What would be a commercial loan ?

6 Replies

I am 90% sure that anything over 4 units is going to be considered a commercial. If you are the kind of person that has enough money to buy a 6 unit residential building then you probably don't want to LIVE there.


Thanks for the response. I know that the interest rate would be higher on a commercial loan verses a residential loan but how much more normally would it be ? Thanks for your time.

Don't get me wrong, interest rates are important and all but... Cash is king.

In commercial real estate the transactions involve larger dollar amounts than most residential properties. Not only that, but lenders for commercial units generally want to see LARGER down payments than lenders for residential properties. Just do a rough calculation (your cash X 4) to determine if you can even consider getting into commercial properties.

Evaluate your cash, do a market analysis for your chosen niche in commerical real estate (gotta have tenants), and then go search interest rates. Definitely more efficient to do it that way.


Thanks for the reply. I agree with you when you said "cash is king" but how about properties that are in the 250,000 - 300,000 price range ? How much cash is needed for those properties ? How much more of a down payment would a person need to acquire those types of properties ? What do you mean when you say ?

Just do a rough calculation (your cash X 4) to determine if you can even consider getting into commercial properties
. Thanks for your time.

BSM is right. You can expect to put between 10-25% down, but generally 20% of the appraised value is what to expect. For example, take a $1,000,000 property and you can expect to put $200,000 up in cash. Commercial loans are around a point higher in terms of rates, and are also usually amortized over 15-20 years instead of 30.

I don't know about the 15 years...I do believe you can get
30 year loans.

The key to the multiunit is the 6 families. 5 and up is commercial.

Also...lenders look to the income from the property itself to help
determine the viability of the loan. That doesn't apply to residential.