Finding a lender

[Edward Joseph]

I own a commercial property with a full time tenant in place. This was done as a cash purchase. The cash was from savings and a personal loan. I renovated the property following the purchase. I would like to take a first mortgage out in the property to repay the personal loan but I'm not sure where to turn for a lender. It's a rural area. Any advice would be greatly appreciated. 

[Henry Clark]

OP.  Stop for a second and identify your goals.

1.  If just short-term cash flow, as mentioned go to your local bank where you already have a relationship and I would take out a working line of credit.  Pay interest only for 2 to 5 years.

2.  If you plan to do another commercial project, recommend you don't take a loan out.  Wait till you have your next project and use this property as Cross Collateralization for financing the next project.

3.  If this is the only project, you plan to ever do.  Would recommend you check on doing a long-term commercial loan.  This will lock in the rate normally for 5 years with say a 20-year amortization period.  It will cost you an appraisal, say $2,000 for kicks.  Relative to the total value and the amount you want to cash out.  Say a $1mm property, but you only want $100k out.  Depending on your objectives, ask for a longer refi period of 5 years to 7 years.  Or for a 1% lower interest rate since there is so much collateral tied up.  If you don't want a long-term loan.  Then ask for a working line of credit for say 3 to 7 years.  Instead of an appraisal see if they will do a penciled valuation, since their collateralization will be extremely high.