How can I write a better OM?
A well-crafted Offering Memorandum (OM) can make all the difference when you're presenting a deal to a lender. It should be thorough, professional, and easy to digest, while clearly showing the strengths of the deal and mitigating potential concerns.
You may already know that Janover Pro offers an AI-enabled OM creator which can simplify this process greatly for you. That said, it still pays to know what goes into a solid OM.
Here's a detailed breakdown of what should be included — and what makes an OM stand out to lenders. We'll go section by section:
🔹 COVER PAGE
- Property Name / Deal Title
- Address
- Borrower / Sponsor Name
- Date
- A high-quality image or rendering of the property (do not use super-pixelated images)
🔹 EXECUTIVE SUMMARY
Purpose: Quickly orient the lender with the high-level deal overview.
- Deal type (Acquisition, Refinance, Construction, etc.)
- Property type (Multifamily, Office, Retail, etc.)
- Location overview
- Total loan request amount
- Use of proceeds
- Quick snapshot of sponsor and track record
- Summary of underwriting highlights (e.g., LTV, DSCR, Cap Rate, etc.)
✅ Tip: Use a bulleted format for clarity.
🔹 LOAN REQUEST TERMS
Clearly define what you're asking for.
- Loan amount
- Desired loan type (Bridge, Permanent, Construction, Mezzanine, etc.)
- Amortization and term
- Interest rate expectations (fixed or floating)
- Prepayment structure
- Loan-to-Value (LTV) or Loan-to-Cost (LTC)
- Debt Service Coverage Ratio (DSCR)
🔹 PROPERTY OVERVIEW
This is where you market the asset. Make the lender feel confident in the collateral.
- Property address and basic specs
- Year built / renovated
- Unit mix (for multifamily)
- Size (square footage, acres, units)
- Current occupancy / lease-up status
- Photos or renderings
- Market comparables
- Key selling points (location, demand drivers, amenities)
🔹 SPONSOR / BORROWER INFORMATION
Build lender confidence in the team behind the deal.
- Background and experience of the borrower / sponsor group
- Previous similar projects
- Organizational structure (who is borrowing, who is guaranteeing)
- Financial strength (net worth, liquidity — especially if recourse is involved)
- Contact information
✅ Tip: Include a short résumé or track record of successful exits.
🔹 FINANCIAL ANALYSIS
Demonstrate the numbers and show they work.
- Sources & Uses of Funds
- Pro forma income & expenses (Year 1 through stabilization)
- Historical financials (if existing asset)
- Rent roll (if applicable)
- Key underwriting assumptions (rent growth, vacancy, CapEx, etc.)
- Return metrics: Cap Rate, DSCR, LTV, IRR (if relevant)
✅ Tip: Use charts/graphs to visualize the data. Lenders love clarity.
🔹 MARKET OVERVIEW
Contextualize the property within its environment.
- Macro: city/region overview, economic drivers
- Micro: neighborhood trends, comps, developments
- Supply & demand dynamics
- Supporting demographics
🔹 RISK MITIGATION / BUSINESS PLAN
Show that you’ve anticipated challenges and have a plan.
- Key risks (lease-up, construction, interest rates, etc.)
- Mitigation strategies
- Timeline / project milestones
- Exit strategy
🔹 APPENDICES
Provide depth without crowding the core sections.
- Rent roll (full version)
- Floorplans
- Site plans
- Photos
- Market reports
- Legal entity structure
- Sponsor bios or résumés
- Third-party reports (appraisal, environmental, etc. — if already ordered)
What makes an OM stand out, beyond what data's in it?
- Design: Clean layout, branded, readable fonts, sharp imagery.
- Clarity: Don’t overcomplicate. Use concise language, short paragraphs, bullet points, and bold headers.
- Professionalism: No typos. Use accurate numbers. Add hyperlinks if it's a digital doc.
- Confidence: Anticipate lender questions. Back up every claim.