Updated almost 5 years ago on . Most recent reply
Private Financing for NNN Industrial Building
Hi All,
I had questions about what is realistic for private, secondary financing for commercial real estate. Thank you in advance for any wisdom you can share!
Situation: I have a verbal contract for two NNN-leased industrial buildings. I do not have 25% down, and the seller is not interested in carrying any. I originally planned on an acquaintance lending most of the down payment, but he recently decided to stop making personal loans.
Questions: What ideas and options do people have for secondary financing in the commercial world? Should I keep talking to friends and family? Are there business loans that can be applied to real estate? Private RE lenders?
The deal does not really make sense if I have to pay 10% or more for the secondary loan. Is it realistic to hope for a $50,000 to $100,000 loan at 6% or 8% (20-year am, 2-year term)? I feel like a lower rate is justified for this deal for some of the following reasons:
- international tenant who has occupied both properties for over 10 years (and NOT energy related)
- NNN terms where they maintain everything except the structure
- Purchased below appraised value
- 800 credit score of borrower
- short term loan. I intend to pay it off in 1 or 2 years.
Let me know what you think and your experience.
Thanks!