Is it possible to get lending for CRE while unemployed?

Question

As a total beginner, I have been reading about CRE investments and understand that banks will typically lend based on the property value, tenant (assuming national grade or reputable tenant), and/or the value of the lease.

Therefore, is it possible to get lending even if you're unemployed, as long as you have access to a good potential deal?

If the answer is no, is it possible to have someone with strong assets or employment co-sign the loan with you as a partner?

Asking mainly because I work as a technology consultant and have generally very demanding WLB (enough to make focusing on CRE very challenging).

Thanks for any and all advice!

Corby Goade · Answer

Commercial is a different beast than residential. Theoretically, if you are doing commercial deals, you are a self employed investor. The biggest challenge you'll have is lack of experience. Most banks won't lend to you until you prove you have a clue what you are doing.

Your best bet for starters is to dig up deals for other investors and partner with them- structure your deals so you get a piece of the equity or the cash flow and hustle- be their gopher. Get experience, some equity and learn the process while you get your feet wet.

Best of luck!

Account Closed · Answer

The CRE lending is based on the asset's performance. For instance, I launched my PE to buy CRE 3 months ago, so technically I am unemployed/self-employed (so W-2) but I closed on two $3 million deals and working on closing 3rd one because bank looks are assets' risk metrics. Please free to connect if you want to discuss offline.

Mordy Chaimovitz · Answer

Most lenders will be looking at the strength of your assets and current RE experience. Or that of your partner/sponsor

You will generally need to have total assets equal to the amount of the loan. With %10 of those being liquid post closing.

So if you want to take out 1mm dollar loan you will need to show 1mm in total assets.

This can also include: your home, your car, and other RE you own.

%10 liquidity includes, 100k of:

Cash, marketable securties like stocks, as well as operating accounts of businesses you or your sponsors own.

hope this helps

Ronald Rohde · Answer

Yes, you definitely can get financing. But consider a lower LTV for non recourse, you can shop 60% LTV all day...

Taylor L. · Answer

You can find people to sign on loans with you, but the bigger issue is your time. You may be better off focusing your time & energy on your consulting and placing capital with experienced operators. Getting a loan is one thing, but having the time to find and manage your investment is a much bigger topic.

John McKee · Answer

Having access to a deal doesn't mean anything to a bank and every bank has their own underwriting criteria.  They want to know if you have access to capital to pay for it.  You need to walk into a local bank and have a conversation of what your trying to do.  They will give you a PFS (personal financial statement) to fill out.  Based on that they can give you some guidelines of typical deals they are underwriting in today's market.  Co signing a loan with a partner is a huge plus.  Banks love cosigners and personal guarantees!

Zack Gill · Answer

Might be a dumb question but the advice of "dig up the deal for other investors and partner", do you just post here on BP that you've found a deal? Where do people start to put deals together for other investors? I have residential experience and a few rentals but I'm specifically thinking of SS and thought about man I personally may not have the experience nor the capital to do a possible deal I've already come across but then started thinking about wholesaling it or having an investor (possibly family) and learning how to do SS myself (been researching/learning for quite some time on SS).

Ronald Rohde · Answer

In the alternative, work a high paying w2 job in the industry, commit $1-200k a year for deal equity and keep stacking...

Mitch Larrivee · Answer

Best answer on getting started. Go find the deals and work with partners. The second paragraph is a high-level roadmap to becoming a fulltime commercial investor. Kudos to Corby.

Astrit Bauta · Answer

Most definitely, if the property is stabilized. Stabilized properties, meaning those that are leased to 3rd party tenants and provide cash-flow, lenders provide financing based on the cash flow at the property not the strength of the borrower. These also happen to be non-recourse loans, meaning no personal guarantee. If you are doing a ground up development or major value-add deal, that's when the strength of the borrower will be questioned as those are riskier transactions for lenders based on the nature of the project.

Happy to go into more detail or discuss further if you have any questions.

Is it possible to get lending for CRE while unemployed?

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