Commercial Investment Real Estate March/April 2016

lenders to engage in these transactions, lending against commercial properties that are not quite ready for traditional bank f nancing. Nontraditional private loans of er numer- ous advantages when compared to tradi- tional bank loans. One benef t is that private real estate lending f rms typically do not require personal recourse as they are under- writing the value of the real estate collateral as opposed to the borrower. T is should pro- vide a level of comfort to borrowers as they do not have to report this loan as a liability on their balance sheet. By focusing on the real estate as the pri- mary source of repayment, private lenders can lend to borrowers with subpar credit. An additional benef t is private lenders are able to close a loan relatively quickly because of the streamlined underwriting of the borrower. For example, in one such $3 million loan, a borrower owned a vacant warehouse in downtown Phoenix, with plans to convert the space to creative of ce. Because the prop- erty was dilapidated and vacant, there was no cash f ow and the conversion was going to take time, but the borrower knew there was a shortage of creative of ce product in the Phoenix area coupled with rising demand. T e borrower had little net worth, and poor credit history but was experienced in these types of conversion projects, adding another level of comfort to the lender. Overall, it is estimated that more than $800 million in prof ts could move from the banking system to nonbanks over the course of the next f ve years for the reasons outlined. Alternative lenders are well posi- tioned to capitalize on this emerging shif in the f nancing landscape. Brian Good is president of Eagle Group Finance, a direct lender specializing in private money commercial real estate loans throughout the Western United States. Contact him at brian@ eaglegroupllc.com. ALTERNATIVE LENDING DUE DILIGENCE A streamlined due diligence often speeds the alternative lending approval process. Here are some of the most common items requested by alternative lenders. • Appraisal • Conversations with brokers • Phase 1 environmental site assessment • Property condition report • Credit report • Litigation searches • Clean title • Property ﬁ nancials • Personal ﬁ nancial statement • Insurance certiﬁ cates • Entity documents FIND YOURSELF AT RE/MAX RE/MAX Commercial Practitioners are part of an industry-leading network of over 100,000 associates worldwide. The opportunity to exchange referrals with top-producing residential agents is available to you the day you join. That’s huge. Retail • Multi-family • Of ce • Industrial Land • Commercial Development • Hospitality remaxcommercial.com ©2016 RE/MAX, LLC. Each RE/MAX® of ce is independently owned and operated. 16_72339 CCIM.com March | April | 2016 15

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