FAQ

Q. What information do I need to supply to get a quote?

A. Generally, we would need to receive a property description, income and expense data, a current rent roll (for multi-tenanted properties) and several property photos. Please see the checklist section on our website.

Q. What happens after I submit my loan application?

A. First, call Main Source Capital and discuss the project with an Account Executive to find out what we can do in general terms.

Second, you must Pre-Qualify the property and borrower(s). Please review the Pre-Qualification requirements in the Checklist section of the website.

Each program has its own unique Pre-Qualification checklist; make sure you send us the right and current information for the program you want for your borrower.

After we have reviewed the Pre-Qualification documents and find that the project is favorable, Main Source Capital will forward a Letter of Interest.

After the borrower(s) have signed the Letter of Interest and funds have been received to cover the 3rd-party reports, the loan will be registered and begin processing.

The 3rd-party reports (appraisal, property inspections, including environmental data report, etc.) are ordered
The Commitment Letter and funding are the last steps. After conditions in the Commitment Letter have been cleared we then set up the closing. The whole process generally takes 45-60 days from pre-qualification to close, though sometimes timeframes are shortened when information is submitted quickly and when all submissions are completed without delay.

Q. What can I expect from start to finish?

A. Quick responses, unbiased feedback, great benefits, competitive rates and a company that earns your business and trust.

Q. Will you review a deal before we finalize a purchase contract?

A. Absolutely! Many times, Realtors, Brokers and Borrowers will get our feedback to assist them in understanding a deal or to confirm the underwriting cash flow. We want you to feel that you have a friend in the business that you can consistently rely upon.

Q. Is Main Source Capital’s limited to lending in specific states?

A. We lend in all 50 of the United States.

Q. What is Yield Maintenance?

A. Yield Maintenance is more directly concerned with the contemporary market situation. Yield Maintenance allows the borrower to prepay without harming the lender’s expectations of income from interest. The “penalty” for prepayment is the present value of the remaining payments, multiplied by the percentage difference between the interest rate on the loan and the current yield from treasury bills with the same maturity.

Q. What is cap rate?

A. Cap rate is calculated by dividing the Net Operating Income (NOI) by the sales price. First, Properties are valued primarily on their ability to produce income. Second, cap rates consider income only; it can be used to compare other alternative investments. Such as other real estate besides office, stocks, bonds and businesses. Third, no two properties are exactly alike. Brokers and appraisers need a method to compare properties with different locations, physical condition, and quality of construction and level of management. Cap rates are adjusted up or down depending on the level of risk of the property that it has in maintaining that future income stream.

Q. How do you determine cap rates?

A. Cap rate is calculated by dividing the Net Operating Income (NOI) by the sales price.

Q. How do you calculate NOI (Net Operating income)?

A Gross income generated by the property, minus all normal operating expenses excluding depreciation and loan payments, you get your NOI.

Q. How do you determine Sales price from NOI & Cap Rate?

A. Divide the NOI by the cap rate to reach the Sales Price

Q. What is included in Operating Expenses?

A. Property taxes, insurance, payroll, management fees, utilities, advertising, office expenses, lawn maintenance, snow removal, repairs, reserve fund for future & capital expenditures.

Q. Why do we use cap rates?

A. First, Properties are valued primarily on their ability to produce income, second, cap rates consider income only, it can be used to compare other alternative investments. Such as other real estate besides office, stocks, bonds and businesses. Third, no two properties are exactly alike. Brokers and appraisers need a method to compare properties with different locations, physical condition, and quality of construction and level of management. Cap rates are adjusted up or down depending on the level of risk of the property that it has in maintaining that future income stream.