commercial loan
I'm looking for a commercial loan in MA.
Can anyone please explain me which people/banks i should be looking for?
I spoke with few banks around Boston and nothing useful happen.
Tal
Keep trying. Banks will usually want to check credit and look at the potential deal along with your experience.
Hi Tal,
You haven't mentioned what the asset class is within commercial,the deal size, or if it is stabilized,vacant,or half full.
Additionally you could also be getting a construction loan for a brand new build.
4 main types of lenders:
1. Banks ( local,regional,national)
2. Credit Unions
3. Life Insurance Companies
4.CMBS
Some lenders will not talk to you directly and you will need to go through a capital markets mortgage broker. They tend to look at the property and the borrower and then after listening to what the borrower desires for a loan matches them up with the closest fit available. The mortgage brokers tend to charge 1 percent paid at closing.
If you are putting 25% down you generally cannot roll into the loan the mortgage broker fee. If you are putting say 40 to 50% down the most of the time a lender will let you roll in the 1% fee to the mortgage broker as the LTV is low and you can pay the cost over time.
@Joel Owens Thank you for your reply.
i'm curious in general how to leverage my money.
Tal really depends on what you are trying to do and how much time you have.
I have clients that make 500k,1 million a year from their job and when investing in commercial need it to be passive. So we tend to go after retail strip centers with national tenants at a 7.5 cap rate. With 25% down it's about 10% cash on cash going in before principal pay down and tax depreciation.
If you want more yield you might have to do new development, take something half full and turn it around, or buy into a more intensive type asset where you have to work more for yield.
The lenders I mentioned above only work with certain borrowers and certain types of properties. The quality of the asset makes a difference and the liquidity and net worth of the purchaser after the down payment.
Some lenders are non-recourse and others are not. Some come with a pre-pay penalty. Some will do a 25 year amort. and others 30. Some want 35% down and others 25%. Some will do 5 years and others will do 10 years fixed. Some will only do loan above 2 million minimum.
So it comes back to what type of loan are you trying to get? 500,000 sales price and 125k down or 3 million property and 750,000 down? Due diligence alone on a commercial property with reports runs about 10k or more and then add on legal costs.
@Joel Owens I have ~ $500k to invest. I'm looking to buy 4-5 units in the area.
Putin 20-25% sounds reasonable.
Just remember Massachusetts is a more tenant friendly state so takes a long time to evict if you are dealing with multifamily.
If you are going to buy a 4 unit multifamily that is usually better for a loan as you get long term financing. You go 5 plus units you get into short term financing. The better loans start getting into the millions of dollars and more units once you go commercial.
The commercial laws are generally more landlord friendly than the residential tenant laws.
Hi Tal,
I can lend on deals starting from 1 mil. Depending on the property, it can sometimes be done with a 10% down payment. Please inbox me if you have any further questions.
Best regards,
@Tal P. How did you make out here? Did you end finding a commercial property? Would you care to describe the lending process
Going thru a similar situation in MA and would be happy to trade war stories!
I didn't have promising results. Sorry.