Good AZ Commercial Lenders

4 Replies

I own two commercial properties in Rural AZ. The info is as follows

Property 1: Rents for $1850 a month on a 9 year lease (7.5 years left) to a Arizona specific non-profit. I owe 125K on a seller carryback at 7% interest with an upcoming ballon payment. I paid 165K 5 years ago. Property is a 1975 constructed home that is on a highway corridor that is zoned and has been converted into commercial office space. 

Property 2: Rents for $1900 a month on a  9 year lease(8.5 years left) to a national non-profit. I owe 105K on a hard money loan(15% interest). It is in an old downtown area but the building has been completely gutted and rebuilt earlier this year.

I have been attempting to refinance both properties to take advantage of low-interest rates in the 4.5-5% range without any luck. I have tried with two smaller lenders(National Bank of Arizona and OneAZ Credit Union) and they have both dragged it out for several months before deciding they wouldn't do the loan for what I perceived to be fairly silly reasons(Management didn't like that the tenant had only been in for 1 year, Management didn't like that the structure used to be a residence, management didn't like that 3 years ago I took a loss in a completely unrelated business etc.)

I am hoping that someone out there has had some success purchasing or refinancing commercial property like this in AZ and can put me in touch with someone who actually completes deals like this. There is a good equity position and stable tenants, I just need access to lower cost of capital for a property like this to make these properties cashflow.

I am willing to do them together or separate or lumped in with another residential property that I currently own that is cash flowing around 550 a month over the mortgage as well.

Thanks in advance!

Rural and low quality type assets is a tough nut.

Only local banks and credit unions in the immediate area would likely look at this. Regional and national banks the deal is not vanilla and too small for them. Something goes wrong they have a small loan in the middle of nowhere taking up a big amount of their time.

If you are paying 15% to hard money lender maybe you should source a private lender at say 10% or so.

I know most lenders on commercial won't touch a loan under 1 million, some under 2 million. 4.5 to 5% interest are premium rates in today's environment.

If you could land a 6 to 7% for loans that small in those locations then likely doing well. If you need 4.5 to 5% interest rate  to make them cash flow then underwriting appears to not be properly done. On assets like this the stabilized cap should be ultra high so with higher debt service the cash flow spread is still good.

I hope you find the loan you need but it sounds like you are looking for miracle terms for the asset type and location. 

What are the value of each property and do you have credit score over 650? Not sure why you not able to refi but 15% is very very high on rates. I’m interested in seeing how you able to have positive cash flow with those rates.

Thanks for the feedback!

Properties are worth about 200k each. My credit score is in the mid 700s.

I only have hard money out on the second property. It is accusing interest and their is no payment required. It’s money from a family member. I purchased the property in February and used the money as a bridge loan to purchase the property and make repairs for the non-profit tenant who was interested in a long term lease. The intent was always to refinance.

The first property had a seller carryback at 7% interest. I purchased it 5 years ago st 165k and I currently owe 125k. I have an upcoming balloon payment and while I’m sure I could talk him into modifying the agreement, he is getting older and I would prefer to cash him out to not be doing business with his estate.

Originally posted by @Austin V. :

Thanks for the feedback!

Properties are worth about 200k each. My credit score is in the mid 700s.

I only have hard money out on the second property. It is accusing interest and their is no payment required. It’s money from a family member. I purchased the property in February and used the money as a bridge loan to purchase the property and make repairs for the non-profit tenant who was interested in a long term lease. The intent was always to refinance.

The first property had a seller carryback at 7% interest. I purchased it 5 years ago st 165k and I currently owe 125k. I have an upcoming balloon payment and while I’m sure I could talk him into modifying the agreement, he is getting older and I would prefer to cash him out to not be doing business with his estate.

 Did you find a lender yet? If not I could help you out.

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