Commercial loans under 1 million

[Tammy Skeath]

Hello BP! I’m trying to purchase my first commercial property. It’s a 7 unit building for $800,000 in Fl. We own some duplexes in Fl and a quad in CA so up to know have only needed residential loans. I’ve been a little shocked at how difficult it’s been trying to get a loan for this 7 unit. My husband still has a W2 job so we make very good income and we are not over leveraged. We are putting 25-30% down on each property we own but every broker I’ve spoken to has either ignored us or told us that they couldn’t find a product in commercial for under 1 million. The best I’ve been able to get is a portfolio loan from local bank but the interest rate is too high for the deal to work (5.38%). Any tips on how to get a commercial loan for 800,000 at a decent interest rate (3-4.5%)? I’m not sure what I’m doing wrong are all the banks just swamped? Appreciate your guidance! 

[Alex Bekeza]

@Tammy Skeath The 5.38% is competitive for the small loan size if it's amortized over 30 years at 75% LTV. There are some nationwide private wholesale options that mortgage brokers use which could do a 30 year fixed on this in that rate range or a 10 year term w/ 30 year am could sneak into the 4s at 65%-70% LTV. Another issue investors have is that local banks can be more restrictive on out of state investors.

You're not doing anything wrong.  This is just a tough asset class to secure financing  on which is why I love finding these scenarios.