An executive summary is a 1-4 paragraph explanation of what’s on your mind, what you are going to do, what you need others to do and/or what market conditions have to occur to make the whole idea a success.
Every hard money loan, business loan, proposition, etc. has an idea or scenario on which it plays, and a plan to make it happen.
Here’s what to write in your executive summary for a hard money real estate loan:
Describe the real estate you own and its current value. If you are buying, describe what you will buy, what it’s worth and state what you will pay for it.
Tell how the value has been established.
Tell how much you need to borrow from the lender and where the balance of the cost to close will come from. JMG Capital Partners and most other hard money lenders will lend up to 65% of the purchase price on commercial real estate.
For loans in this category you will be required to put up a minimum of 20% cash or other equity in your project. The balance can come from another loan, such as a seller carry back loan.
Describe what you will do with the property, how you will make money by owning it, and how you will make the monthly payments on the loan you are requesting.
Describe your exit strategy. A hard money commercial loan is a bridge loan. You will have 1-3 years to refinance it with a conventional loan.
All of these transactions can be structured into Equity financing in the event they are development projects. Equity in most cases will allow for a longer term on repayment and also a lower rate of return.
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