Homeowner looking to Buy Commercial

6 Replies

Hi Everyone,

I closed on my first multi-family home 2 month ago. My mortgage is basically being paid for by my tenant. I am now looking into the possibility of purchasing commercial/retail property and am not sure where to start. I am saving of course and I am familiar with the purchase process of a residential property but i'm not familiar with commercial/retail side. I bought my home through FHA only put 3.5 down so this was a fairly easy transaction. Are there any similar programs for those who are purchasing commercial/ retail? I would love to know of any loopholes or strategies people have used who may not have the means to put down a huge sum of money in order to make this a reality.

Thanks in advance I really appreciate any helpful feedback!

Hi @Meli'sa May ,

Unfortunately, I'm not aware of anything that'll help you out.  All the commercial deals I've seen take more cash (25%) and more collateral.  

I'm curious to hear from lenders though, as I'm interested in more commercial property myself...

Yes, I would like to hear a lenders take on this also. Thanks a lot!

I'm not a lender nor commercial mortgage broker.  However, my experience says...no.

The closest you will get is if you are an owner-user of a commercial and may qualify for a SBA loan for 10-15% down.  In terms of investment, you are unlikely to find a lender who will lend you anything greater than 75% LV (nonresidential commercial loans).

If you are looking for a little to no money down, you would have to have the situation hit just right (creative financing).  For instance, a lender coming in 1st position with seller financing in 2nd position if the seller is motivated enough to sell the building.  Also you can look into private lenders and hard money lenders.

*Not a Lender*

But having explored some major commercial projects, spoken with a few lenders, and knowing a lender that specializes in hard money AND commercial lending, I would have to say that my experience agrees with @Daniel Chang . I have seen commercial lending terms along the lines of max 70-75% LTV, as well as a maximum of 26 years *depending on the project.

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