Commercial real estate lenders may be becoming hungrier to lend and be offering great terms, but there is no question that underwriting is more difficult to get through today than it used to be. For those interested in financing and leasing multi-family, office, or industrial real estate in Worcester, Mass. success in getting a loan depends a lot on the power of the executive summary.
The Importance of the Executive Summary to Your Loan Request
The executive summary is all important to your commercial real estate funding request.
It doesn’t matter how great the property is, how profitable you see the opportunity is or even if you have an 800 credit score. If your executive summary isn’t up to par it’s unlikely any commercial mortgage lender will give your project or loan request a chance.
Those newer to commercial real estate investing in Worcester, MA may not realize how different the borrowing process is from applying for a home loan. Unlike residential mortgage applications commercial lenders want to see an executive summary upfront. If they love it, they’ll invite you to pursue a loan with them and your chances of getting it will be pretty good. If they don’t love it, don’t expect to hear anything back.
The Anatomy of a Successful Executive Summary
So what does a winning executive summary look like?
The perfect executive summary is a 1-3 page document outlining the opportunity, who’s involved and the loan request.
What should be included?
- Property details (include copy of a previous appraisal if possible)
- Transaction details
- Profile of the principals and management team
- Project description; returns, how it will be made to succeed and profit
- Loan request including terms and plans for servicing debt
4 Tips for an Executive Summary that Gets Funded
1. Don’t Exaggerate
Refuse the temptation to exaggerate in your executive summary. Commercial real estate lenders funding loans in Worcester, Massachusetts see hundreds and thousands of loan requests each month and know their stuff. Exaggerating returns or rents or property values is going to either make you look green and inexperienced or to look like a liar. Neither of course makes a good impression on someone you are asking to borrow money from. Be realistic while pointing out the potential.
Make your executive summary look thorough, yet easy to ready. You should appear to have done all of your homework, yet still be interesting enough to want the lender to get excited about being involved.
Management experience is a huge deal to commercial lenders. It doesn’t matter how great the property is or the numbers it is turning in now if a borrower doesn’t have a management team experienced in this type of building. Even a great property can be driven into the ground in green hands. In other words the opportunity is only as good as the execution. If you and your partners don’t have the hands on resume then perhaps interviewing, selecting and listing a respected local property management company in Worcester County as part of your team will go a long way towards getting funded.
4. Crafting the Copy
If you don’t feel eloquent on paper or just aren’t confident in putting it all together why not consider hiring a freelance writer to help you out and make sure your executive summary is a hit?