Loan Due Diligence Documentation

The following is a brief synopsis of required items to refinance or purchase an existing, market-rate apartment building, complex, or portfolio.

Importance of Net Worth: When applying for a commercial loan from a bank, a borrower needs to make sure that the size of his commercial loan request is reasonable in light of his net worth. For example, a borrower with a net worth of just $100,000 probably is not going to qualify for a $5 million loan. The general rule is that the borrower's net worth needs to be at least as large as the size of the commercial loan he is seeking. In the parlance of commercial real estate finance (CREF), the Net-Worth-To-Loan-Size Ratio needs to be at least 1.0.