How does mortgage debt effect commercial debt

2 Replies

Hi,

My question is how does a personal mortgage debt effect getting commercial loans;

Scenario, I’m thinking about selling my personal house and one rental to stockpile a significant amount of cash for future purchase if multi family, hopefully 20-30 units.

After the sale of the primary house, I could rent, not cheap where I live(Scottsdale) and not great for a conducive family life, just because ent is high and the property wouldn’t be that great.

2nd option is to buy another house, VA loan, and maintain my cash and have a lower monthly payment and have a nice house to live in.

When it comes time to buy the commercial property, will I regret buying the house now because it will drastically effect my debt ratio? Will the bank or lender base the commercial loan strictly on the cash I have in the bank.

Thanks

Originally posted by @Paul W. :

Hi,

My question is how does a personal mortgage debt effect getting commercial loans;

Scenario, I’m thinking about selling my personal house and one rental to stockpile a significant amount of cash for future purchase if multi family, hopefully 20-30 units.

After the sale of the primary house, I could rent, not cheap where I live(Scottsdale) and not great for a conducive family life, just because ent is high and the property wouldn’t be that great.

2nd option is to buy another house, VA loan, and maintain my cash and have a lower monthly payment and have a nice house to live in.

When it comes time to buy the commercial property, will I regret buying the house now because it will drastically effect my debt ratio? Will the bank or lender base the commercial loan strictly on the cash I have in the bank.

Thanks

 Most commercial lenders let the property do the talking when it comes to income, but they'll check the credit of guarantors for bankruptcies and foreclosures.

Your second option sounds best to me. Sell the houses and buy with VA and then a commercial property.