Tag Archives: Commercial lending

Commercial Lending Lives!

Dragon Realty Capital is alive and well despite all attempts by the corona virus to take us out of action. We are actively reviewing commercial loan transactions and can fund commercial bridge loans even in “intensive care.” (Dragons are tough creatures, just ask Jon Stark!). If you have a commercial real estate financing scenario involving any of the following property types, please send us your scenario and we will do our best to get you funding:

Multifamily (5+ units), Office, Mixed Use, Warehouse, Industrial, Independent Living, Senior Assisted Living, Age Restricted Housing, Self-Storage, or Student Housing.

In general, we will fund loans that fall within the following guidelines:

  • Loan amount between $1MM and $10 MM.
  • Located nationwide.
  • 65% LTV / LTC (rehab, renovations, cap-ex, upgrades).
  • 6-36 month terms.
  • Interest only amortization.
  • Close in 20-30 days.
  • 2nd TD available behind Institutional Debt, only.

And to save you time, we will NOT finance Land or Special Use properties (Marinas, Cannabis-related, Golf Courses, etc.). For greater detail on our programs, please go here: https://dragonrealtycapital.com/loan-programs/bridge-rehab-loans/. If you or someone you know has one or is looking to acquire one of the property types above and is in need of financing, please reach out to us at 888-578-5441 x81.

We hope that you and your loved ones remain safe and we remain ready to assist with a commercial bridge loan if you need us. For more information on the Dragon, please visit www.DragonRealtyCapital.com or email us at Info@DragonRealtyCapital.com. 4/29/2020.

Loans For Love

OK, that is admittedly an odd title for a commercial lending related post, but I had to tie this post to Valentine’s Day somehow, right? Yes, gentlemen… Valentine’s Day is quickly approaching and if you haven’t planned for it, you’ll be paying a premium for those roses, chocolates, and good luck getting a good seat at Mastro’s Steak House!

And that allows me to segué into my “lending” topic: Planning, specifically as it pertains submitting a commercial loan request. One of the most difficult aspects of being on the lending side is getting “piecemealed” on the information that we need to make a realistic decision on interest in the transaction and pricing. This represents a lack of “planning” from my perspective.

This is especially apparent in “fast funding” situations. There’s an old saying: “A lack of planning on your part does NOT constitute and emergency on my part.” Pulling documents one at a time out of a broker or borrower does not bode well for a quick close. So what does it mean to “plan” for a submission?

I would suggest at the very least that you have the following prepared and ready to sent to a lender:

  • A well prepared and complete Executive Summary describing the transaction clearly, no more than 2 pages of text, with pictures.
  • The guarantor(s) Personal Financial Statement, Schedule of Real Estate, and Credit Report.
  • If a purchase, the Purchase and Sale Agreement and Offering Memorandum.
  • If a refinance, SOME validation of value (either comps, a recent BPO, or an appraisal) and a breakdown of equity injected into the project.
  • A Use of Funds Statement.

All of that should pretty much describe the transaction in enough detail for a lender to provide a realist and quick response on pricing and closing time. Yes, it means more work on your part… at first. However, you’ll find that when shopping for good loan alternatives, this approach will save you a HUGE amount of time an headache.

Now gents… get out there and get those flowers, chocolates, dinner reservations, teddy bears, and anything else to let your special someone know just how special she is!

Craig Higdon is the Chief Executive Officer of Dragon Realty Capital, a nationwide private money direct lender who has been in the commercial real estate lending business since 1993.

The “Three Lender Rule”

If you broker loans for a living, whether commercial or residential, you’re only as good as the lenders with to whom you submit those loans. If you’ve been in the business for any length of time, then you know that your enemy is “time.” Your lenders are constantly change their guidelines, loan appetites, credit boxes, submission procedures, etc. all the time. Staying on top of those changes so that you can be an effective resource to your clients, is almost a full time job in itself.

Let me introduce you to the “Three Lender Rule.” I discovered this in my brokering career by accident. Basically it says that if you submit your loan request to multiple lenders and THREE of them give you essentially the same answer (accept or pass), then that will represent roughly 98% of all lenders to whom you submit that transaction. So what’s the take away and how do we leverage this for success.

First, you can use this as an effective time/loan management tool. If you get three “no’s,” then it is probably a good idea to let another broker waste HIS time on that loan while you focus on another one. (I’m not saying that this rule is perfect, but if you’re managing a large pipeline, then it’s a VERY good rule of thumb). Or give it to an assistant to try to find that lender exception.

Second, you can use the rule to develop a very effective Lender List. Now you know that you can pick 3 bridge lenders, 3 multifamily lenders, 3 office building lenders, etc. until you have a full grouping for those types of properties in which you care to specialize or represent. This magic number is also much easier to stay on top of then say 20 bridge lenders, 15 self storage lenders, and the like. Yes, have some back-ups, but keep 3 “top tier” lenders for each category of property you like to finance.

Last, you will find that giving most of your attention to fewer lenders will result in getting better concessions and exceptions from those lender when you really need them. Loyalty can provide you with rewards when you need them.

Next week I’ll discuss how lenders are more important to you than borrowers with regard to growing and maintaining your loan brokerage business.

Craig Higdon is the Chief Executive Officer of Dragon Realty Capital, a nationwide private money direct lender. More information can be found at www.DragonRealtyCapital.com. We also offer educational, interesting, FREE Reports for industry professionals and investors: Click Here to get yours. And Click Here to obtain free Broker-specific tools.

Questions To Be Asking

Last week I discussed the importance of the Executive Summary, the first document to send to a lender and the last document you create in your loan file. This week I want to give you a few very important questions to be asking at the outset of a potential financing to help you discover if you should give a particular request priority or even pass on it all together.

So you get a call from a prospective borrower and he/she starts to run through all the really great reasons why you should give him 110% LTV, interest only balloon note financing on his outhouse in Podunk. This is where you step in and ask these questions:

  1. How much is your property worth and how did you determine that? (Is there real value here?)
  2. How much do you owe on the property and are you current on your loan(s)? (What kind of trouble is this borrower in and is it even possible to finance him?)
  3. Where is the property located? (Are you in downtown LA or in Podunk… guess which is easier to finance?)
  4. What is your motivation for getting this loan? (Gets to WHY they need the money.)
  5. When do you need to close on the loan? (Gets to HOW motivated they are to get financing.)
  6. What are your credit scores? (Again, do you have problems you have to solve?)

First, notice that these are all open-ended questions. The prospective borrower can’t give you a Yes or a No. He’s got to tell you the story. Can you see how these questions will give you enough information to make a determination on whether to proceed?

I’m not suggesting that you turn down a tough to close if you know what you’re doing. You can make real money on tough loans because they ARE tough. It’s simply better to know up front what you’re getting into.

Next week I’ll elaborate more on the Executive Summary and its structure. The better you craft this document, the better your chances of getting initial interest in your loan request.

Craig Higdon is the Chief Executive Officer of Dragon Realty Capital, a nationwide private money direct lender. More information can be found at www.DragonRealtyCapital.com. We also offer educational, interesting, FREE Reports for industry professionals and investors: Click Here to get yours.

Executive Summaries: The Alpha & Omega

What do you really have to do to get a commercial loan approved and funded? Dragon Realty Capital is a direct lender. We take loan submissions from mortgage brokers, loan officers, and banking professionals. What we notice in this process is how FEW of these lending professionals seem to know what it takes to present a loan to a lender in a way that will actually get it funded!

Dragon will be sponsoring a series of commercial broker training and industry networking seminars in 2019. In support of that, we’re putting together a series of blog posts that previews some of the key elements of that training. We hope that you find the information useful in your practice or in understanding the commercial lending process.

The first installment involves the Executive Summary. Ironically, while it is the FIRST document (Alpha) that you send to a lender it is the LAST (Omega) document that you prepare before sending in a commercial loan request to a lender. From its name you should get that is “summarizes” the loan request. Before you can prepare an effective one, you need to do some work!

You’ll need to understand the history of the transaction (how did you get to the point of needing a loan?). What is the motivation for the request? What’s the timing or urgency to close? What kind of property is it? What is its Net Operating Income, who occupies it, where is it located, and what kind of shape is it in? What about the guarantors? Who are they, what kind of experience do they have, what’s their credit like, and how much money do they have in the bank? And there are even more things that go into a good Executive Summary.

We send our brokers a template for creating one on each submission that does a pretty good job of laying out the story. You can get one for free at any of our Loan Program pages under the Loan Programs tab here: www.DragonRealtyCapital.com. You can also get some good, FREE information on other aspects of commercial lending and marketing by Clicking Here.

In the next installment I’ll cover the first few questions that you should ask ANY borrower to see whether or not you’re wasting your time on a potential loan request.

Craig Higdon is the Chief Executive Officer of Dragon Realty Capital, a nationwide private money direct lender. More information can be found at www.DragonRealtyCapital.com.

Things to come at dragon

Dragon Realty Capital is looking forward to 2019. 2018 was our first year and we learned a great many things… not all of them good! We will be implementing changes this year to better serve our primary referral sources: Mortgage Brokers, Bankers, and other Lenders. We will also be expanding our technology base to deliver loans faster and more efficiently to our ultimate clients: Commercial Real Estate Investors.

We have set up a number of excellent correspondent relationships and continue to seek additional Investors for a wider range of commercial loan offerings, nationwide. Our cloud-based loan origination system will allow our partners to enter, update, check status, and deliver conditions faster than ever before. We are also streamlining our initial documentation requirements, the one area that everyone HATES! Hey… we get it. We were brokers once.

Finally, we are going to usher in a COMPLETE commercial lending Training and Coaching Program. We’ve offered a complete commercial brokerage course and support materials since day one, but we’ve realized that the two critical components to actually DOING a great job of getting commercial loans funded quickly are missing from that: The first is hands on training with the materials. The second is ongoing support and interaction with other successful originators around the country. We will soon formally announce programs that meet both of these industry needs.

Finally… be on the lookout for two fun and informative additions to our “outreach.” The first will be a series of videos called “The Mortgage Minute” featuring the Mortgage Black Belt and a whole lot of martial arts demonstrations linked to lessons and wisdom to be applied in the commercial mortgage industry, often done “tongue-in-cheek.” The second will be a Coaching Program feature called the “Dragon’s Den” that will allow originators to find our in very short order if they have a transaction worth pursuing. It will NOT be for the faint of hear. Will you dare to enter the Dragon’s Den? Watch for more posts to find out…