All Forum Posts by: Cason Acor

You’ve received some good answers already. I just wanted to reiterate, I don’t know of a single lender that won’t require equity holders with greater than 20-25% to guarantee the loan. Even all the hard money lenders I’ve worked with have the same requirement. So your best bet is to change the capital stack if you don’t want to ask any of your partners to sign on the loan. 

Just sent you a message.

I personally wouldn’t submit an offer unless I knew exactly what the expenses were. That said, a 40% expense ratio seems high. If you’re going to move forward without knowing the expenses, offer a price that gets you the cash flow that you want. 

1. A lender is not going to appraise a property based on pro form income

2. I'm not aware of any SBA lender that would approve a commercial loan with 0% down

3. For owner user industrial with an SBA loan, plan on 5-15% down. It's been a long time since I've seen a 30 year term. More common is 25

I'll reiterate construction management. Also, some universities have real estate development degrees. Where I went to school they have a Masters of Real Estate Development program that is really successful. 

I have a client closing on an industrial park with a hard money loan next week. They can be great when you need to get creative in order to make a deal work. But they can be very expensive. For example, the terms my client got on his loan are 70% LTV, 10.99% interest only for 12 months and 3 points with a 12 month defeasance. Covering that loan will eat up most of his cash flow until he refinances, but it's what he needed to do to close in time and not lose his six figure earnest money.

Also keep in mind that commercial hard money lending is different than residential. I have yet to see a commercial hard money lender offer more than 75% LTV. And most will still require at least two weeks to close in order to underwrite. The terms they offer aren't as liberal as residential deals because there's a lot more money and risk involved.

You’ll most definitely have to use the real estate as collateral for the loan. Also being that it’s your first purchase, expect to also provide a personal guarantee. 

Will you be running the gas station as a business as well? Or lease to a gas station tenant? If you’ll also be running the business, then look into getting an SBA loan for a lower down payment. Find some location commercial mortgage brokers and reach out to them. Also call the local credit unions to see what kind of terms they can offer. 

A copy or screenshot of a bank statement showing the equity needed to close is usually all you need. 

@Ellie Narie from a lending perspective, you'll be looking at a recourse loan with a high interest rate, a lower than average LTV, and possibly multiple points. I think everyone else that has commented so far has given you a good idea of the technical drawbacks.

@Brett Blalock Bridge and hard money loans.