Accelerated Real Estate Investor 271: Handling Bank Draws: Pro Forma Vs. Reality with Josh Cantwell
Anyone who has ever worked on a renovation project knows that everything doesn’t always go according to plan. So, how do you handle the draws when you have a large value-add CapEx program and a loan with a bank or lender with construction draw money?
How do you prove to your bank that your draws are accurate, you’ve done everything right, but your actual plan doesn’t exactly align with your original one?
We purchased Forest Ridge Apartments in Parma, Ohio, for $11.65 million about a year ago. Our original loan was for $1.1 million in draws and $1.1 million in construction. From the start, the numbers lined up perfectly, but it got much more complicated when we firmed things up. When we submitted our final draw request, our banker needed an explanation as to why things were going the way they were.
In this episode, I want to use what happened with our project to show you a real example of pro forma versus reality. When you’re ready for the next draw with your banker, I want you to have the insight to be able to explain yourself when things get complicated, get the budget you need, and have the power to add value to your deals when it’s within reach.
Key Takeaways with Josh Cantwell
- Why we needed to invest additional funds into the commons at Forest Ridge apartments, and how this changed our budget.
- What happened when we submitted our final draw request, and how I explained what was happening with our lender.
- How we were able to beef up our budget from $1.1 to $1.41 million.
- How our improvements left us with a building worth more than it was when we originally underwrote it.
Want the Full Show Notes?
To get access to the full show notes, including audio, transcripts, and links to all the resources mentioned, visit https://acceleratedinvestorpodcast.com/271
Rate & Review
If you enjoyed today’s episode of The Accelerated Real Estate Investor Podcast, hit the subscribe button on Apple Podcasts, so future episodes are automatically downloaded directly to your device.
You can also help by providing an honest rating & review over on Apple Podcasts. Reviews go a long way in helping us build awareness so that we can impact even more people. THANK YOU!
Connect with Josh Cantwell
Sign Up For My Coaching Program!
To unlock your potential and start earning real passive income, visit joshcantwellcoaching.com