Commercial Apartment Financing Strategy
Hello to all of you, this is my first posting
I am looking at a 40 year old 11 unit motel turned into efficiencies and 1 and 2 bedrooms in New Mexico. This is a poor neighborhood with several Mexican national as tenants(I figure nothing wrong with hard working folks who want a better life for themselves)Asking price $275,000
I am shooting for 100% financing. I have a decent fico of above 700. Aside form all the caveat I have read here,and still reading/learning. What could any of you suggest in regards to :
Commercial lender(1st mortgage) I want a predictable rate but with current spikes in rates; what would you investors suggest 7/1 adjust 30 year amort? I mean a fixed 30 year is up in the 10+% and makes the property not cash flow.
And for the downpayment I want to borrow as well. I figure a hard money lender could do thiis. Perhaps 12% standing for a few years? The goal is to cashflow at about a $80.00-$100.00 per unit per month after debt service.
I will mange the property myself including repairs and anything I can do myself, I have been an owner-builder of my current sfh.
Any lenders or brokers anyone could refer? .
Also what is the "code of communication" i.e. do you tell/not tell the first lender that you goin to borrow the down payment and vice-versa for the second mortgage holder?or can this info can be all out in the open?
Thanks for any input on any of this
Thank you feltman. This brings up another question. Is thee any broker program that would support a commercial loan of 80% + 10% seller carry back and 10% my own funds where my own funds would not be seasoned but available within a short period of time prior to closing. I do have access to all of this however, I do not wish to lie on application. So isthere such a lender out there?
Quote:
On 2005-04-01 17:06, CashflowVest wrote:
Thank you feltman. This brings up another question. Is thee any broker program that would support a commercial loan of 80% + 10% seller carry back and 10% my own funds where my own funds would not be seasoned but available within a short period of time prior to closing. I do have access to all of this however, I do not wish to lie on application. So isthere such a lender out there?
An 80% loan is all that you could hope for in getting a commercial loan. Income properties are figured a little differently, the Debt service coverage ratio is what the lender will be looking at. The DSCR is the net operating income divided by the total debt service.
The net operating income is the income from a rental property left over after paying all of the operating expenses. You will always have to factor in some vacancy 5% or more if it is more. Also you will have to figure a management fee, if the lender has to take the property back they will have to pay a manager, so another 5% or so. A reserve for future repairs is also needed, about 5%
The debt service will include the principal and interest payments of all loans including any seconds. Taxes and insurance should be figured in your net operating income.
If you figure out what your DSCR is then you can figure out how much a lender will borrow on this property.
Good luck,
Robert
Please use our Preferred Lender Program for this, or do a search.
http://www.tcilending.com
The forums are not for Lender Fishing.