Top Exec Blog (Web Log)

In the world of real estate investing, whether you are the buyer, the seller, the realtor or developer, one of the critical elements to making your deal happen is Cash Flow.

During a recent conversation with builders in the Atlanta area, I was asked for my advice on what was better: a great FICO (credit score) or a great portfolio of liquid (cash/stocks) assets? The essential question was: how do we make sure that we qualify and get the funding we need to make this project happen?

While there is no simple answer, the truth is a mortgage professional can work with you to successfully structure the loan request in such a way that some elements of the loan request can be used to counterbalance issues that might disqualify the loan applicant. For example, if the borrower has a lower FICO, but lots of liquid assets, then that makes it easier to complete the funding. If the borrower has a great FICO, but little in terms of cash (liquid), yet has a great cash flow (from salary, interest, rental income or other legitimate sources), then that, too, can make it work to get the funding approved.

In many ways, this can all be boiled down to: cash flow is king! Whether that cash flow is shown as income or liquid assets or rental receipts or something similar, this will help justify a commercial property (or residential) loan, when structured appropriately and handled by a professional mortgage expert.  Remember this, the next time you approach a financial transaction as a borrower, investor or seller. The numbers will tell you whether the deal is right or not.

Posted 2/1/07

© Daniel A. Cabrera/Top Exec Funding, LLC, 2007 All rights reserved