Commercial Loan Process

[Zachary DeNeen]

I have successfully completed a few single family home flips and have always had conventional loans. I am now planning to invest in a small to medium sized apartment complex out of state. I have found a few local credit unions and small bank options locally who do offer commercial loans, but I am unsure how to proceed. A lot of my research has said to first get in touch with the banks/lenders in order to secure finances before proceeding with a commercial property. Do I have to bring a specific property and the bank/lender when I meet with them in order to get approved for financing for that property? Or is it initially just providing my finances and other necessary documentation for a commercial loan pre-approval type of letter that will show the limit of what I can afford property wise in order to then move on to finding the property I want to bid on? Thanks in advance for any help and guidance. 

[Bjorn Ahlblad]

@Zachary DeNeen basically there are a couple of ways to go...........go to a CU or other lender and present the property with financials showing rent roll, income and expenses. You will need a PM, net worth equal to loan amount, reserves for 12-18 months, and 25-30% down. 

They may want to look at your creditworthiness too. You can have a partner who meets the net worth requirement if it is not you.

The alternative is to seek private funding for a year maybe two, reposition the property at a better stabilized run rate and then get a loan from a CU.