How we compare financing proposals from multiple lenders

Step 1: Underwrite the deal as the lender will

Before anything goes to market, the deal gets underwritten as a lender will see it. Pull and normalize the trailing 12 months operating statement. Verify the rent roll. Recast operating expenses to the lender's standard (management fee floor, replacement reserves at $200 to $350/unit for multifamily, conservative real-estate tax assumption based on the property's actual reassessment cycle).

Build a clean as-is and as-stabilized NOI (if applicable). Stress-test DSCR at +100 bps to current rates. Identify any underwriting issue that the lender will flag (rollover concentration, deferred maintenance, recent tenant defaults, capex catch-up) and prepare the narrative or mitigant before the lender asks.

Step 2: Build the loan request memo

A 10 to 20 page document that gives a lender everything needed to issue an indicative term sheet without a follow-up call. Sections: deal summary, sponsor profile and track record, property description and physical condition, operating performance with normalized financials, market and submarket data, business plan if applicable, capital stack request, exit strategy, and supporting exhibits (rent roll, T-12, photos, comparable sales, comparable rents).

The memo is built once and used across all the lenders. The investment in a complete memo dramatically improves the quality and consistency of the term sheets that come back.

Step 3: Select the right capital sources

The selection is the work. Wrong lenders waste two weeks of the borrower's time. The right lenders are: the lender categories that fit the property and the deal (e.g., agency for stabilized multifamily, life co for stabilized industrial), the specific lenders within each category that are active in the property type, sponsor profile, and geography, and an appropriate mix of bank/non-bank for the deal type.

Typical parallel process sends to 6 to 12 lenders: 2 to 3 agency or life co for the perm option, 2 to 3 banks (relationship-eligible regional and one national), 2 to 3 debt funds for the bridge or higher-leverage option, and 1 to 2 specialty lenders for the asset class.

Step 4: Set a target window for indicative term sheets

The advisor coordinates package delivery to the selected lenders and centralizes follow-up questions. A 7 to 14 day window can be used as a planning estimate for initial indicative term sheets, but lender response times vary with the file, credit process, and current workload.

Indicative term sheets cover: loan amount, rate or spread, loan term, amortization, IO term, prepayment, recourse, key reserves, key conditions. Real-money negotiations happen at this stage, not after the term sheet is signed.

Step 5: Side-by-side comparison and lender selection

All term sheets get normalized into a comparison sheet. Apples-to-apples on every dimension that matters. The borrower picks the term sheet, informed by the comparison and the advisor's read on which lender will execute most reliably.

Selection criteria typically: pricing (all-in, not just headline), sizing (debt yield/DSCR/LTV constraints), prepayment flexibility, recourse exposure, reserves, and execution certainty. The cheapest term sheet is not always the right one if the lender has a track record of re-trading at closing.

Step 6: Negotiate, document, close

The signed term sheet starts a 30 to 120 day closing process depending on lender type. The advisor quarterbacks: third-party reports, lender legal, borrower legal, title, insurance, closing checklist. Issues get resolved early. The closing day is uneventful because every issue was already addressed.

What does this deliver?

A parallel process gives the borrower a consistent way to compare pricing, proceeds, interest-only periods, prepayment terms, recourse, reserves, and closing conditions. Any pricing or structural benefit depends on the offers available for that specific transaction; no savings or closing outcome is assured.

Frequently asked questions