Hello Bigger Pockets community. I am reaching out for any suggestions as to the best way to qualify for a commercial loan. I am transitioning from single family homes and duplexes to larger multifamily properties. Thanks!
@Kevin Ryan Commercial loans aren't based on your personal qualifications and credit worthiness, although you do need to be, but are based on the net operating income (NOI) of the property itself, the area and property itself. Banks will be interested in the property and the income it can generate. Start developing relationships with commercial lenders and send them deals to underwrite and provide feedback.
@Kevin Ryan , it really all depends on the lender and what type of financing you're seeking.
If you're dealing with smaller multis where the loan balance is under a $1M more than likely you would have to consult with local community saving and loan banks. These type of loans are usually full recourse. You will need to have a networth of whatever the loan balance amount is as well as 10% post liquidity. You may have to bring anywhere from 20-40% down as the DP.
If the loan balance is $1M and over you can qualify for Non-recourse financing through Freddie Mac and Fannie Mae. CMBS also are great loan products for non-recourse financing.
What @Tj Hines said. @Kevin Ryan -- If networth/liquidity pose an issue, find a partner with the networth that would be willing to go in with you.