Looking for Input on My First Commercial Property Purchase

[Adrienne Herrenbruck]

I'm looking to buy my first commercial property.  It's two small lots, one with a building currently renting and one with a currently rented parking lot.  I'm having a hard time getting answers from lenders on what type of loan we may use for the property.  It seems like muddy waters.  Do I have to have a commercial loan?  Since it's only one unit per lot can I get a conventional loan? 

I'm well qualified financially for the purchase but am having a hard time getting started with my funding options.  Any help is appreciated by this newbie!

[Bjorn Ahlblad]

@Adrienne Herrenbruck look up top and you will see 'Network' select that and the second from the top is 'Mortgage Lenders'. See if you can get some clarity from folks there. You can also search the site for lenders (members). I think some of those folk could do some legwork-it would be in their best interest.

[Lawrence Potts]

 Commercial lending is pretty tight right now, it’s hard to find loans for some assets. Would they consider carrying the note or sub2? 

[Adrienne Herrenbruck]

Quote from @Bjorn Ahlblad:

@Adrienne Herrenbruck look up top and you will see 'Network' select that and the second from the top is 'Mortgage Lenders'. See if you can get some clarity from folks there. You can also search the site for lenders (members). I think some of those folk could do some legwork-it would be in their best interest.

 Thanks for the tip!

[Adrienne Herrenbruck]

Quote from @Lawrence Potts:

 Commercial lending is pretty tight right now, it’s hard to find loans for some assets. Would they consider carrying the note or sub2? 

 Unfortunately, no. We were hoping to go this route initially.

[Jake Kucheck]

Are you planning on substantively improving the property or changing its use/zoning in some way to improve the economics?  If so, it may make sense to work with a private or bridge lender for your acquisition and project, and then refinance into a conventional loan once the property is performing at a higher level.  How much equity (as a % of the purchase price) are you bringing to the project and what is the overall scope of the project (debt + equity + renovation)?

[Ronald Rohde]

Commercial, does it cash flow at 7% debt?

[Henry Clark]

What’s the dollar figure?  If it’s below $1mm recommend you talk with a local credit union.  

Assume the two properties are different PID’s.   Are your plans for both different in terms of flipping?  Would recommend you get separate loans.  Bad if big dollars. Shouldn’t matter if small dollars other than appraisal cost.  

What do your numbers say?  

[Charles Park]

I am under the impression that this property has sufficient cash flow to support the proposed debt (permanent financing), however, either the property type or the loan amount might be too small for these lenders to jump on it.  

[Henry Clark]

How much are we talking about?  Do you have cash, cd’s or bonds?  Ask the loan officer if you can either deposit or have them control the account.   They can use this to help support the loan.  You should also get about 1% point less on their interest rate.  

You need to supply more info for a better answer.  See questions above.  

[Ronald Rohde]

Quote from @Henry Clark:

How much are we talking about?  Do you have cash, cd’s or bonds?  Ask the loan officer if you can either deposit or have them control the account.   They can use this to help support the loan.  You should also get about 1% point less on their interest rate.  

You need to supply more info for a better answer.  See questions above.  

 we do this on some of our loans, put an amount equal to the loan on deposit with our lender, drops our fixed rate 5 year debt to just a point above fed. then we pull the cash for other stuff.