Who to have on your team in the Commercial
Lending Business
in The Rivera Maya and Playa del Carmen?
(Who's on First, What's on Second … in the PDC Mortgage and Real Estate Scene) | |
by ENRIQUE (HENRY) SALDANA (Feb. 2012)
Back in 2006 I wrote an article with reference to the Who's on First, What's on Second, I Don't Know is on Third—Abbot and Costello's famous routine—as it applied to the commercial lending business in Mexico. I believe this famous joke analogy can also apply to the practice of real estate and mortgage business in our area.)
I later wrote, in 2012, a similar article, this time applying it to Residential Mortgages and Real Estate, you may read this article at the following on line magazine...
|
In the commercial lending business it is extremely
important to identify who is on your team, and what level of expertise does
that person has. Let me just say that, not
only have I personally dealt with many commercial loan investment bankers,
brokers, and lenders, but I have also heard many horror stories of people that
have spent large amounts of money trying to get funding for their projects.
Many of these funding companies or individuals end up to be exactly not
delivering their promises.
Unfortunately, commercial loan investment bankers, or brokers that offer commercial funding, are not regulated in the USA, much less in Mexico. I can recall of a so-called group out of the United States, whom after several complaints were made, an investigation took place, and they were finally closed down. Therefore, why is it so important to know, who’s on first and what’s on second? Well, because unless you want to become another statistic of clients being ripped off by their commercial loan investment bankers, or commercial loan investment brokers, you must make sure you know who is sitting where, and on which side of the plate they are on.
So, who’s on first?
On first there should be a reputable company that can
provide you with all the information required for the funding. They
should be able to prepare a good business plan, with 3-5 year of projections,
or even 10 yr. projections, as required by some Mexican Banks. They should be able to read and understand
profit and loss statements, balance sheet statements, and any other required
documentation an investment project requires, for Mexican Lending and American
Lending, whichever the case may be. This company must have the expertise
and know how required to put the project together. Of course, they will
charge you a fee. No one works for free. However, that fee should be a
reasonable one, depending on the amount of work required by your project. The
man on first is your LEAD OFF man. He works for you. He must do
everything possible to get you your loan.
What’s on second?
On second there should be a reputable commercial lender, commercial loan investment banker, or commercial loan investment broker. Someone with a proven track record of successfully funding projects similar to yours. Someone that can promise a successful closing, and who will do whatever it takes to make the deal happen. You must remember that the person on second is nothing more than a middle man. Many of which make false claims of successful funding, and who may, at the end of the day, leave your bank account severely depleted. The person on second will claim to have a group of investors, commercial banks, or lenders at its disposal that funds their loans. Your man on first should be able to check on that and verify the information.
At the end of the day, who’s on first, matters as much, if not more, than what’s on second since he/she will be your eyes and ears. Commercial lending is not an easy task; you must first and foremost, put on your investment thinking hat and say to yourself, is my project something I would want to invest in? Do this, with a level head, and then go on and look for your man on first. And remember who’s on first matters most, if not more, than who’s on second, from the beginning to the end of the transaction. Just like in baseball, you must first reach first base, and then you move onto second, to set yourself in a position to score. If your man on first is capable, experienced, and most importantly honest; you can count on reaching home with a good “ground ball”, with no need for a “home run”.
In closing, I will say that both articles above still apply to both types of businesses, but rather than doubting every potential funder or prostpect that comes your way, what we are saying here, is DO YOUR HOMEWORK. Do ask the right questions, and look for key points that may help you determine the validity of the information and reliability of the source.
Most importantly, keep an open mind.
I have yet to find a good and reliable source of funding in the private funding arena. So far our funding has come from institutional banking and/or government funded programs.
Yet, I remain optimistic...and still looking for my man on first!
No comments:
Post a Comment