Commercial Loans - What should I know?

[Gurshan Bansal]

Hi BP!

One of the most valuable resources I've used in my short investing career is seeking advice from people on BP that have gone through the same milestones I am trying to reach! I started my journey during the summer of '19 and I was in what's called the "motion" (James clear has a book called atomic habits that explains motion vs action) phase of my development. I made it a weekly KPI to talk with at least 1 person a week on the phone that I met on BP. It was awesome and I ended up getting my first deal through a wholesaler that I spoke whom I met through another investor... what are the chances ;)

Now I've got a commercial property (5 units) accepted and under contract. I know nothing about commercial loans and I'd like to pull on that resource a few more times just to learn about what I am getting into. To add complexity to this, the property is in Ohio and I am in GA. Finding the bank and THEN getting approved by the bank was challenging because I am out of state so they came at me with these terms: 30% down, 4.51%, 15-year term, fixed for 5 years, then reset every 5 years, FHLB rate + 3.25%, and asked to establish $20k deposit account. The purchase price is around $250 k so I didn't mind paying more down because this thing is a cash cow but I wanted some better terms so I found a local partner through my realtor and we're going in 50/50 on the deal. 

The bank would not budge on loan terms bc my partner's DTI is kind of high (he has 14 units and going through a separate closing) so we're closing the loan under my name then putting it under an LLC. He's bringing 50% cash to the closing table and I decided to partner with someone even though it didn't help me out on the loan front, there is inherent value in working with someone who's 4 or 5 levels ahead of me.

I'm not scared of all this, it's exciting, but I want to be cautiously aggressive and learn where I can limit risk and would like to brainstorm my next 5 moves with someone... anyone interested? 

Gurshan Bansal