What criteria do lenders look at when approving a commercial real estate loan? In this episode, the importance of thorough due diligence in real estate transactions is explored. Brian shares what he learned how to coordinate various professionals such as roofers, HVAC specialists, and contractors to get precise estimates and assessments. Brian talks about the need for transparency and upfront communication with vendors, the significance of timely loan applications, and the critical role of personal financial statements and statements of real estate owned. Real-world advice on maintaining strong relationships with contractors and lenders, as well as the strategic preparation for property acquisition, rounds out the episode. 00:00 - 03:11 Importance of Accurate Estimates A thorough due diligence process requires involving multiple professionals like roofers, contractors, and HVAC repairmen. It's crucial to have specialized professionals assess specific areas such as roofing and HVAC systems to ensure accurate analysis. Accurate measurements are necessary for precise cost estimates, making it essential for contractors to measure areas like countertops and square footage. Due diligence goes beyond superficial checks, necessitating a deep and detailed inspection to develop an effective renovation budget for B and C class value-added projects. 03:12 - 04:54 Transparency and Communication The necessity of thorough due diligence and capital expense planning when managing properties. The process of passing extra requests through external vendors The importance of identifying costs early, the potential expense of HVAC replacements in older buildings The need for specialists to evaluate key aspects like roofs and HVAC systems Using the due diligence period to both uncover property issues and prepare vendor arrangements for future work. 04:55 - 10:40 Navigating the Loan Process The importance of transparency and honesty in both personal and professional relationships, particularly during due diligence processes. Being upfront and clear about expectations to foster trust and cooperation, drawing parallels from military leadership and teaching experience. The need for timely communication and preparation during due diligence in real estate transactions The importance of involving contractors early to avoid last-minute issues. Practical advice on timelines and considerations when signing purchase and sale agreements (PSAs), such as avoiding signing on a Friday to prevent losing valuable days. 10:41 - 15:55 Key Financial Documents and Criteria The importance of submitting loan applications early in real estate transactions to avoid delays and potential financial losses. Delaying the loan application caused the need for an extension, which was costly. Loan application fees can be significant, they are minimal compared to the overall transaction value. Submitting loan applications promptly after signing the purchase and sale agreement (PSA) to ensure ample time for loan processing. 15:56 – 18:31Conclusion Lenders consider when granting loans for real estate investments. The importance of meeting net worth requirements, demonstrating experience in real estate, and providing detailed information about personal properties and portfolios. Lenders evaluate factors like post-closure liquidity and other financial requirements to make quick decisions. The necessity of potentially partnering with others to satisfy lender conditions. Key Quotes: "If you have a due diligence, contingency, and front load. This is an important subject and it never really ends until you own the property." – Brian Briscoe "I would rather get a middle of the night phone call on something stupid than not get a phone call in the middle of the night for something that's important." – Brian Briscoe "Get the right people in the type of people who are going to do the jobs and have people measure." – Brian Briscoe Connect with Brian Briscoe: https://www.instagram.com/brian_briscoe https://www.linkedin.com/in/brian-briscoe-ut/ Visit sponsorcloud.io/contact today and unlock $2,000 of free services exclusively for REI Rocks community members! Get automated syndication and investor relationship management tools to save time and money. Mention your part of the REI Rocks community for exclusive offers. Help make affordable, low-cost education summits possible. Check out Sponsor Cloud today! LEAVE A REVIEW + help someone who wants to explode their business growth by sharing this episode. Are you confused about where to start? Join our community and learn more about real estate investing. Head over to our Facebook Page, YouTube channel, or website https://www.theacademypresents.com/jointhesummit36848306.
