commercial lender need to be in the same state as the property?

Commercial Real Estate Investing
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commercial lender need to be in the same state as the property?

Sandy Metivier
Rental Property Investor · San Francisco, CA · Member since 2020 · 38 posts · 35 votes

Hi… I have a 6-unit in Cleveland OH that I own in full, and now I’d like to seek a cash-out refi commercial loan/mortgage. Does the lender need to be in the state the property is in (Ohio)? (Oh, and I live in CA).

I’m also open for any tips for where I should start, or lender recommendations.

Thanks in advance!

-Sandy

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Alex BekezaBusiness Member
Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
3y

@Sandy Metivier This varies quite a bit lender to lender and program to program. However, speaking to your situation, just about any mortgage broker should be able to originate a small balance commercial loan like that for you since Ohio is not very strict on out of state bankers/brokers/lenders and this would not be a Fannie/Freddie product.  This is assuming the broker is familiar with those products.  "Business purpose" loans like this have more lax requirements from the loan originators.  I'm in Los Angeles but have done countless in Ohio and the midwest in general (thanks to the nationwide BP community). 

@Salvatore Lentini Makes good points regarding lender's POV on out of state investors.  At the local level, many banks want to see the borrower close by and/or with an established track record.  Others are fine as long as the borrower is using 3rd party professional property management. Since BP and social media are the main ways I connect with borrowers I've embedded myself with some lenders who allow first time 5 + unit operators, allow out of state investing, etc.  

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  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    3y

    It'll vary by lender. Lots of commercial lenders have different criteria on how they like to do these. I know some lenders who will do Ohio deals for New Yorkers, but not Californians and vice versa. Commercial lenders are going to have a lot more variability than resi lenders who are all selling their government backed loans after origination.

    0Reply
  • Matthew CrivelliBusiness Member
    Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
    3y

    @Sandy Metivier

    Lender does NOT need to be in the same state. Like @James Wise said, it's up to the lender. No state law exists that binds you to OH lenders.

    [email protected]413-348-8346
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  • Marty JohnstonPro Member
    Lender · Wauwatosa, WI · Member since 2016 · 570 posts · 203 votes
    3y

    @Sandy Metivier I think you're meaning to say "Does the lender require me to be in the state of the property" is that right? If so, then the answer is "some will, some won't". There are lenders out there who don't mind if you're an out of state investor, many then will simply want to see that you have a local PM company in place and may want to vet them. But you should have options.


    Feel free to DM me if you have more questions about this.

    [email protected]414-600-0123
    0Reply
  • John M.
    Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 798 votes
    3y

    I agree that it depends on the lender.  Use a mortgage broker that works with hundreds of banks/investors and they will place you with the right one.  Feel free to PM.

    1Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    Lenders can lend from anywhere, they just have to understand the local laws. I would recommend someone local because 1. They're cheaper 2. They understand the local market 

    0Reply
  • Salvatore Lentini
    Rental Property Investor · Doylestown, PA · Member since 2008 · 1k+ posts · 1k+ votes
    3y

    Hi @Sandy Metivier - do you have other rentals?  If you don't have any other properties (ie no experience) some lenders will want the borrower to be in the same state or they will want to know that you have a partner or property manager in OH.  Feel free to message me and I can connect you with the lenders I've used to grow my portfolio over the years.  No W2s or tax returns.  Lending based on the property, not you (well, except for credit score - minimum 600).

    0Reply
  • Simmy AhluwaliaPro Member
    Lender · Atlanta, GA · Member since 2015 · 1k+ posts · 200 votes
    3y

    Sounds like one of our DSCR loans for multi-family would work best here. Reach out:)

    0Reply
  • Kyle Curtin
    Real Estate Agent · Tewksbury, MA · Member since 2020 · 494 posts · 284 votes
    3y
    Quote from @Sandy Metivier:

    Hi… I have a 6-unit in Cleveland OH that I own in full, and now I’d like to seek a cash-out refi commercial loan/mortgage. Does the lender need to be in the state the property is in (Ohio)? (Oh, and I live in CA).

    I’m also open for any tips for where I should start, or lender recommendations.

    Thanks in advance!

    -Sandy


     Hi Sandy! I have spoke to a variety of commercial lenders local to my area in Mass. and have found that most of them typically have a footprint (even by county) where they are comfortable and know the markets well. The terms would be more favorable if your subject property(s) is/are in that zone and they know it like the back of their hand! Good luck! 

    1Reply
  • Kyle Curtin
    Real Estate Agent · Tewksbury, MA · Member since 2020 · 494 posts · 284 votes
    3y
    Quote from @Kyle Curtin:
    Quote from @Sandy Metivier:

    Hi… I have a 6-unit in Cleveland OH that I own in full, and now I’d like to seek a cash-out refi commercial loan/mortgage. Does the lender need to be in the state the property is in (Ohio)? (Oh, and I live in CA).

    I’m also open for any tips for where I should start, or lender recommendations.

    Thanks in advance!

    -Sandy


     Hi Sandy! I have spoke to a variety of commercial lenders local to my area in Mass. and have found that most of them typically have a footprint (even by county) where they are comfortable and know the markets well. The terms would be more favorable if your subject property(s) is/are in that zone and they know it like the back of their hand! Good luck! 


     I also recommend first asking for an intro from other commercial investors in your network to local lenders they have used and credit unions etc. to build that relationship. Then looking on LinkedIn and searching commercial lenders and refine the terms to that particular city in Cleveland. The power of local relationships is absolutely awesome and the sky is the limit for the future! 

    0Reply
  • Alex BekezaBusiness Member
    Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    3y

    @Sandy Metivier This varies quite a bit lender to lender and program to program. However, speaking to your situation, just about any mortgage broker should be able to originate a small balance commercial loan like that for you since Ohio is not very strict on out of state bankers/brokers/lenders and this would not be a Fannie/Freddie product.  This is assuming the broker is familiar with those products.  "Business purpose" loans like this have more lax requirements from the loan originators.  I'm in Los Angeles but have done countless in Ohio and the midwest in general (thanks to the nationwide BP community). 

    @Salvatore Lentini Makes good points regarding lender's POV on out of state investors.  At the local level, many banks want to see the borrower close by and/or with an established track record.  Others are fine as long as the borrower is using 3rd party professional property management. Since BP and social media are the main ways I connect with borrowers I've embedded myself with some lenders who allow first time 5 + unit operators, allow out of state investing, etc.  

    [email protected]818-606-8823
    Investor Property Loan5306 Reviews
    WebsiteView Page
    1Reply
  • Melanie ThomasBusiness Member
    Real Estate Broker · San Antonio · Member since 2022 · 1k+ posts · 489 votes
    3y

    In short, no. Happy investing!

    [email protected]
    RentWerx Property Management4.73296 Reviews
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    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    3y
    Quote from @Sandy Metivier:

    Hi… I have a 6-unit in Cleveland OH that I own in full, and now I’d like to seek a cash-out refi commercial loan/mortgage. Does the lender need to be in the state the property is in (Ohio)? (Oh, and I live in CA).

    I’m also open for any tips for where I should start, or lender recommendations.

    Thanks in advance!

    -Sandy


     No you don't need to be in Ohio to originate a commercial loan. Sometimes you could get better financing if you go to a local commercial lender (as I have heard from other investors). But any mortgage broker specializing in commercial property financing can help. It also depends on what loan terms you are looking for.

    [email protected]818-269-7983
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    1Reply
  • Carla Kordab
    Property Manager · Cleveland, OH · Member since 2022 · 80 posts · 48 votes
    3y
    Quote from @Sandy Metivier:

    Hi… I have a 6-unit in Cleveland OH that I own in full, and now I’d like to seek a cash-out refi commercial loan/mortgage. Does the lender need to be in the state the property is in (Ohio)? (Oh, and I live in CA).

    I’m also open for any tips for where I should start, or lender recommendations.

    Thanks in advance!

    -Sandy

     @Muhammad Amawi

    0Reply
  • Chad Davis
    Lender · Richmond VA · Member since 2012 · 301 posts · 30 votes
    3y

    @Sandy Metivier DSCR loan would work. Happy to take a look.

    0Reply
  • Antonio Luciano
    Member since 2018 · 2 posts · 0 votes
    3y
    Quote from @Sandy Metivier:

    Hi… I have a 6-unit in Cleveland OH that I own in full, and now I’d like to seek a cash-out refi commercial loan/mortgage. Does the lender need to be in the state the property is in (Ohio)? (Oh, and I live in CA).

    I’m also open for any tips for where I should start, or lender recommendations.

    Thanks in advance!

    -Sandy

    Good morning. I do Hedge Fund lending with my company. If you need assistance please call me 914-606-1398 Antonio Luciano
    0Reply
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