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Answers (4)
- Norman Sangalang, "Mobile Home Parks RV"
- Contributions:2
The clock is in reverse now. Before you go to far down the road ask your lender or broker to show evidence that the bank is actually doing deals. The doors are open but that doesn't mean they are funding. Stay away from complex stories about the property or your situation. There are so many properties going after such few loan dollars the more complicated stories get the back burner.
- Cyrus Khadivi, "ckhadivi"
- Contributions:60
Southpark,
Commercial financing is primarily concerned with the DSCR (debt service coverage ratio) of the property. It will vary based on the type of property. For instance, there will be different metrics used to qualify for a medical office building vs. a 6-unit apartment building. At the end of the day, the DSCR must make sense per the lender's guidelines. Some lenders will allow a higher DSCR than others, and vice versa.
As mentioned by the other post, you will need P/L statements. And depending on the property type, you will need other documentation. Also, you will need a good amount down on the property today for a) DSCR to make sense and b) to have skin in the game. Lenders today are wary of certain properties and are really scrutinizing financing requests. For example, retail properties are being heavily scrutinized since businesses are having trouble meeting debt obligations due to less consumer spending, etc. So lease agreements will be needed in that case, aside from other documentation.
I hope this has helped.
Best wishes!
Commercial financing is primarily concerned with the DSCR (debt service coverage ratio) of the property. It will vary based on the type of property. For instance, there will be different metrics used to qualify for a medical office building vs. a 6-unit apartment building. At the end of the day, the DSCR must make sense per the lender's guidelines. Some lenders will allow a higher DSCR than others, and vice versa.
As mentioned by the other post, you will need P/L statements. And depending on the property type, you will need other documentation. Also, you will need a good amount down on the property today for a) DSCR to make sense and b) to have skin in the game. Lenders today are wary of certain properties and are really scrutinizing financing requests. For example, retail properties are being heavily scrutinized since businesses are having trouble meeting debt obligations due to less consumer spending, etc. So lease agreements will be needed in that case, aside from other documentation.
I hope this has helped.
Best wishes!
- Rudi Hofmann, "LUXURY HOME LOANS CA"
- Contributions:7435
SP, you need good credit and reserves. The primary factor is how well the property debt services. Lenders have different formulas and specialize within property type niches and dollar amounts. You'll need
Financials and at least the last P&L statement from the current owner to begin. ... Good luck!.
Financials and at least the last P&L statement from the current owner to begin. ... Good luck!.
There is no general formula for commercial properties.
How much loan you can qualify for is subject to many factors including the type and size of the property. Among other factors, the type and size of the property will determine put how much you have to put down and what the interest rate will be. You need to talk to a commercial lender.
How can I determine how much of a loan I can qualify for on commercial property? Is there a formula?
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- 0.0/5.0
Contributions:2Is there a general formula that I can use to determine what a lender might lend on a particular commercial property. Or is this such a subjective decision that there is no way to know. I know the income/expense numbers, type of property, etc. weigh in on th decision, but I'd like to know more specifically what else to look for. I know my history will have some impact too. But how much?
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