Offer On A Commercial Building
Hi all,
I never thought about investing in commercial property, but I think I may have an opportunity here to make a great buy.
The seller has a 3 unit commercial building, with long term tenants. Mortgage with a balance of 184k. They are asking 320k, but the gross rent is $4500 per month. This sounds fantastic. Currently properties are appreciating at about 12% annually. I am unsure about who covers the utilites. The building is in good shape (as far as my eye can tell).
I have a credit score of 750, 8k in cash, and a 20k HELOC available. I was going to try to get a 1st mortgage of 240k, and see if the seller would carry back 80k.
My biggest questions are:
What kind of offer should I make on the note back to the seller? Would a bank even lend me 240k based on my credit score and the lease agreements? Are there any hidden costs associated with commercial versus residential properties.
Thanks in advance for any input and/or ideas!
When dealing with a commercial lender with no experience in the field I have found that they likely will finance 70-80% LTV max. Several lenders allow the seller to carry a note up to 90% LTV. This leaves you with 10% plus closing costs.
If you have a good relationship with a local bank in need of commercial properties in their portfolio you may be able to adjust this. Local banks that underwrite their own loans are the way to go if can. If you stay a good customer they will likely keep loaning to you again and again. Make sure to talk to them about their portfolio requirements as they may only want one commercial loan. If possible work to establish relationships.
GOOD LUCK
Might work, get it under contract and start shopping for a lender. Some will not object to the seller second. You report here the gross rents but not the net. That does of course make a difference
I have a credit union that carries the paper full term. Also they will finance 80% of praised value of property, so if an owner is willing to carry 20% or more a person can get in with just about nothing down. maybe closing costs.
that info was based on a property with 7 units on it: A tri plex, A duplex, and 2 small houses on it.
so check around on the finance you may find somthing that will work for you.
Don't just look at the bank. 750 is a good score. There are lenders that will go 100% on commercial financing. A good source of information is www.smallbizlending.com
They will not go 100% but its a good source of info for you.
Quote:
On 2004-04-27 15:16, waterfront wrote:
Don't just look at the bank. 750 is a good score. There are lenders that will go 100% on commercial financing. A good source of information is www.smallbizlending.com
They will not go 100% but its a good source of info for you.
Which lenders go 100% on commerical property? Thanks.
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