WHY MY COMMERCIAL MORTGAGE PACKAGING STUNK THE FIRST FEW YEARS
I’ll never forget how hard I tried to get commercial deals. In the late 90s, I had created an outstanding Powerpoint presentation and had a really informational website. And I hustled.
I submitted hundreds of deals (and there was plenty of capital then!) and closed one loan in a year. I earned jack squat.
This image below looks like one of the binders I used for years. Back when you didn’t have pdf files and you had to send in a binder that was thick as a brick (or thicker) with documents, I would send mine in a red binder with a sticker of my logo on the side and front so it could easily be found by a credit analyst.
I’ll never forget it. It was probably 2000 or 2001, I called Business Lenders out of Hartford, CT to speak with one of their underwriters. I knew he had the file so I called and asked him about a particular borrower. I could hear him fumbling around through binders and stuff and I said “It’s in the red binder and has my logo on the spine and the front of the binder.”
He went “ahhhh… here it is.”
Now, my binders were awesome. They were beautifully organized. I use the same system today or organization with pdfs and Word documents that I did then. 1) Summary 2) Collateral Images 3) Borrower financials, etc. You get the idea.
I asked “can you give me a status update on the borrower?” He responded “I don’t have any idea what you’re trying to do here.”
I said “Seriously? It’s all right there!”
His response was “you could have saved sending me most of this stuff to begin with. You hardly have any Executive Summary and you don’t even have a Use of Proceeds.”
“You can’t figure it out from what I sent?”
“I’m not a mindreader.”
Approximately 40% of the transactions we get come from mortgage brokers. Another 15% or so come from realtors or business brokers and the remaining 45% come from the ultimate borrower. Honestly 90% of the deals we get have no or a poor Executive Summary of the transaction and about the same for Use of Proceeds.
I learned I’m not a mindreader either.
I find the better Summary I have and an accurate Use of Proceeds, the quicker my deals get looked at and either move forward or are passed on by the analyst. It’s also the same when I receive a package from someone. Sometimes we’ve had deals where they sent us a cow pie and expected us to put candles in them and make them look like a birthday cake. Sometimes we get a birthday cake and they come looking like a cow pie too! (We like those!)
I’m almost OCD with the way the files are organized now, but most of the time, I do “tell them what you’re going to tell them, tell them, then tell them what you told them.” Sometimes I’m so jammed it’s difficult for me to present it properly like I’d like to, but I keep trying!