Does anybody know how willing banks are to secure loans to buy commercial real estate with the real estate itself? What kind of guarantees might they need? What if the commercial real estate has a lease already on it?

Any help would be great. Thanks.

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Posted by I Love Bama

Alabama

Member since Nov 2007

37693 posts

Posted on 3/21/13 at 6:22 pm to ShreveportTIGER318

This is very general but

A 1.4 dcr
25 percent down

YmMV

This post was edited on 3/21/13 at 6:25 pm

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Posted by tigerrocket

Member since Aug 2008

162 posts

Posted on 3/22/13 at 9:44 am to ShreveportTIGER318

If it is free and clear and has a lease that supports the expenses, it should not be a problem. If it isn't free and clear, then you probably need at least 30% equity including the cash out. Try the smaller banks and homesteads.

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Posted by LSURussian

Member since Feb 2005

126934 posts

Posted on 3/22/13 at 9:47 am to ShreveportTIGER318

quote:
Does anybody know how willing banks are to secure loans to buy commercial real estate with the real estate itself?

The short answer to your question is banks do it every business day.

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Posted by ShreveportTIGER318

Shreveport

Member since Apr 2008

2832 posts

Posted on 3/23/13 at 1:47 pm to LSURussian

Ive never financed commercial real estate. Family has quite a bit for people that aren't really in the business. I am trying to push them to leverage the property we own now to acquire more property, or just take out a loan and secure it with the property. That way we won't have to have a capital call or use up the rent from the other properties. Right now, it has just been passed down with the generations without much enthusiasm for growing it and as an heir, I would like to see that change.

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Posted by BigAppleTiger

New York City

Member since Dec 2008

10374 posts

Posted on 3/23/13 at 1:53 pm to ShreveportTIGER318

quote:
ve never financed commercial real estate. Family has quite a bit for people that aren't really in the business. I am trying to push them to leverage the property we own now to acquire more property, or just take out a loan and secure it with the property. That way we won't have to have a capital call or use up the rent from the other properties. Right now, it has just been passed down with the generations without much enthusiasm for growing it and as an heir, I would like to see that change.

I am in your exact position right now. I am in talks with 3 banks at the moment and awaiting financing structure and rates. We have almost 100 percent equity in the properties and at the rates offered today it would be a shame not to act, which is why I am doing this right now. I am concerned about easing cash flow, so leveraging and expanding the properties at this interest rate makes too much sense at the moment. I will let you know what I turn up in financing as far as rates.

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Posted by Tiger4Ever

Member since Aug 2003

36702 posts

Posted on 3/23/13 at 2:06 pm to ShreveportTIGER318

quote:
Does anybody know how willing banks are to secure loans to buy commercial real estate with the real estate itself? What kind of guarantees might they need? What if the commercial real estate has a lease already on it?

Any help would be great. Thanks.

As Russian said...every damn day.

If the property is held in a corporate name then you(and any other principals) are going to be expected to guarantee the debt.

A long-term lease to a strong tenant that provides a comfortable dscr would definitely be a plus.

What type of property is this?

This post was edited on 3/23/13 at 2:09 pm

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