Last of the 15 Mistakes

11 Assuming that just because property cash flows and a borrower has good credit that the lender is going to approve the out?of?state borrower.
You must be aware that not all deals close, especially with the out?of state first time borrower.

12 Underestimating the costs and expenses that the Lender is going to deduct from the gross rental income and the resulting net income, such as TILC, Management, Insurance and taxes.
Wait till you get the underwriters spread of the existing cash flow before determining if you are going to be able to buy the property and have a good ROI.

13 Under estimating the amount of documentation that is required to get a package together and placed into underwriting.
Just be aware that the time from full loan approval to doc preparation and signing to the actual money being transferred to close the escrow is expanding every day.

14 Under valuing the importance of cash flow projections for the purchase of a business or an investment property.
Understand that CAP Rates have a direct effect on the cash flow of the project, And CAP rates will be decreased as the lender adds more and more expenses to the bottom line, thus affecting your bottom line.

15 Not valuing the importance of the 4506 seller tax validation.
The importance of the 4506 cannot be underestimated, if the sellers tax returns don’t reflect what they are repressing the loan will be denied and if you as the borrower have un?explained issues on your 4506 the lender may not close the deal.

This concludes the 15 mistakes most borrowers make.  For more on Getting Your loan Approved please read our book of the same name. For more on modifying a commercial loan visit our new company, California Commercial Loan Modification Company.