Page 105 - Trump University Commercial Real Estate 101

Ho w to Read a Deal

It ’ s critical that you have a good mortgage broker on your team. If
this person is well - connected, he knows which lenders specialize in
what types of loans.
This service alone is worth the one point (that is, one percent of the
loan amount) that you ’ ll pay the broker for putting the fi nancing
together.
If you try to save money here, you will waste a lot of time looking
for the right lender for your deal. Not only will you often be rejected,
but — and this can be worse — you may get a false yes . What I mean by
this is that a lender will tell you that it can do the deal, but it really
cannot. This can be disastrous.
This happened to me on a large repositioning deal. I went with a
lender who said it could do the construction loan, and when construc-
tion was complete, the lender would roll it over to a conventional loan.
Six weeks into the process the lender called to say it didn ’ t want to
do the deal. That really got my attention. I was now looking at eating
a lot of expenses if I had to back out of the deal, not to mention the
damage to my reputation.
Fortunately, I had a great relationship with the bank that currently
held the note on that property, and I arranged for alternate fi nancing.
I later talked about this fiasco with an experienced local mortgage

broker who smiled, nodded, and said that he could have told me that
the lender had a reputation for not following through with that type of
deal! I ’ ve been glad to pay experienced mortgage brokers for their
invaluable knowledge ever since.
Brokers not only save you time and trouble with lenders, but they
double - check your analysis and make sure you got it right. It ’ s like
having an expert deal analyst on your team.

After you do your first deal, you ’ ll have many brokers and sellers
sending you deals. If you cultivate your mortgage broker correctly,
you can even have this person do the preliminary screening of the
deals. Imagine only hearing about a deal when your broker says that
it ’ s a live prospect, and that he already has a lender in mind. That is the
true power of your team.

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