Are there any CRE underwriters here?

[Alan Jones]

Hi. 

I've been out of school for four years and work in residential administration, but I want to eventually make my way up to underwriting commercial deals in a sister company. I know I will probably have to go through residential u/w first and I have a fairly firm grasp on that as I am exposed to that side daily. But I want to impress my bosses and show some type of understanding and aptitude on the commercial side.

I have read up on the net and have found some info. And also borrowing some knowledge from my current job I have come up with some basics and also found a template for u/w CRE deals. So as for running numbers and seeing if they fall within our DSCR and LTV guidelines, that's not a problem.

Basically I want to know how a CRE u/w approaches a new deal. Here's what I've come up with. Is there anything else basic that you can add?

Property:

- Appraisal

- Environmental

- Perform a site visit (if needed)

- Rent roll 

- Operating statements/NOI (look out for any one off capital improvements that could hurt cash flow)

- Cap rate (obtain by comparisons to recent transactions for property type in same market)

Borrower:

- 3 years financials

- Credit check

- Personal statement on experience (if it seems they are new to commercial)

- Obtain personal or corp. guarantee if needed (get personal net worth statement)

At the end of all this, determine if we can lend the amount they are asking for if it falls within our maximum LTV and minimum DCR. Or lower the amount or increase the amortization to reduce the debt service. And decide what term lengths we are comfortable offering based on age/condition of property or maybe to match the lease length of the single tenant or anchor tenant.

Thanks.