Commercial lending to a newbie?

[Melissa Kirchhoff]

I am (mildly) interested in buying a retail storefront with apartments above. I honestly, haven't really researched or thought about this very seriously before, so I feel completely out of my element. (If it matters, I would actually want to put my business in the storefront - going from a one woman show to something much larger - and rent the upstairs apartments)

So my question is:

How would I go about getting a loan for something commercial? Would they even lend to a newbie who is not in any type of commercial game or would I need someone else to invest with? Like, where do I even start this process??

Any podcasts or other information about this that you could refer me to? Again, I never really considered this before, so I almost want to just run for the hills but I can't stop thinking about it and wondering if this might be a good idea or not?

[Charles Kennedy]

I work in CRE lending so hopefully I can help! I'll tell you one of the things we are really big on at my bank is PEOPLE. We look to track history, relationship with the bank, if you've done what you're about to do before, so unfortunately you're a little behind there.

However, the real estate is also looked at much more closely than a person in comparison to a traditional residential loan. I'll tell you the max loan to cost you'd be able to get would be 75% and the bank I'm personally with won't go that high. Continually, loans are typically 3-5 year loans with extension options that amortize over 25-30 years w/ a balloon payment at the end, so have a plan to refi or sell at the end of that term. We analyze if we project you will be able to refi. Commercial loans are also floating rate usually quoted on a spread over LIBOR, or London Inter-Bank Offer Rate. Typically when we lend to someone on large property like this, real estate should be there core business. I personally would not feel confident in someone who is buying this property, but they have an entirely different business they will be running. I still wish you the best of luck, but I think without the proper knowledge of analyzing a deal this size you may end up over-paying!