The committee was scheduled on a Thursday morning. We were waiting anxiously for the phone/e-mail from the bank that will confirm our mortgage terms. Around 2:00 PM we got the initial call. According to the lender, the committee approved a lower loan for $1,820,000. That was a very difficult moment for our project and a big disappointment for us and our partners. With this loan, we will need to come up with additional $130,000. In addition, the ROI, in this case, is not as high as we expected.

At this point, we were seriously thinking of pulling out of this deal.

We discussed our situation and agreed that we have 3 options at this point:

• Pull out the move on
• Find another lender
• Convince the current lender to get back to the original offer

As you already know us, the first one is not an option, at least until we really exhausted all other options. Finding another lender will be a very challenging task at this point and we were not sure that the seller will be willing to wait this time. The only valid option is trying to convince the lender to increase the amount and match the original numbers they have provided.

The first step was understanding what was the reason for the committee to lower the amount. When we asked the answer that we got was that they didn’t think that the rent in the area can get to $750 per door. So they based their calculation on $725. With this rent, the yearly income went down and in order to meet the LTV and DSCR, they had to lower the loan amount.

We got the commitment letter the next day and we scheduled a call with the bank to discuss.

In the next post, we will share with you the highlights from this call and our outcome of the discussion.

the KERRA team