Earn potentially large fees helping commercial borrowers get principal reductions

Richard Geller and Lane O’Bryon

“Good deals, bad deals, how to find

GREAT deals

Quick Market Overview

• Credit is beginning to EASE slightly• Govt backed, Life companies still VERY active• REO and NPN washout is very active• Hard Money/Bridge Capital is Flowing• Cash Buyers are VERY active right now

Some Deals That Didn’t Work –And Why

• Loan Amount: $305,000• LTV: 90%• Closing Date: next 15 days• Credit Score: 750+• Loan Type: Multi-family• Purchase Price: $305,000• Occupancy: Non-Owner• Goal of the request: Purchase of 9 unit multifamily

property. The borrower has agreed to partner up with me on 50/50 split basis. Ideally we as borrowers like to get $305K however we can put down 10% if needed.

No Deal• I found a commercial business property (multi family) and the

numbers are good enough to be able to support the loan 100% financing (distressed property) Its about $12 million dollars. Problem is, I have bad credit and no down payment. Do you know (I know its hard) any lender who would help me out? There is enough cash flow for debt service even with 100% financing. (or a bridge loan or hard money for at least 10% Right now, I applied for a SBA loan and so far, my application has not been denied (its past that 72 hours already) As an alternative, I am looking for a Joint Venture or Angel Investor. Can you refer me to someone? Please... I do not want this opportunity to pass by. I see it as buying myself a job with good cash flow. I can fix my credit once I get the "job".

No Deal• Credit Score: 690• Loan Amount: $585,000• LTV 37%• Loan Type: SBA Re-Fi • Type: Cash Out • Current Appraised Value: no current appraisal• Purchase Date: 2001 Original Cost: 250000 for 1st unit • Occupancy: Owner Occ• Property Type: Industrial • Goal of the request: Client owns a commercial condo for auto & RV

repair. Wants to refi, purchase another unit he currently rents, purchase a 3rd unit, add equipment, renovate, pay off current liabilities and add reserves.

No Deal

• Listing Agent • Property type: Student Housing • Property Class: A • Number of Units: 36 Units = 144 Beds • Asking Price: 3,850,000.00 • Stated NOI: 321,616 • Stated Revenue: $743,555 • Stated Occupancy: 98%-100% • Price Reduction for Cash Buyer: Make Offer

No Deal

• Can we fund DNP that an investor has found on his own. Say Greg finds a DNP opportunity on a strip mall that Tom owns. Tom's bank will discount the note.

• Greg comes to me to get note funded acquires the property. Greg is an experienced commercial property professional and is in good financial shape.

• The property has solid DCR after haircut.

No Deal• My first deal is a friend/customer. He owns some 150 single family residences• that are now rented at 85% + (after much hard work the last year). He owns a• couple of commercial properties too. These properties are predominantly debt• serviced with two different loans with two different banks.

• He is distressed and barely covering current costs. He is a seasoned 40 year• professional and took a substantial hit when the market crashed. He believes• his banks (long term relationships) would allow a discounted take out. He• has solid NOI and DCR would be would be very strong if haircut is achieved at• the right price. His current debt balance is $10.5 million, he speculates the• achievable haircut could be at the $6.5 million range.

No Deal• The property is your basic low B or High C multifamily, that needs some

Rehab, BUT it is Cash-Flowing apparently,• It probably is 80% occupied (I've still got to check if its Section 8 or not)

The Parking lots were full when I did another Drive-Through at 3:00AM in Morning.

• Original Note is over $3million.• Tax assessed Appraisal at $1.6 million• Average rent over $400/month (some on Rent rolls are at $550/month),

but would still make great Cash flow at even $300/month.• Owner is almost a year behind on Payments.• Auction start Bid price at $500,000.• Let me know if this is too late too Follow up on. I know i need to do more

Due Diligence, Let me know what other Info you need. Please help Guide me on what to do.

No DealI have a client with 3 duplexes that would like a mortgagework up. He is current on all loans however, he would liketo cash flow.

We can begin with 2 of the duplexes and possibly the third. His goal is to have the capability to offer the propertywith a assumable position.

I have the mortgage company for 2 of the properties if this is doable.

No Deal

• I have someone who wants to borrow money for bulk reo.

• What documents do you need?

No Deal

• self storage units, he paid $1.5• 1.2 million loans• receivership already (1 week ago) going to sale in 60

days• reason: taxes weren't paid by a partner, something

has been going on. Wasn't doing the job• occupancy 75%, other competing units are 90%• gross $224K• NOI $114K

No Deal

• bank loan: 11,200/month (was $10K)• bank principal due: 1.2 million 1.350, second

200K• $115K, lien (former partners)• $135K, lien (former partners)• bank said they'd discount the note• thinks it's worth $1.6 to $1.8 million• borrower doesn't have ability to bring in any cash

Deal!!• 750 • Loan Amount: $480,000 • LTV: 56 • Personally Spoken to Borrower: yes • Loan Type: SBA • Re-Fi Type: Rate and Term • Current Appraised Value: $858,000 • Acquisition Date: 6/30/2006 • Original Cost: $800,000 • Occupancy: Non-Owner • Property Type: Retail • Goal of the request: Owners are looking for a better interest rate for their strip mall loan.

Got Them LOI and Terms of 5.25% on a 3/20 Conventional Loan!!

Deal!!

• Comfort Inn- Refinance- Went to Loan Modification• I have a client that you spoke with a couple of months

ago, they have a flagged hotel, Comfort Inn and suites, Their loan is with a local community bank that is on the FDIC Watch list.

• They need a principal reduction in order to do a SBA loan.

• The appraisal came in short and they are about 250k upside down . How can I submit their deal for these guys to look at buying their note and doing cram down so I can get them into 504?

Deal!!

• I have a sponsor- that is a seasoned business management team experienced in wine and spirits retailing, information technology operations and real estate brokerage and development will contract and build out stand alone retail sites in St Louis metro market that is asking about getting a loan to purchase three bank owned commercial buildings and a warehouse.

• They are looking for about $4 - 5 M in financing.• They are currently raising down-payment with investors at

1% interest for $40K of a start-up LLC to retail wine • Credit scores at 700.

Deal!!

• Goal of the request: There are 3 investors. Pls see PFS. They own a Travel Lodge and wish to convert it to a new master franchise with Choice Hotels into an extended Stay Hotel. Need Apprx 1.2 million in renovations. New value will w/be 3.1 million. Need help on this one. OK to contact borrower directly.

• Current Appraised Value: $2,200,000 • Acquisition Date: 2005 • Original Cost: $2,100,000 • Occupancy: Non-Owner • Property Type: Mix Use

Deal!!• Credit Score: 720 • Loan Amount: $25,000,000 • Loan Type: Conventional Multi-Unit Construction • Purchase Price: 25,000,000 • Occupancy: Non-Owner • Goal of the request: Construction Loans for 179 unit and 144 unit apt

bldgs. All specs and local requirements are done. Seasoned investor has 7M in equity and net worth of 10M.

• Response:• This looks good if the client can come up with a little more money. We

cap our development loans at 70% LTC which would be $12,962,876 based on the numbers provided. If this can work, we would consider the deal.

Deal!!

• This is a Refinance• Current Annual NOI = $378,804• Current Debt = $3,169,000• Current Value = $5,000,000 (at 7.6 Cap)• Loan Amount Requested = $4,000,000• Note: This is a recently purchased bank REO property.

Forty units are currently vacant because of some water damage and lack of maintenance. The refinance will provide funds to get those 40 units back online, which will improve the stabilized NOI.

Deal!!

• Discount Note Request• Anchored Retail Center• Purchased for $4.5M• Current Debt= $3M• Current Value= $3.6M• Had issues w/ tenant and could not keep up

payments• Bank is willing to sell at a discount ($2.5M est)• Borrower willing to inject an addl $500K

Deal!!

• Vending Company Refinance• Good Credit, Good CF• Loan is Due needs to pay-off current• Request for $785,000• Owns RE and Equipment- Value Est. $2.3M• Established business, had tough yrs in 08,09.

Deal• 8 Florida Property Multi-Family Portfolio – 1,411 Units• • Tampa – 130 Units• • Largo – 140 Units• • Tampa – 176 Units• • Bradenton – 92 Units• • Casselberry – 352 Units• • Orlando – 184 Units• • Brandon – 125 Units• • Tampa – 212 Units

• Putting in Cash Offers On 4 of these Properties Today!!

Deal!!• OFF Market Private Sale!! • 100% Occupied/200HUD Units • Units: 200 Units Total/ 4 Buildings,50 Units a Buildings /Includes an• office, laundry & clubhouse• Current Net Income: $742,643 per year• Current CAP Rate: 10.1%• Stabilized Net Income: $941,309 per year• Stabilized CAP Rate: 14%• Stabilized Market Value: $13,447,271• Appraisal Value: $9,500,000 (April 2010)• Asking Price: $7.2M-$7.5M(+4points commission)• HUD properties require a HUD approved manager/We can assist with this

• Putting in Cash Offer today- Will also refinance this out w/ HUD loan w/ our investor!!

Deal!!• Multifamily refinance.

• Current NOI: $431,283

• Current Debt: $4,750,000

• Current Value of Property: $6,000,000

• Loan Amount: $4,900,000

• New Loan DSCR: 1.45

• This is an 80 unit multi-family consisting of two 40 unit buildings. He bought it about 3 years ago and is consistently at 94% occupancy. His current loans are a seller financed first and third, and a second with U.S. Bank.

• Have LOI/Terms for 4.25% on 35/35 Loan!!

Deal!!

• 190 + Units• Asking Price: Less than $29K A Door • Receivership: REO• Current NOI: $314,592(bad management)• Proforma NOI: $439,500• CAP RATE: 8%(better management can raise it)• Occupancy Rate: 84.6%• Putting in Cash Offer Today!!