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3 Considerations for Keeping Underwriting on Track

Format your financials on a calendar year basis, if possible, with monthly and annual totals. If items that are below the NOI line (capital expenditures, depreciation, financing expenses, one-time non-operating expenses, etc.) are lumped in with other operating expenses, separate them out and put them below the NOI line before they’re handed off to the underwriter.

If your tax returns do not match financials for a property, it is best to offer an explanation and provide as much support as possible on why this is the case. Lenders can become alarmed when they see discrepancies, and some may “write down” the NOI because of this.

Be prepared to provide backup and be transparent with details regarding the story behind the loan request, or the process may become more complicated than it needs to be. Providing your lender and underwriter as much insight as possible on the property, the transaction, and sponsor increases your chances of obtaining the desired terms and staying in-line with the timeline.

PLUM Lending is a full service commercial real estate lender that provides creative structured finance solutions for all property types. We specialize in the capitalization of middle-market commercial real estate properties nationwide with a focus on secondary markets. We provide borrowers with capital through our various direct lending programs as well as access to construction financing, mezzanine capital, and preferred and joint-venture equity investments.

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Disclaimer

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Ownership of real estate contains unique risks, such as changes in real estate values and property taxes, interest rates, cash flow of underlying real estate assets, supply and demand, and the management skill and credit worthiness of the issuer. Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market. This article is not intended to replace competent legal, tax, investment or financial planning advice. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. Please contact your investment, tax and legal advisors for professional advice that is consistent with your personal situation. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve. Historical performance is not a reliable indicator of current or future performance.

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