Recording on?

Welcome To The Week 4 Coaching Call

“Life-Pivot” Business Loan Brokering Mastermind Course

My neighbor friend and entrepreneurship.

FOLLOWING THE SUCCESS PATH

Modules 1,2, & 3

Modules 4

Module 5

Module 6

Find Deals

Package Deals (and price)Find The Right Funding Source

This Business In It’s Simplest Form

Module 5 Pricing and Packaging Your Transactions (Also, Reading Financial Statements) (2:28)

(5 SubModules) Submodule 1 - Pricing Commercial Real Estate Deals (7:27) Submodule 2 - Pricing Equipment Finance Deals (25:44) Submodule 3 - Packaging an Equipment Finance Deal (8:31) SubModule 4 - Packaging a Commercial Real Estate Deal (7:50) SubModule 5 - Reading Business Financials (26:01)

Module Review

Submodule 5:Reading Financial Statements

When reading financials, I always look for four things:Current Ratio (Current Assets/Current Liabilities) usually good is 1.2:1 or better

Tangible Net Worth (All Tangible Assets - All Liabilities)Revenue Growth (This year vs last two years)

Debt Service Cover Ratio (Net operating income/Annual Debt Service) 1.25:1 or better

Lending limit will be limited to 50% or less of TNWNo Intagible assets allowed!

Is business growing or declining in revenues?

Module 5 Submodule 2 Clarification

I said early on in the video that the fees were normally higher in equipment finance than in commercial real estate but I failed to mention that is only as a percentage. Not necessarily in dollars.

Module Review

Write-Up “Know The Deal”Use your write-up so a loan officer can see everything about the deal in short concise bullet points.Loan amount: $727,000 Purpose of loan: To purchase property to replace the current 2 properties the companies are renting for combined total of $4,300/Mo. Once the new property is purchased the two different business’s will merge under one of the existing business’s Type of Business: The first of two business’s (Name Of Business) been open for 6 years is a parts & accessories for trucks and spray in bed liners. The second business Name Of Business) been open for 3 years is for ####. (Name Of Business) offers lifetime spray on roofs for ##### they offer repairs and inspections through manufactures extended warranty companies and the NRVIA. They also offer parts and accessories various #### types Property Information: located in Location, several miles away from a university and a community college also about a mile away from the interstate. Just under 4 aces with 2 large metal buildings and one brick building for commercial use. This larger property will increase workflow by being able to triple their business profitability and ease growing pains that they are dealing with from being backed logged. Ownership: Owner 1 Name (Name Of Business) ) 50%. Owner Name 2 (Name Of Business) 50% Personal Credit: both ###### and ###### have 780+ credit scores. Both clients were recently approved together by a local bank for 500k falling short of where they needed to be. They have the option to lease the bigger property from the current owner but are looking to find funding for the 727K. Loan Requested: They want to refinance the previous SBA loan they have in place and do a 25 yr amortization. Photos: See attached satellite photos current property circled in yellow Time to Close: ASAP Package Attachments Include: A. Last three years personal tax returns for both partners B. Last three years corporate tax returns C. Current year (2018) Interim Statements through March 2018 D. Credit Applications for both partners E. PFS Personal Financial Statements for both partners F. Photos of properties G. new and old appraisal

If there is a problem in the credit and you know about it and give them the background of the problem.

Questions From This WeekHow many funding sources should we start with?_What is a "Cap" in Commercial R.E. Mean? (Net Income/Purchase Price = Cap Rate)_What is your take in partnering with business brokers? (Is that the same thing as a commercial R.E. Broker?)_What about partnering with Banks_What to say to banks? (Do you have the other scripts up for us yet?)_What about partnering with credit unions?_If so, what should we say to credit unions, or would it be he same as a bank?_How many contacts should I make to reach my goal of getting 4 referral sources a month?_What is your take on offering referral fees?_If I can work / partner with business brokers, what is your take on sourcing through the IBBA somehow?_Also what is your take on walking into banks / equipment businesses to introduce myself other than calling? _Also what do you think about the casino / gaming niche for equipment?_As far as commericial R.E. Goes, what is your take on hotels as a niche? Or am I way off?_Also how soon do you think I can start walking into places and be able to answer questions? I guess I am concerned they will have questions I won't know how to answer.

Questions From This WeekWhat is a "Cap" in Commercial R.E. Mean? (Net Income/Purchase Price = Cap Rate)

It is valuation method used by investors, commercial appraisal companies, and banks

Allows buyers to compare properties in a given market based on the net income they generate.

Example:If a property nets 100,000 in income and is selling for a $1,000,000 it would have a 10% Cap Rate

One other note:Buyers want the cap rate to be highSellers wants it to be low (so do funding sources, in most cases)

Why?Example from above (from seller view point):Property nets $100,000 with 7% Cap Rate = $1,428,571Property nets $100,000 with 12% Cap Rate = $ 833,333

Questions From This Week

Are you setting expectations with the banks up front that 7/10 deals will more than likely not be a good fit?  Are they typically ok with a 30% funding rate?

Are you usually putting some sort of disclosure on your vendor rate sheets letting them know that these are not guaranteed and dependent upon credit?The rates contained within this proposal are subject to change at lessor’s discretion. If this proposal is accepted at rates above, they will remain fixed for the duration of the lease/loan provided new equipment is delivered and accepted by that date acceptable by lessor. Although this letter outlines the principle terms and conditions of our proposal, it should not be construed as a commitment to prior credit approval and the execution of standard documentation. 

Think Like An Equipment Sales Person or Sales Manager

What do sales people want?- they want more sales- they want higher margins on what they sell (in many case there will be incentives for this)- they want to make more money- they want to meet their monthly and annual quota’s- they want to beat their competition- they want to differentiate themselves from their competition- they want to close more sales faster

How can you help them?- be a trusted advisor by knowing almost as much as they do about their industry and products- provide support through joint sales calls- offer to do perform sales meetings- offer help in providing them industry information related to sales and/or financing- send them industry “proof sources” to help them in their businesses.- offer help in providing a better proposal

TValue Invite - Please request the extension mention you are BLC student

Hubspot Invite - Will be sent this weekend

Lender Reviews

Index Link to All Modules

Consider trello.com for managing projects and your day.

Reminders

Next Week’s Coaching Call - Thursday 6 PM Eastern