Originally posted by @Michael G.:
Hello BP!
My brother and I own a 4,000 sft Class C office building held in an LLC. We've owned it for ~18 months and have spent the time shuffling tenants and doing tenant improvements, and now we have it fully occupied with 3 year leases with annual escalations, so we are looking to finance it. At a 5 CAP, we put the value at around $1.1M. We're looking for 60% LTV, at which point it still cash flows acceptably to us.
We had hoped for a non-recourse loan but learning that it is not very likely at our scale. For recourse financing, both of us have good credit, long work histories with good income, and other assets. Not sure how much this comes into play?
I think the thing that hurts us is that our cash flows for the first 6 months were less than they otherwise would have been since we had tenant move and we granted some rent concessions to attract new tenants. Our training 12 months look great, but not the whole 18 months. Will lenders take this into consideration?
We do our banking with B of A and we're too small for their commercial loans, so we are targeting local banks in FL, and in West Palm Beach area specifically. Is this our best strategy, or are their other institutions that we should be targeting?
Lastly, and I hope that this is appropriate, but if anyone has any suggestions for someone they could recommend for our scenario I'd love to hear it.
Congrats,
Because you stabilized the property the history of vacancy and income makes sense to lenders as long as you can prove the work and money invested. What will be analyzed is the asset and your networth overall. As for recourse or non-recourse, the same things will come into play.
Fico, Networth (know where you stand) Run a soft pull on your credit, gather your personal financial statement and schedule of real estate.
Asset Performance (DSCR, Vacancy, Leases, Profit & loss, ARV, and the market it sits on) Gather the entire history of P & L, rehab and leases as well as original purchase docs and current mortgage if applicable.
So start gathering the necessary documents so you can speed up the process. Packaging a scenario is the name of the game.
Big banks, as well as local banks, can be uptight or closing their lending parameters as well as the way they qualify you for a loan, especially during these times.
You could door knock to local banks or get a broker (try a direct lender/Broker) because if they cant do it inhouse they can find you a lender.
Door knocking is a slow process time consuming, brokers will have a greater chance to find you who is lending in this specific space (Niche) let them work for you, one call a few questions and they will know where and how to qualify your specific scenario, if you are a strong borrower recourse could be beneficial as parameters are less stringent. If you have any other questions on the process I'll be happy to answer your questions.
Happy shopping
