Having Trouble Finding a Loan for an Out of State Commercial Property
I live in California and found an off market deal for a commercial property in a different state. I plan on renting it out.
However, I am having trouble finding any lenders.
*BoA says they don't do commercial loans for commercial investment properties, only for businesses.
* I tried contacting a local mortgage broker, but she didn't find anything .
* Local credit union is out of the question because I don't live in that state.
Any tips on finding a lender would be much appreciated.
#1 All Forums Contributor
- Investor
- Northern Virginia
@William Lu
What type of commercial property is it? Is it occupied? What’s the use?
Need more info on property to try and provide you with a place to go
Quote from @Chris Seveney:Hi Chris. Thanks for the inquiry.
@William Lu
What type of commercial property is it? Is it occupied? What’s the use?
Need more info on property to try and provide you with a place to go
It is an office space. Currently no tenants. The place was previously owner occupied and I plan on purchasing the property as an investment to be rented out.
The place is in a medical plaza so I plan on renting it out as a pharmacy or any other office use.
Hi William,
There are a few key pieces missing from your inquiry. An experienced and well-versed DSCR / commercial-based broker should have no problem helping locate a lender for this deal.
#1 All Forums Contributor
- Investor
- Northern Virginia
@William Lu
Vacant office space is very difficult to finance in todays environment
May need to go private lending route
What’s the purchase price and amount financed
Quote from @William Lu:
I live in California and found an off market deal for a commercial property in a different state. I plan on renting it out.
However, I am having trouble finding any lenders.
*BoA says they don't do commercial loans for commercial investment properties, only for businesses.
* I tried contacting a local mortgage broker, but she didn't find anything .
* Local credit union is out of the question because I don't live in that state.
Any tips on finding a lender would be much appreciated.
Hey William! Once this property is leased up and stabilized I think that you'll have a much easier time getting longer term financing. I do have a few resources that can help on the financing for this one, but definitely want to wait until it's stabilized.
Thanks all for the tips.
The property is $400k and I plan on putting 20-25% down with a credit score of 780+.
I'll looking into having a tenant but I worry about the coordination woth a "chicken and egg" situation.
How would I get a tenant without owning the property?
How would I get a lender when there is no tenant.
I may have to look into a private lender as suggested above.
Quote from @William Lu:
Thanks all for the tips.
The property is $400k and I plan on putting 20-25% down with a credit score of 780+.
I'll looking into having a tenant but I worry about the coordination woth a "chicken and egg" situation.
How would I get a tenant without owning the property?
How would I get a lender when there is no tenant.
I may have to look into a private lender as suggested above.
For some reason I thought the purpose of this was for a refinance. Do you have any idea what the market rent would be, or what the average rent per square footage is? This is something that can still potentially be done depending on how the DSCR will shake out?
@William Lu- try researching the previous lenders / loans / transactions in the buidling and the surrounding areas to see what entities have made loans on it ......also - if you locate some options your down payment needed will likely be higher than 25% of the purchase price ....is there anyway to raise the 300K some other way ? ( heloc on home / 401K loan / leverage homes equity )
If you need a private bridge loan some friends of mine do this nationwide and on any asset but they are conservative on values.
@William Lu you don't need to actually live in the area to work with many credit unions. Just give them a call to see if they have options for you.
My recommendation is to post in your local (local to the property) investment facebook groups posing this question. I have always found all of the vendors and contacts that I needed very quickly this way.
Quote from @William Lu:
I live in California and found an off market deal for a commercial property in a different state. I plan on renting it out.
However, I am having trouble finding any lenders.
*BoA says they don't do commercial loans for commercial investment properties, only for businesses.
* I tried contacting a local mortgage broker, but she didn't find anything .
* Local credit union is out of the question because I don't live in that state.
Any tips on finding a lender would be much appreciated.
Hello William,
What type of commercial property is it?Is this a purchase or refi? How many units? Will the property need rehab? Is it in good condition? From what you say it sounds like the property is not occupied.
That will affect things like your financing options you get with any lender you speak to.
@William Lu @Timothy Howdeshell Welcome! I would definitely check local community banks and credit unions. Many have no requirement of you living there. Good luck and keep us posted.
Thank you guys for all the inputs. The tips have been helpful and kept me motivated.
I found a lender broker in the same state as the property and he got me in touch with a commercial lender.
I'm working on a pro forma and other forms to fill out.
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