Edison, NJ · Member since 2014 · 80 posts · 19 votes
I am trying to get a commercial property in hartford Ct. Its a 6 unit building with 1 commercial unit that is operating. My income and my partners income is solid. However, banks are making us put more than 20% to get the property cause there are no tenants in the building. Any idea how i can get around this? Anyone have any exp with this ?
That makes sense. Since the lender, and almost all lenders with insure their DSCR, or Debt Service Cover Ratio is met. My lender uses 1.2. So in other words, even though you and your partners income is solid, it may not be enough to cover the debt service and all the estimated expenses by a factor of 1.2. The bank needs a source of income that will cover the loan. When that income is not enough, then either find more income or make the loan smaller. While closing on the deal try and find new tenants and get them on 1 year leases. This way you can show the bank there is a larger future income stream. I know easier said than done.
On the flip side, you should be able to get an amazing deal on the property since it's empty.