Starting Out In Commercial R.E. Need Advice
I'm looking to get started in Commercial properties (preferably small office or residential). Need advice on typical lender requirements (% downpaymt), typical returns, and types of properties consider.
I have about 5 years experience with small residential apartments (mostly single family). I'm trying to make the transition to bigger (and hopefully) better deals.
-Mamba
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The standard for commercial is 20%. But a good investor will have someone that can do it at 10% or less.
Your returns depends on the deals just like residential. But I would start at 80% of appraised value and work my way down on the buying price.
The thing you need to do is to see which lending programs are available through different mortgage brokers. This will change constantly. You will need to marry the deal with the lending program that is available at the time to that particular mortgage broker. It will vary on amount of loan, type of property, amount of down payment, minimum credit scores considered, term of loan, and the interest rate.
Since you are familiar with residential you may want to start with Apartments, multifamily etc, until you build up a good monthly income and experience. Then work your way over to other fields that are higher risk/reward properties like warehouse, offices etc.
Good Luck,
Kyle
Sounds like you already have the basics with your experience. I've been in the commercial mortgage business for over twenty years mainly dealing in "small balance" deals. The complete package including good debt service coverage of 1.25X, low loan to value, and excellent credit scores from the borrower earn you the best interest rates. Money is available for borrowers with lower credit scores and higher LTV's and no DSC (but expect higher rates and higher points).
The main thing is to start looking at deals and weed them out based on your comfort zone. Good luck!
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