4 Simple Steps to Evaluate Your CRE Portfolio for Refinancing
By Roger Porter and Olga Brandeis
The start of a year always seems to bring a head-spinning amount of things to get done. We sort of see a vision for our year ahead and suddenly that vision gets clouded with tasks and goals, to-do lists and milestones. Before long our year ahead has ballooned into a stress bubble of big, complicated things that may get in the way of having your best year yet. It doesn’t have to be this way folks. In my 20+ years in commercial real estate finance, I’ve refined a mindful approach to serving clients, growing my business, and notching big wins by the end of each year.
It starts with going small. What do I mean by that? In Gary Keller’s seminal work, The One Thing, the hugely successful real estate mogul and founder of Keller Williams Realty, the largest real estate franchise in the country, breaks it down for us: “The way to get the most out of your work and your life is to go as small as possible. You want your achievements to add up, but that actually takes subtraction, not addition.” His approach is simple but profound: focus on one thing you can do each week for maximum gain.
“Success demands singleness of purpose.” –Vince Lombardi
Here in the commercial real estate finance business the one thing you can do – a grounded, practical step for folks with one commercial property ranging to a portfolio of commercial real estate – is to evaluate your current loans for potential refinancing. This one thing can streamline your commercial real estate investments and reset and optimize your portfolio for the years ahead. I’m going to show you how to do it with the small yet mindful approach below. Because as Gary says, “Going small is a simple approach to extraordinary results, and it works.”
Step 1: Identify the Loan’s Due Date
To evaluate your commercial real estate loan or multiple loans for potential refinancing, start with the due date. You can find this on your loan documents. And since you are looking over your loan documents, ask two questions to find out key pieces of information:
Does your loan have an adjustable period?
Does your loan have a prepayment penalty?
Step 2: Gather Necessary Documentation
Once you have answered these questions for the loans in your portfolio, consult the refinancing checklist below to gather the documents needed to present to your broker/banker.
Your Refinancing Checklist:
Rent roll
Previous two years of income statements
Current year-to-date income statements
Copy of current tax bill
Copy of mortgage statement
Any info on payroll of onsite and offsite management
Step 3: Negotiate Best Available Rates by Consulting a Broker or Banker
A skilled mortgage broker like myself will guide you through loan options that offer you optimal financing structures. The current rate environment will be a key player in potential savings; regardless, I’ll negotiate with my partners to find you the best rates.
Step 4: Explore Strategies to Improve Cost Savings and Long-term Growth
It doesn’t stop with loan options. I’ll open up a larger conversation around how your loans can help you achieve your business goals – from other cost-saving strategies on loan negotiations and new deal points, to long-term growth strategies.
If you’re a seasoned commercial real estate owner or new to the business, the one thing you can do this year to ensure long-lasting growth and success in your business is to evaluate your commercial real estate loans. Gary Keller figured this out long ago and watched his company take off.
When was the last time you evaluated your portfolio for refinancing? If you are ready to evaluate your portfolio, reach out via our Contact Form. And don’t forget to give us a follow on our LinkedIn page.
