation, expansion, etc)
Interest rate desired?
Amortization schedule desired?
Loan term desired?
Special problems, issues, or needs

What am I missing? What else do I need to consider?

[Erik Estrada]

Hey Erik, 

What kind of terms does your client need for the loan? You can do up to 8 units on a straight forward DSCR loan.