Commercial Loan

[Toan Le]

I want to do a Commercial Loan for a 16 flexes , and the Lender said they would do that with leveraging all of my properties that I ' ve owned( put liens.I have never done that before so kind of confused if it good or bad . Anyone out there can help ? All advices are appreciated! Thanks BP communities .

[Joel Owens]

Sounds like a local bank. What they are doing is "cross collateralizing" the loan. Meaning all of your properties are at risk with this loan. If you have lot's of equity in another property and this one takes a bath then they come after your other properties to make themselves whole.

Banks generally have crappy loans and they ask for all of this security. Did I mention again they have crappy loans and terms??

They can ask all they want but as a borrower you also have the right to say NO,NO,NO.

Negotiate for no pre-pay penalty, a burn off on the personal guarantee once you hit a certain LTV on the property, a 7 or 10 year fixed term with a 25 year amort, no cross collateralizing etc.

You tell them what you want and call around until you find close to your terms. Some banks will balk and some will consider it. Loans are a negotiation the banks just do not want to let people know that. They reserve the better terms for those who demand it and the herd just goes along with the bank demands.

If your other properties are going to be at risk this better be a grand slam 16 unit with the numbers.