One of our past clients came back to refinance and cash out on one of his small buildings with the goal of obtaining a program with a good rate and terms and while achieving some cash out to help replenish his reserves that had been spent on the soft story retrofit on one of his other buildings.
The most difficult part of this transaction was our borrower’s record keeping. In the operating expenses it seemed that the utility expense was extremely high, and we had to figure out what was happening here. Ultimately it turned out that his accountant had made an error and was over expensing. This over expensing however was cutting into our required loan dollars so we had to figure out a solution.
We were able to document and prove to appraiser & lender that the accountant had mistakenly over expensed thinking that the subject properties utility bills were monthly when in fact a majority of the utility expenses were billed 6 times a year not 12. This explained why the utility expense had been so high. Once we got this cleared up our loan was approved and at the loan dollars we were seeking.