I'm looking to buy a 6 unit building and running into difficulties finding financing. Building has a 1st floor retail space and the other 5 units are apartments so it falls under a commercial loan. Having a hard time getting a loan officer to even call me back. I currently own a 3 unit multi family and single family as rentals in NJ so maybe I'm not asking the right questions.
I have all the numbers (leases, taxes, maintenance, electric, gas, garbage, etc.) ran them through the Bigger Pockets and two other calculators to get a good estimate on the price. Just need to get in front of a loan officer to present this.
Also need a real estate lawyer to close that can do a trust later.
@Andy Finneran - Sorry you've had such terrible LOs to work with in not calling you back, that's a major bummer. This sounds like a solid Mixed Use property with the Residential SF making up more than the Commercial (this is a positive thing!) More lenders prefer a greater residential SF footprint vs the other way around - it opens opportunities for more lender options. Do you intend to live in any of the residential units by chance?
@Marty Johnston I talked to a few banks that provided some good info on the finance options but then got stuck at finding the right person to talk to. You're right about the residential vs retail footprint being a good thing but because it's 15% retail the multi family LOs call it commercial. Long term tenants with leases and a solid rental history make it a low risk finance. It could be a side effect of covid because one bank said only 1 in 10 commercial loans were being approved. I was planning on living there but not right away. I was told running my business out of there would also help with the loan.
Bottom line I just need to find a banker to see what kind of loan I can get. There were a few NewYork brokers I found on bigger pockets but they wanted an application filled out before they would talk to you. Any ideas let me know.
@Andy Finneran , an application before a quote is pretty much necessary on most commercial loans, since their 80% the property and 20% the guarantor - I'd say that's fairly standard practice. Now you should be able to still get a phone call for a consult.
As it relates to Owner Occupancy - you'll have an incredibly difficult time finding a commercial lender allow you to live in a commercial property. I'd say 95% of Commercial Lenders require it to be solely non-ower-occupied investment. So probably a good idea to not live in the property (at least not right away to be sure) to make your life much easier. It's possible a note could be call-able as well if they find out you did ultimately decide to live in the property. Always consult with an attorney first if this is your end-intention.
If you do make it your business place of work, the biggest benefits would be after you utilize 51% or more of the SF of the property for your business. This would allow you to go SBA 7(a) or SBA 504. rates and terms can be preferable here.
The non-QM market would be a great place to look - banks are being pretty stingy in most markets around the country, and you're absolutely right - it's very largely a result of COVID... Lender's went on the extreme defensive in March-April when it first hit, most pipelines were wiped out 90-100%. Lender's are now slowly rolling back their recently tightened guidelines, but everone is still have some extra 'reserve' requirement, slightly lower LTVs (in many cases - some are back to pre-COVID) etc. Banks in general will have the highest requirements in most cases (although this was true even in the best of times). Non-QM (secondary market or private lenders) will be more easily obtainable.
Send me a DM if you'd like to chat more on this. Would be happy to!
@Marty Johnston Thanks for the detailed info. Interesting about living/ working in the property. The banker who told me about it was also a residential multi family guy.
I have contacted another commercial broker so hopefully I can make some progress.
Still looking for a lawyer but that will probably be easier.