commercial building - loan
Return to Board  •  Menu  •  BottomPage 1
Message
commercial building - loan
Posted by oldschoolgreats on 11/12 at 1:22 pm
new to the board. I need a little help from you guys. Trying to get a loan to purchase an office bldg. for rental purposes. will be able to put down 20% - 25%. building is currently 100% occupied. loan amount would be about $850,000.
This will be my first time trying to get a business loan.

what do you guys think will be the most important factors (in order)in trying to get this loan:

1. amount of equity I put in deal.
2. my credit score/quality
3. fair market value of prop. vs. costs
4. cash flow generated by property
5. duration of current lease contracts
6. other

thanks



Reply  •  Back to Top
Posted by Tigerpaw123 on 11/12 at 2:26 pm to oldschoolgreats
1-5 yes

other - your personal income and savings...IE how long could you make it if you lost some tenants

overall condition of bldg...will repairs need to be made soon?

don't be surprised when they come back with a 10 year term, or a 3 year with a balloon




Reply  •  Back to Top
Posted by oldschoolgreats on 11/12 at 3:01 pm to Tigerpaw123
10 year term would probably be ok for starters. refi later. 3 year is a no go.


Reply  •  Back to Top
Posted by Tigerpaw123 on 11/12 at 3:41 pm to oldschoolgreats
usually it is a 3 year term, with a monthly note based on a 10-15 year Amortization, with a balloon note at the end that they would then re fiance


Reply  •  Back to Top
Posted by TigerHunt on 11/12 at 8:09 pm to oldschoolgreats
What market is the building in?


Reply  •  Back to Top
Posted by tigerrocket on 11/12 at 8:37 pm to oldschoolgreats
If 1-5 are good, you should be able to get a 20 year amortization with a 5 to 7 year balloon. Owner-occupied is much easier loan to get done. I just did an owner-occupied commercial and got a 15 year amortization and term with no balloon.


Reply  •  Back to Top
Posted by bryso on 11/12 at 9:56 pm to Tigerpaw123
Id hate to buy something knowing i would have a rate adjustment in 3 years. Gonna get the short end of that stick


Reply  •  Back to Top
Posted by JMTIGER85 on 11/12 at 10:38 pm to oldschoolgreats
I underwrite commercial deals for a living. Mostly middle market, but do have some CRE.

1- Very important, you won't be able to put down any less than 20, but preferably more
2 - Not really that important. Just puts more stock in to the kind of person you are.
3 - Yes, your appraisal is what the loan will be based off of. The bank will only lend you 80-75% of appraised value, and the value of the appraisal will be reviewed for the bank's approval. Most banks have a list of appraisal companies acceptable.
4 - MOST IMPORTANT after your appraisal and equity position meet requirements.
5 - Rent rolls are important
6 - Quality of the tenants, history with CRE, your financial support to carry things if they go bad. Also, see if you are dependant on any one tenant, and if you can sustain any loss of rental income and still service your debt.

That’s all I got off the top of my head. Good luck.



Reply  •  Back to Top
Posted by Alltheway Tigers! on 11/12 at 11:04 pm to JMTIGER85
6. Other

Do you know what the hell you are doing? Blunt and to the point.

If this is your first property of this type or first CRE property, a bank might require more equity.

Don't forget to sell yourself and your abilities to do these types of projects. Tell the bank you are considering future deals and looking for a banking relationship.

Be creative as you can on structure. If you don't ask, you won't receive. If you want a longer maturity to lock in payments, be expected to pay higher rates. Perhaps offer the bank a one-time rate adjustment (in the bank's favor) in exchange for a 5 year (or longer...) balloon based on a 15-20 amort?




Reply  •  Back to Top
Posted by oldschoolgreats on 11/13 at 8:24 am to Alltheway Tigers!
thanks guys. lots of good information. I own a small set of apartments but have no commercial experience. I personally know the seller and the property and have a good understanding of how the property is rented and maintained etc.

the property has significant cash flow and numerous tenants (not one or two major tenants).

under these circumstances, will the bank ask for any personal guarantees from me or will the upfront equity and property liens be all the bank needs.



Reply  •  Back to Top
Posted by Tigerpaw123 on 11/13 at 8:28 am to oldschoolgreats
quote:

will the bank ask for any personal guarantees from me


I would be surprised if they did not require a personal guarantee



Reply  •  Back to Top
Posted by rlp on 11/13 at 10:23 am to oldschoolgreats
quote:

will the bank ask for any personal guarantees from me


If they don't, please give me the name of your bank and banker. I will be willing to take much greater risks if only 20% - 25% is at stake.


This post was edited on 11/13 at 10:23 am

Reply  •  Back to Top
Posted by oldschoolgreats on 11/13 at 12:07 pm to rlp
good info. how long will it take from the first time you talk to a banker until the money is available to you?


Reply  •  Back to Top
Posted by rlp on 11/13 at 1:34 pm to oldschoolgreats
Depends on a few things, like how long it takes to get appraisal, setting up with closing attorney, etc. but my experience is 4 - 6 weeks. Being that this is your first time and with no established banking relationship, probably longer rather than quicker.


Reply  •  Back to Top
Posted by TigerHunt on 11/13 at 8:30 pm to oldschoolgreats
If your building is located in the St.Tammany or New Orleans market. Give me a call 985-612-3208. I may be able to help with your financing.


Reply  •  Back to Top
Posted by oldschoolgreats on 11/14 at 10:06 am to TigerHunt
not in that area but thanks.


Reply  •  Back to Top  •  Refresh
Return to Board
Jump to Page   

           Page 1 of 1           

 

 Message Boards
 Tiger Rant
 Recruiting Board
 SEC Rant
 Saints Talk
 Pelicans Talk
 More Sports Board
 Soccer Board
 O-T Lounge
 Outdoor Board
 Movie/TV Board
 Music Board
 Political Talk
 Money Talk
 Fark Board
 Gaming Board
 Fantasy Sports
 Food and Drink Board
 Ticket Exchange
 Help Board
 

 Other Options
 >> Search
 

 SECRant.com Links
 SEC Rant
 SEC Recruiting
 SEC Tickets
 Off-Topic Board
 

 Geaux.com Dining Guide
 New Orleans
 Baton Rouge
 

 Site Features (Full Version)
 Home Page
 LSU Football Schedule
 LSU News/TD News Wire
 Pick'em Home Page
 
Back to top
Sign In 
View in: Desktop
Copyright ©2014 TigerDroppings.com.