I'm currently looking into buying a commercial property that consists of two small stores, two-apartments above that currently have tenants under a 1 yr. contract and possibly another apartment that could contribute to the revinue. I'm very interested in purchasing the property, but I don't know what it will take to secure a loan for something like this. I have a home that has enought equity to borrow against, covering at least 20% of the cost for this commercial property along with very good credit. Any advice to give me as far as how I should go about getting a commercial loan for this property?
Thanks...
Full Version: Commercial Loans
It depends at what step of the process you are.
If you are looking at it as an investment opportunity ask for the rental income, occupancy, and expenses. With that information you can go ahead and figure out if the price is ok by learning about the “income approach” appraisal method.
If you are already in contract get the rent roll, expenses and contact a couple of local commercial banks. 20% is enough to get the loan if the property cash flows.
If you are looking at it as an investment opportunity ask for the rental income, occupancy, and expenses. With that information you can go ahead and figure out if the price is ok by learning about the “income approach” appraisal method.
If you are already in contract get the rent roll, expenses and contact a couple of local commercial banks. 20% is enough to get the loan if the property cash flows.
QUOTE(loanuniverse @ Nov 13 2005, 10:54 PM)
It depends at what step of the process you are.
If you are looking at it as an investment opportunity ask for the rental income, occupancy, and expenses. With that information you can go ahead and figure out if the price is ok by learning about the “income approach” appraisal method.
If you are already in contract get the rent roll, expenses and contact a couple of local commercial banks. 20% is enough to get the loan if the property cash flows.
If you are looking at it as an investment opportunity ask for the rental income, occupancy, and expenses. With that information you can go ahead and figure out if the price is ok by learning about the “income approach” appraisal method.
If you are already in contract get the rent roll, expenses and contact a couple of local commercial banks. 20% is enough to get the loan if the property cash flows.
I'm currently just looking at the property; I haven't made any offers just yet, I just want to know how I should approach any financial institution? I have no experience with a property like this, and understand my word and ambition doesn't mean anything to a Bank.
It is not a matter of word or ambition. There are three big things that will determine if you can get this loan.
1 – You need to have the down payment {at least 20%}
2- The property needs to cash flow {Rental Income minus operating expenses should be enough to pay the debt service and a cushion}
3- Your personal credit history can not be bad.
These transactions are done all the time.
I think that the first thing that you should do is get familiar how income producing properties are valuated. This way you can make a better assessment yourself.
1 – You need to have the down payment {at least 20%}
2- The property needs to cash flow {Rental Income minus operating expenses should be enough to pay the debt service and a cushion}
3- Your personal credit history can not be bad.
These transactions are done all the time.
I think that the first thing that you should do is get familiar how income producing properties are valuated. This way you can make a better assessment yourself.
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