need advice on commercial lending

7 Replies

Ok so ill be straight up honest and would appreciate and advice. I just got turned down from buying a duplex because i didn't make enough money. The duplex only costed 130k  so my lender said sorry theres nothing i can do because you don't make any money which is true . i go from job to job. . So heres my delima about if i should get into commercial lending ( which i don't have any experience in so would need guidance) so in my bank account i have about 250k in savings but on the flip side i only made like 30k dollars last year due to circumstance and banks see that they just through it out. which doesn't make sense because of my savings..

So heres my question do i go into commercial lending and buy 5+ units and above or even can i ? since I'm buying an operating business . i just don't know how it all work. I am very eager to start working on this today. so if anyone out there that has apartment complex for sale with good returns and you know my finances i would be glad to to do business with. and any lenders on here that can help me i am willing to do business with . Thank you so much bp . I am also located in dallas texas but am will to do business out of state.Thank guys!

There are even 100% Funding for Apartment Complexes or large ticket items (typically over $500k+) that are easy to get financed..no income, even credit concerns. All based on property. The smaller ticket items I have found are more difficult.

We are financing investment properties and commercial properties for our clients using stated income products and loans based of the cash flow of the collateral. Down payments range from 25 to 30% down, 30 yr fixed with 30 yr Amoritization or 5/1 - 7/1 Arms. If you have any question regarding financing feel free to ask.

Originally posted by @Marc Kelly :

There are even 100% Funding for Apartment Complexes or large ticket items (typically over $500k+) that are easy to get financed..no income, even credit concerns. All based on property. The smaller ticket items I have found are more difficult.

 Can you explain that a little better so to get the 100% finances they look at whats in my bank account or see how much the apartment complex is generating income?

Originally posted by @John Broussard :

We are financing investment properties and commercial properties for our clients using stated income products and loans based of the cash flow of the collateral. Down payments range from 25 to 30% down, 30 yr fixed with 30 yr Amoritization or 5/1 - 7/1 Arms. If you have any question regarding financing feel free to ask.

 Hey john thanks. so can you explain a little more. so your loaning me money based on how much the investment property is generating, and is it commercial lending or home lending. also do you look at my income and base it off that or what? thanks for helping

One of the loans is based on a stated income, the other is based off of a Debt service ratio. The loan are for single family investment properties only and commercial properties. We do not look a income to qualify you for a loan. In box me for more details.

Hello Zach,

100% Financing isn't based on credit or assets, it is first based upon the property itself, then upon the experience of the people involved in project. This is Private Money. The rate is 10%, typically for 1 year, interest only. The conditions will be different based upon whether it is new construction or a renovation. If a renovation, they will want a common sense approach on the impact of the cap rate. As long as numbers make sense and the people involved appear to have the professional capability of completing the project, then the project can be fully funded. 

If you want to do real estate with a certain scale, I'd definitely start focusing on commercial banking. No point to waste time with retail bankers who will probably give you cap and crap when you hit 4 properties. With 250k cash, you are only buying a $130k duplex. You can get the deal done if you really wanted to. But I wouldn't really look at private lending as the prioritized solution to your problem.

Any banks out there will look at your global cashflow. Sounds like that is your main issue that if you are pulling in 30k that's not reliable. After your own personal expenses, there probably is unlikely anything much left over in terms of free cash flow to support mortgages. It's fairly typical an issue real estate types face when they start out, I was in the same situation years ago when I first got started. You either change your income stream which is not always realistic, or just work with a banker that sees this as a business and that means commercial or private lending.

If you think the duplex is a good deal I'd just buy it all cash and let it sit in inventory for a year. In the meanwhile start connecting with local community banks, and small/mid-sized regional banks (IE: relationship bankers) and establish your links with these types.

After a year of owning your asset, it's considered "seasoned" from a banking perspective then just go for a refinance to cash out. Your banker should be able to steer you towards what they expect from you and it sounds like with that cash pile you can probably get multiple deals done down the road. It shouldn't be a roadblock. As @Marc Kelly was suggesting you are going to be in the 10's% interest rate with private money with a short term duration. I find these to be more practical for flippers or people with a tight financial profile. With 250k cash, you really don't need that.

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