Commercial Loan question

5 Replies

How deep do banks normally dig for commercial realestate loans? Here is my situation. Full time I work for the State Police, have a property managers license and Mgmt bness where I manage 20 homes owned by others as well as 1 that I own. I purchased an acre of land in an LLC being partners with my mom (she put the down payment down and I handle the rest). Purchased the property for $150,000 owner financed, and put $30,000 down (no bank would loan to me because it had 2000 sqft brick house and 6 mobile homes on the same partial of land (and they were all trashed). I spend about $50k in materials/repairs and have 6 of the 7 properties rented for the last year. 7th will be done next month. As of now it's pulling in $60,000 a year. I have purchased all the materials with store financeing and credit cards that have 0% interest for 18 months or better. I have been knocking them down quickly but does not leave much for cash flow. Figured if I could take out a loan for $155,000 I could pay off the mortgage, and every credit card Or loan associated with this property. Doing so though they want my personal taxes and finances, my property Mgmt finances, I have a repair/construction bness as well a graphic printing bness. They said they need along of those too. Though It seamed like a bit much since the house aloneness covers the mortgage and then some, I turned it in. (My credit is great and other bness are profiting. Now they want to see my moms last 2 years for taxes. Is this the normal procedure for a commercial loan or they just jerking me around here? Seems a bit excessive considering the value of the property and what its pulling in vs what I'm asking for.

That is pretty typical for a commercial loan. but a bank that you deal with regularly and sees the LLC rent checks coming in will be less stringent. $60k a year, for how long? go get a loan from that bank...

This doc request is normal. The worry is that your other businesses or personal obligations may suck money from the properties. They'll want your personal guarantees as well as those of the affiliated businesses.

Im pulling $60k year now from rent.  Next year will be just over $70k (I will have the last place remodeled and a few of them will have the rent increasing).  

I appreciate the feedback guys.   Not having delt with this before, I was not sure if this was the norm or not.  Sounds like it is, so thanks again.  


Most banks in FL aren't fond of mobile homes, that may be different in SC. A big issue they have is the regulatory oversight and need to be able to fully justify making a loan. Banks get audited from regulators on a regular basis (worse today) and they randomly pull files to review. If the file is not complete (i.e. insufficient financial updates or verification of a solid borrower) they will get "dinged" by the regulators which they DO NOT want. Also, the loan covenants you originally agree to up front will dictate the frequency going forward. Negotiate hard on this one, most commercial loans I have require updates annually but one (LOC) I missed years ago required it quarterly. Not a big issue but it sets it up for scrutiny EVERY quarter. I have since gotten this amended...

Hope that helps.

You need a "bank alt" perm lender who won't require tax returns.  Also, I would imagine, this property would be treated as a mobile home park which is a hard assert class to find lenders for.  Another reason to look outside of the bank realm.

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