REAL ESTATE FINANCE Ninth Edition. John P. Wiedemer and J. Keith Baker. Chapter 11 Commercial Loans: Construction and Land Loans. LEARNING OBJECTIVES. At the conclusion of this chapter, students will be able to : • Understand key aspects of commercial real estate finance analysis.
John P. Wiedemer and J. Keith Baker
At the conclusion of this chapter, students will be able to:
• Understand key aspects of commercial real estate finance analysis.
• Describe the commercial real estate loan application process and documentation requirements.
• Understand how the property evaluation process relies on more than the appraised value of the property and how the type of commercial loan will affect the approach to valuation and maximum loan considerations.
• Explain the draw or disbursement process for commercial construction real estate loans.
• Describe the approach used for considering construction loans for residential properties versus other types of commercial real estate loans.
Operating Statements of Property
If the property has been operating, statements for the past two or three years are required. These include annual balance sheets, profit and loss statements and an operating statement.
Annual Balance Sheets
Profit and Loss Statements
Discuss the differences in the loan application for a commercial loan and a home loan.
Describe the risks involved in commercial real estate investment and financing.
What type of work is covered in a land development loan?
Describe the information normally found in a profit and loss statement; in an operating statement.
What is a pro forma statement?
What is an audited statement and who can prepare one?
Describe the function of the Office of Interstate Land Sales.
Define construction loan.
How is a takeout commitment normally used?
List two ways a lender can be assured that release of construction money is delivered to the right contractor.