Risk Management is the Silent Killer of New Construction Financing Proposals
For CRE development financing, risk management is everything in underwriting the transaction. If you fail to address it, then you fail period.
Risk management and mitigation program due diligence is THE BIG issue for new construction financing in the commercial real estate post-COVID market. Capital preservation is the name of the game, and commercial real estate lenders and investors have the pick of the litter as to what they put their money in and support. You don’t want to be eliminated because you were lazy or stupid about risk management.
Default Risk – More Than Just Construction Risk
The exposure of default risk is the entire ballgame. It takes on many forms and requires an end-to-end systemic approach or holistic solution to satisfy today’s capital investors. If you do not understand these issues, then have someone who actually knows something about default risk management and/or default risk underwriting to help out. This is a completely controllable matter that you can turn into an issue that sets you apart from other funding proposals and thereby increase your odds of success. Don’t let it lay fallow.