Financing for commercial and multi-family properties

Lender · Member since 2024 · 106 posts · 17 votes

For those who have explored or utilized such financing options, what has your experience been like? What should first-time investors be aware of when considering these types of loans, and what tips would you share for navigating the process successfully?"

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Benjamin AakerPro Member

Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes

I very much agree with @Erik Estrada. Get your financial documents in order first. Talk to multiple lenders. The offers they make will vary quite a bit. Discuss up front what they think the time to underwrite will be. This is largely dependent on your getting the requested documents in, so have those ready to go. Try to research various types of loans first to have an idea of what you want.

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Victor CollazoPro Member
Investor · West Palm Beach, FL · Member since 2014 · 49 posts · 12 votes
2y
Hi Charlice,
Financing is deal specific and can vary from asset to asset. If you can find a deal that is assumable (you take over the seller's interest rate), that would be ideal. We recommend reaching out to a broker and obtaining a relationship with them as they can help you understand the nuisances and can make/break a deal.
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Sam Applegate
Member since 2019 · 59 posts · 30 votes
2y
@Charlice Arnold
This is a tough question because it's so broad; debt is dealt with on a deal-by-deal and location-by-location basis. It depends a lot on the asset, the cash flow it generates, and the risk tolerance. The best way to become good at navigating the process is through repetition and by going through the process yourself.
However, here are a few items to consider: whether you want a fixed-rate or variable-rate loan, and also understanding prepayment penalties. I would recommend finding the top lenders in the area where you're buying and gaining a good understanding of their terms.
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Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
2y
Quote from @Charlice Arnold:

For those who have explored or utilized such financing options, what has your experience been like? What should first-time investors be aware of when considering these types of loans, and what tips would you share for navigating the process successfully?"

I would say do your due diligence on the lender first. Look at reviews, track record, and overall communication. Most first-time investors shop blindly and end up learning the hard way..
Also make sure to present the deal clearly to the lender. Most lenders will want to see your track record, net worth, creditworthiness, and liquidity to qualify you. They will also examine property rent rolls, leases, and expenses to verify the property fits their DSCR requirements.
An easy way to communicate all this information is to have a package ready. Include your SREO, PFS, Property P&Ls, leases, and any other information that is worth noting such as property condition, zoning use, etc..
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Benjamin AakerPro Member
Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
2y
I very much agree with @Erik Estrada. Get your financial documents in order first. Talk to multiple lenders. The offers they make will vary quite a bit. Discuss up front what they think the time to underwrite will be. This is largely dependent on your getting the requested documents in, so have those ready to go. Try to research various types of loans first to have an idea of what you want.
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