Getting a Fix and Flip Loan for Commercial Property
Upgrading a commercial property and then selling the freshly renovated location can be a highly profitable venture. Such fix and flip projects, however, require significant cash typically not readily available to most prospective investors. Everything from roof repairs to parking lot reconstruction, HVAC unit replacement, and beyond demand hefty funds most cannot readily afford. The solution is to obtain a commercial property loan from a small-balance mortgage lender, a task that many find elusive. The following explains how to present your proposal in the best light possible, thus boosting your odds of signing an agreement.
Tell Your Story
Providers of small-balance commercial loans are different from Wall Street bankers. Instead of allowing algorithms and endless number crunching to guide their investment logic, intuition acts as their greatest motivating factor. Put your interpersonal skills to work and create a bond that fosters feelings of familiarity and comfort. Once the getting-to-know-you stage is complete, be prepared to comprehensively dissect your credit history. The primary purpose is to head off potential paperwork complications, but divulging past issues comes with the added benefit of creating trust.
Describe the Property
Provide your lender with particulars regarding every aspect of the building you plan to renovate. Write a compelling description outlining the type of business being run, then follow this summary with a hard data block stating the property’s size, location, and notable features. Request an appraisal from a real estate professional and freely provide a copy as proof of estimated value.
Explain Your Plans
Commercial property bankers want to know specifics regarding how you wish to use their money. Detail your precise ambitions and how such improvements can be expected to increase value. Reinforce the validity of your proposal by providing real-world, data-centric examples that display clear results. Finish by tallying the estimated gains into one, impactful number.
Break Down Expenses
After outlining your intended actions, provide a comprehensive cost analysis. Have formal estimates compiled by trade specialists at the ready in case you need to address any doubts. Avoid making an all-or-nothing demand by offering multiple propositions to accommodate varying investment comfortability levels. Take special care to compile your summary into neat, easily digestible chunks.
Obtaining a fix and flip loan is a difficult task under most circumstances, but those lacking presentational polish are at a distinct disadvantage. Before pitching your request, make a concerted effort to craft your bid into the most irresistible argument imaginable.
