We were weeks into a multifamily transaction when our lender suddenly cut the loan proceeds. No broker, no backup plan, and the seller losing patience. Here’s how it unfolded—and why stronger due diligence tools like Korra are essential.
The Setup: Clean Deal, Direct to Lender
We had a 32-unit property in Chicago under contract—good bones, value-add upside, and a committed seller. We opted to go direct to a large institutional lender, thinking it would streamline the process and cut out extra fees.
At the time, it felt like the right move.
We packaged the deal ourselves: rent roll, T-12, market comps, renovation scope, business plan. We did all the work a mortgage broker would typically handle—except we didn’t have the benefit of their network or ability to preflight the deal across multiple lenders.
Then the Call Came: 70% LTV, Take It or Leave It
Weeks went by. The lender was responsive, but not fast. Then, shortly before the mortgage commitment deadline, they came back with revised terms: a loan at just ~70% LTV, much lower than we expected based on our underwriting.
The impact was immediate:
- The deal was now short on leverage.
- Our capital stack had to be restructured.
- And we had just days left before the commitment deadline.
No time to negotiate, no time to pivot. We were effectively starting over.
The Broker Question
We debated early on whether to bring in a mortgage broker. Ultimately, we didn’t. Here\’s how that decision played out.
Going Direct (our path):
Pros:
- No broker fees
- More control over lender communications
- Streamlined process—at least in theory
Cons:
- Limited reach
- All deal packaging falls on your shoulders
- No early signal from lenders on appetite or risk flags
Using a Broker:
Pros:
- Access to dozens of lenders
- Professional presentation of the deal
- Early reality checks on underwriting assumptions
Cons:
- Fees (typically 1–2% of loan)
- Slightly less direct control
- Dependent on broker quality and responsiveness
In hindsight, having a broker could have saved weeks—either by sourcing better terms from the outset or identifying this lender’s conservative posture sooner.
Meanwhile, the Seller’s Clock Is Ticking
The seller, understandably, expected a smooth process. They granted one extension already. Now, with the first lender pulling back and no commitment in hand, they’re questioning whether we’re going to make it to closing at all.
We quickly approached a second lender—more local, more flexible—but we’re starting back at square one. New forms, new underwriting, new conditions.
The delay has introduced tension. The deal is still alive, but the margin for error is gone.
How Korra Could Have Changed the Game
What this experience reinforced is the need for better, faster, and more transparent deal packaging—not just for us, but for lenders, brokers, and sellers.
That’s where Korra comes in.
Korra is our internal platform for scoring and underwriting multifamily properties. It pulls together:
- Core asset fundamentals
- Market dynamics and comps
- Renovation and operational upside
- Risk signals based on real data
If we had run this deal through Korra from the beginning, we could have:
- Flagged the conservative lending profile earlier
- Presented a clear, compelling risk-adjusted view to multiple lenders
- Created a standardized package ready for submission across multiple channels
In short: we could have moved faster, with fewer surprises, and more negotiating leverage.
Final Takeaway
Sometimes the deal is solid—but the process breaks down.
Going direct to a lender can work, but only if you have the data, clarity, and tools to support the underwriting process from Day 1. Otherwise, one surprise term sheet can derail your timeline, spook your seller, and put your capital at risk.
Korra isn’t just a scoring engine—it’s a way to de-risk deals before you’re at the mercy of someone else’s timeline.
If you\’re underwriting multifamily, especially without a broker, build a better process. Your future self—and your sellers—will thank you.
