Commercial Lending Question

[Joshua Davies]

Hi All,

I have a question regarding commercial lending as I was recently denied a loan for my second investment property. In summary, I am working with a small bank (out of state) and the same bank holds the note on my first investment property. 

I recently purchased a duplex for $100,000 on a 5 year ARM at 5.49% interest ammortized over 20 years, and at the time of applying for the second loan I had one leased signed at $800 per month. I am a W-2 earner and earn a pretty decent wage here in California and have zero debt (apart from now the duplex).

I applied for the second loan around a week later, this was for a quadplex at $190,000 with a partner. This application was denied based on "not getting the numbers to work" and "out of state borrowers". My assumption was that the bank would use the rental income from the duplex to offset the debt? And also possibly take into consideration the potential income from the quadplex?

If there are any commercial lenders out there that could help me understand why this loan would be denied - were the 2 loan applications too close together? If it was for the "out of state reason" then why was my first loan approved? I was also under the impression that most lenders will take 75% of rents to qualify the borrower if the property is not seasoned.

If anybody could shed some light on this topic, that would be great.

Thanks in advance!