All Forum Posts by: Nicholas Burch

Quote from @Nicholas Burch:

Quote from @Doug Smith:

Hi @Nicholas Burch, I want to better understand what you're asking. Are you wanting the process by which a loan is made...like a checklist? Are you looking for a pitch deck to raise capital for a private debt fund? As a neighbor from down the road in Tampa, I'm happy to help, but I want to clarify what exactly you're needing. Thanks so much. 

I should have clarified what I meant. I am interested in seeing how large commercial loans are originated by a sponsor. Ie 50M+ loans for the purpose of primary lien debt on a property. I am realizing this information is privileged, I guess I will have to find this information by other means.I should have clarified what I meant. I am interested in seeing how large commercial loans are originated from a sponsor. Ie 50M+ loans for the purpose of primary lien debt on a property. I am realizing this information is privileged, I guess I will have to find this information by other means.

Sure, there are connections and a few items that we probably wouldn't share info about...that's how we make our money...but I can share some basics. I wish I had $50M in my small change pocket to lend out, but alas, I don't. We get our money from large hedge funds and insurance companies. Most huge commercial loans are backed by funds, insurance companies, or CMBSs (Commercial Mortgage Backed Securities). They all have their guidelines of what they will buy and not buy. Our job is to really put an amazing loan file together that they can get in and tear apart without finding something to decline the loan for. I've been a lender for 33 years now and I spent more than a decade of that time as a commercial lender with huge banks doing these big loans. A lot of the deals I get are from banker buddies of mine or are referrals from my past contacts. I'll talk through the need with the borrowers/guarantors and try to structure a loan that meets their need. Once we figure out a structure, I'll think "if I were underwriting this loan, what would I need to see" and then I work with the borrower to gather that information & do the "spreads" and ratios. The most important part of the process, believe it or not for a commercial loan, is the Loan Officer Memorandum. They are required in each submission at a commercial bank, so I prepare a write up where I not only create a narrative to have the underwriters understand the deal, but then I play devils advocate. What weaknesses does this file have? I then address those issues in the bullet points. "Here is a weakness and here is the mitigant for why you shouldn't be worried about it." I bullet point cash flows, credit inquiries, any questions on the credit report and bank statements. Basically, I try to construct a bullet-proof file with tons of documentation to make the deal fly through. This is what I get paid to do. I am not sure if that answers your question or not, but I hope it helps you. 

Hi @Nicholas Burch, I want to better understand what you're asking. Are you wanting the process by which a loan is made...like a checklist? Are you looking for a pitch deck to raise capital for a private debt fund? As a neighbor from down the road in Tampa, I'm happy to help, but I want to clarify what exactly you're needing. Thanks so much. 

Quote from @Nicholas Burch:

I would like to see how it is underwritten as a sponser! 

@Chris Seveney

 I doubt a sponsor is going to share their proforma model with you as that is privileged information. It also depends a lot on the type of debt fund. There is a lot that goes into it such as:

Are the LP's debt or equity

Does the fund originate or buy on secondary market

What lien position does the fund buy

Does the fund buy performing, non performing or both

How is the fee structure

Is there a B-D involved 

What is the fund structure (SEC compliant or exemption)

Quote from @Nicholas Burch:

I would like to see how it is underwritten as a sponser! 

@Chris Seveney

1. Loan application is submitted either direct from a borrower or via a mortgage broker
2. If the loan request does not include pertinent preliminary information we request the
applicant to fill out our loan application form either online or through email
3. We review the loan application and any supporting documents provided and make a
decision as to whether the loan meets our lending parameters
4. If we need more documentation to make a decision we will request specific documents.
Otherwise we make a decision as to our interest in providing the requested financing.
5. If we are interested in making the loan we issue a Letter of Interest (LOI) stating the terms
of the loan and the requirements needed to be met before closing. We also request a deposit to pay for an appraisal performed by an appraiser holding the MAI designation (unless the borrower has an acceptable recent appraisal) and to pay for an environmental screen of the subject property. The average cost of an MAI appraisal for a small or middle market property is $3000 - $4000. The cost of an environmental screen is $475.
6. If the borrower wants to move forward under the terms of the Letter of Interest then they sign the LOI and wire/ACH funds to pay for appraisal and environmental screen.
7. We run the environmental screen. Assuming it comes back “low risk” we then contact a number of MAI appraisers in the area of the subject property and ask for their fees and time estimate. We choose the best combination of cost and time.
8. We open title at one of the major title companies
9. When the appraisal and preliminary title report are completed we review to insure that
subject property meets our requirements/expectations and title is ‘clear’.
10. We send the borrower a term sheet restating the terms of the LOI and disclosing any other
items/documents needed t close.
11. Our attorney draws up closing documents and sends them to title company for closing.

I have ben told to apply for and obtain Florida state business license/permit and a county business license/permit to operate STR in Polk county, FL. Can anyone already in this area help with advising if I need anything else? Thank you!