Trying to buy a 500k commercial property

Commercial Real Estate Investing
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Trying to buy a 500k commercial property

George Adams
Beaverton, OR · Member since 2018 · 7 posts · 1 vote

hello,

I am trying to buy a 500k office building for my son .

He has  consoling practice .

I have a 800+ credit score, 

own 2 propertys fully paid off  for around 15 years .

(worth 250k-300k each ) 

Not to much debt 

My question is about a funding :

Do I go with  a commercial broker, or a small local bank, a mortgage company, or a big bank 

Thx for any help  ! 

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  • George Adams
    OP
    Beaverton, OR · Member since 2018 · 7 posts · 1 vote
    8y

    Also even though my profile says Beaverton Oregon ,

    Everything in my last post is  regarding ca.

    From the properties that I own outright,

    to the commercial building I want to buy ,   All are  in ca 

    0Reply
  • Brian Schmelzlen
    Accountant · La Mesa, CA · Member since 2017 · 477 posts · 476 votes
    8y

    I don't think this is an area where there is a right answer (e.g. always go with a commercial mortgage broker, etc.).  Talk to a few different lenders from big banks to small local banks, commercial mortgage brokers, etc.  Find out who is willing to lend to you and on what terms, and go with whatever credible lender will give you the best terms.

    0Reply
  • George Adams
    OP
    Beaverton, OR · Member since 2018 · 7 posts · 1 vote
    8y
    Thx for the information.
     @Brian Schmelzlen
    0Reply
  • Shahriar Khan
    Investor · Houston, TX · Member since 2010 · 234 posts · 145 votes
    8y

    @George Adams  you would be a great borrower for any lender .. i would break out lender vetting process for commercial deals as below 

    1) Borrower's credit worthiness - Check for you

    2) Borrower's over all cash flow out side subject property to cover notes if needed

    3) Cash flow and projection for subject property (heaviest weight) 

    4) Willingness for lender to loan into property category (i.e. some lender will not lend for multi families etc) 

    Once you find a lender who is loaning for you target property then you should be golden. Also keep in mind that all terms are negotiable unlike residential loan (i.e. if they offer 7% w/ 15 yrs then ask them to give you 6% with 20 yrs and interest only payment for 12 months .. since you are a good borrower .. you have plenty of influence on the terms )  

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  • George Adams
    OP
    Beaverton, OR · Member since 2018 · 7 posts · 1 vote
    8y
    Originally posted by @Shahriar Khan:

    @George Adams  you would be a great borrower for any lender .. i would break out lender vetting process for commercial deals as below 

    1) Borrower's credit worthiness - Check for you

    2) Borrower's over all cash flow out side subject property to cover notes if needed

    3) Cash flow and projection for subject property (heaviest weight) 

    4) Willingness for lender to loan into property category (i.e. some lender will not lend for multi families etc) 

    Once you find a lender who is loaning for you target property then you should be golden. Also keep in mind that all terms are negotiable unlike residential loan (i.e. if they offer 7% w/ 15 yrs then ask them to give you 6% with 20 yrs and interest only payment for 12 months .. since you are a good borrower .. you have plenty of influence on the terms )  

    Wow thank you for the reply...

    I did not know I could negotiate  my terms , that is  such valuable information!

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    8y

    With a 500k property you are likely putting a hundred k down or more. That leaves maybe a 350k loan. From what you have described your net worth appears to be good.

    Easiest path might be to talk to your existing bank you do business with now and talk to the small balance commercial lending department. You already have a relationship so will usually be seen as more business for them versus going to a lender for just a small loan which generally has little value for one off type stuff.

    My clients buy really big commercial properties and capital markets brokers ( commercial mortgage brokers) generally do not touch any loan under 1 million. The 2 main reasons is anything under 1 million is very hard to get funded and usually a local bank or credit union. The other reason is most capital markets brokers have  a 10,000 minimum to work on a loan. So for example if loan is 350k and they normally charge 1% that would be 3,500 paid at closing but since it is below minimum the cost is 10,000 fee.

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  • George Adams
    OP
    Beaverton, OR · Member since 2018 · 7 posts · 1 vote
    8y

    Hello, In thinking about possibly  doing a cash out refi on the 2 commercial property’s that I own...

    Ive done a google search for :

    commercial cashout refi 

    And nothing  to promising has came out 

    0Reply
  • Shahriar Khan
    Investor · Houston, TX · Member since 2010 · 234 posts · 145 votes
    8y

    @George Adams .. try  googling credit unions locally and call them up for commercial lending department Also you can call up your existing bank as well. 

    If you do refin.. you can also ask them to do a portfolio loan where they would loan you against all 3 properties . More then likely lenders would like to given total equity against loan and may work out better for you in terms of 1 payment etc. 

    Strongly suggest that you make a small power point with 3-5 slides explaining WHO you are and WHAT you are asking them to do ... and use that as conversation platform. 

    Keep us posted. 

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