I have recently been placed in charge of finding commercial financing for a group of investors that I have residential ties with. As a residential LO I have very little knowledge in commercial products and the resources provided to me by my company are limited as we specialize in residential lending. The group has various projects they need me for, starting with two separate 20 unit buildings that they own. The buildings are both currently financed at roughly 55% LTV at 7.75% with each individual building valued at $2,050,000. They are looking to refinance both of the buildings if possible.

Does anyone have any suggestions on where I should begin shopping this loan to?

Any information regarding the process and how I should begin preparing to shop around would be extremely helpful.

Assuming that those twenty units are rented then it should not be a problem getting a Commercial Bank to take a look at this.

Income producing property financing is easy as pie. Take a look at the “rental financing example” in the site.

Essentially you are going to want to contact a couple of commercial lenders in your area to get a feeling for their interest.

You should start creating a package that contains the following:

- A summary of your request. I would include a debt service here to show that the property cash flows for the proposed.
- Property description as well as information about the current financing, and the purpose for the cash out.
- You mentioned a valuation, so I would attach a copy if that is available
- Rent Roll
- Personal financials and Personal tax returns for the principals

You sound a couple of banks for interest. If you get a couple of lenders showing appetite for the deal, then forward them a package with instructions not to pull personal credit information, but to use the information to come up with a term sheet that you can present your clients. The term sheet will be non-committal but will probably request a fee to proceed with the underwriting. Some banks do not request one until they issue a commitment letter but that is changing some.

By the way, my employers have rarely worked with brokers, but when one of our in-house lenders does. We never pay a fee for the referral, that would be something that the borrower negotiates with the broker and pays directly.

If your total collateral is valued at $4M, you should be able to (depending on coverage/cash flow) be able to get a non-recourse loan as much as $3.2M. Local commercial lenders/banks are going to quote you (on a fixed rate deal) somewhere around 1-1.2% over the 10yr. I have access to small loan fixed-rate, non-recourse permanent loans that should be able to get you a loan under 1% over the 10yr treasury and a few years of interest only.

On a floating rate interest only deal you would be looking for loan proceeds in the $3.6M range on a non-recourse basis. It all depends on your sponsors profile.

Write or give me a ring if you would like some more details. This is my first post, so I hope I am not breaking any rules.