Commercial Mortgages 101

Everything You Need to Know to Create a Winning Loan Request Package

 Commercial Mortgages 101

Author: Michael Reinhard
Pub Date: May 2010
Print Edition: $21.95
Print ISBN: 9780814415078
Page Count: 240
Format: Paper or Softback
e-Book ISBN: 9780814415085

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Table of Contents

CONTENTS

Acknowlegments

Introduction

Chapter 1: An Introduction to Commercial Real Estate Loans

What Is a Commercial Mortgage?

“Mortgage” Defined

“Commercial” Defined

Types of Commercial Properties

Non-Income-Producing Properties

Income-Producing Properties

Single-Tenant Properties

Multitenant Properties

Types of Commercial Real Estate Lenders

Banks

Life Insurance Companies

Conduit Lenders

Agency Lenders

Credit Companies

Mortgage Bankers

Private Lenders

Commercial Mortgage Terms

Maturity Period

Amortization Period

Loan-to-Value Ratios

Interest Rates

Prepayment Penalty

Recourse vs. Nonrecourse Loans

Commercial Mortgage Underwriting

Sponsorship

Property Underwriting

Final Underwriting Analysis

Chapter 2: Preparing the Loan Request Package

Executive Summary

Purpose of Loan Request

Sources and Uses

Property Description and Location

Financial Summary

Borrower

Property Description

Location and Demographics

Property Economics

Financial Statements

Financial Analysis

Schedule of Income

Historical Cash Flow

Loan Analysis

Supporting Documents

Market and Submarket Data

Sponsorship

Chapter 3: Financial Strength and Creditworthiness

Net Worth and Liquidity

Assets

Non–Real Estate Assets

Real Estate Assets, Cash Equity, and Market Equity

Cost vs. Market Value

Pre-Funding Liquidity

Post-Funding Liquidity

Lender’s Calculation of Net Worth and Pre-Funding and Post-Funding Liquidity

Credit Score and History

Five Adverse Conditions Unacceptable to a Commercial Lender

Personal Income and Cash Flow

Gross Income

Self-Employment Income

Net Cash Flow and Taxable Net Cash Flow from Rental Income

Cash Flow Statement

Banking and Credit References

Chapter 4: Real Estate Experience

Ownership and Management Experience

Ownership Experience

Management Experience

Chapter 5: Real Estate Assets

The REO Schedule

The REO Schedule and the Balance Sheet

Anatomy of an REO Schedule

Property Value Section

Property Name

Property Description

Property Address

Date of Acquisition

Original Cost of the Property

Name and Address of Lender

Loan Number

Ownership Percentage

Market Value of the Property

Balance of Mortgages

Total Equity

Net Ownership Equity

Cash Flow Section

Monthly Rental Income

Monthly Operating Expenses

Monthly Loan Payments

Monthly Cash Flow

Net Ownership Cash Flow

Chapter 6: Forms of Ownership

Borrowers and Borrowing Entities

Types of Borrowers and Borrowing Entities

Individual Ownership

Co-Tenancy and Joint Ownership

Partnerships

Limited Liability Companies

Corporations

Trusts

Index

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