Page 188 - Trump University Commercial Real Estate 101

TRUMP UNIVERSITY COMMERCIAL REAL ESTATE 101

financing, but are so good that they can pay back the hard - money

lender, plus provide the investor with a great return.

Getting the Loan Approved

Now that we ’ ve covered many of your options for getting fi nanced,
let ’ s talk about what it takes to get a loan approved.
Just as you did your due diligence on the deal, lenders will go
through a similar process. They will check the past two years of profi t -
and - loss statements, plus the year - to - date one. They ’ ll examine the
current rent roll and will inspect the exterior and interior of the prop-
erty. At fi rst it ’ s just a visual inspection. If they decide to get serious
with the deal, they ’ ll send out their own property inspector.
The great thing about commercial real estate is that much of the
lending decision rests on the merits of the property and not on you
personally. Nevertheless, conventional lenders do pay some attention
to the person requesting the loan. Therefore they will want to see your

own financial statement. In addition, they ’ ll want a schedule of real
estate you own, and will check your credit history.
The next step will be for the lender to send you a term sheet . This is
between 5 and 30 pages long, explaining the terms of the deal. It indi-
cates whether the deal is recourse or non - recourse . Recourse means you
are personally liable for the debt, and non - recourse means you are not.
Most people naturally prefer non - recourse loans. The tradeoff

is that non - recourse financing often comes with burdensome pre -
payment penalties. That ’ s okay if you plan to hold the deal for an
extended period.
On the other hand, if you plan to sell the property fairly quickly,
you should discuss the best options with your mortgage broker.

Insider Tip

Many investors don ’ t realize that the term sheet is negotiable. Even

though it comes printed on official letterhead, you don ’ t have to take

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