Commercial Lending is a beast all onto its own. Everything you thought you knew about lending (as it relates to residential lending at least) can be thrown out the window in deciding whether to dip into the commercial real estate world
Most banks will consider all or most of these in deciding whether to issue a loan to a borrower:
1) Larger Down Payment - many have stories of residential loans at 3% (FHA options). Simply put, you won't see that in commercial real estate absent some extenuating circumstance. Those low down payments are general made possible by governmental programs not applicable to commercial funding. While each situation can be different
2) Track Record - Many will want to see a track record of some type - accordingly, first time borrowers may want to team up with a first time investor to gain a track record in the industry or similar projects. If the borrower is well funded enough, this may be something that would warrant an exception, but it certainly doesn't help to have experience.
3) Net worth - If you are a solo borrower, the net worth of the borrower will absolutely be taken into account in the underwriting process. This may sound shocking, but the higher the net worth, the higher the chance of getting the loan as personal guarantees can be utilizing and provide the lender with more security.
4) Strategy of the borrower as it relates to improving the property or maintaining/ maximizing the property will likely be taken into account. This may goes without saying, but banks want to see a plan/ business plan. .
5) Lending Options: Learn the lending desires of different lending options. Private Equity, Banks, private lender. There are so many different options that one needs to consider options beyond simply approaching the local corner bank to determine if a loan may be issued and what the best terms may be.
6) Type of Asset: Apartments or other more stable assets may be easier to finance than, say, retail lending. This will vary asset class to asset class and market to market, but will likely play a role in the underwriting review.
For more information on finding an Seattle/ Everett Commercial Real Estate Broker, consider emailing me at Scott@Ryleepark.com or calling / texting me directly at 206.306.4034.
Our Info if you'd like any more information regarding Seattle Commercial Real Estate or Everett Commercial Real Estate.
Rylee Park Properties
150 Lake St S, Ste 216
Kirkland, WA 98033
T: (206) 306 - 4034