Need help, first commercial deal

[Damon Oubre]

Hi, I am interested in a commercial office space property. My realtor wants me to be loan approved before the property releases its financial history. This seems counterproductive since every lender I've ever spoken with says that my credit and down payment could be perfect but the proven cash flow of the property is single most important thing for getting a commercial loan. How do I get my realtor or the seller to understand this without seeming like I'm trying to get something for nothing? What do commercial sellers usually accept as proof of a serious first time investor? Cheers, Damon

[Joel Owens]

A commercial lender qualifies the borrower and the property.

Step 1. Look at the buyers personal financial statement with liquidity and net worth.

Step 2. Set up a call to talk to the buyer to see if they are realistic or not with rates and returns in current market cycle.

Step 3. Get an LOI non-binding signed with a confidentiality clause where you can get a first look (initial review period) over the sellers property documents. During this time you can get loan quotes from lenders with first look financials to see what quotes you get. If the loan makes sense and you do not see any big issues upfront with the propertythen go to step 4.

Step 4. Negotiate the PSA with your attorney and the sellers attorney. I prefer custom contracts for the individual deal then modified boiler plate contracts. If price is an issue you might go for boiler plate with special stips added on for the PSA.

Now some sellers want you to go straight to PSA right away but then you are paying your attorney fees without validating the property first and could be wasted money.

No legal advice given.