Commercial financing question

[Michael Vallee]

No longer amongst the "W-2'ers" - living on rental income and capital. (Due to circumstance - more so than some freedom walkout retirement announcement) When applying for a commercial loan - I've read that the loan is based mostly on the property's income to loan servicing amount. What impact will not having a W2 have in this process? Any other compensating factors? Credit is good and rental incomes cover monthly "nut". I'm knee deep in boosting NOI on my 1st commercial apt - 6plex that was seller financed - but thinking out to a cashout refi. As an option. Any insights or caveats would be appreciated. Michael Vallee

[Jeff Kehl]

@Michael Vallee What you hear commonly is 'if you have a commercial property in an LLC' your personal finances are not important, the property is'. As @Dan Wallace and @Ronald Rohde pointed out though, they are generally not going to give a loan on a strong property to a weak borrower just because it's a good property.

They will want to see your personal financial statement/net worth/balance sheet and they will want to see that you earned good money in the last 2 years from some source on your tax returns.

And this only makes sense, right? If you find a stellar deal that is a cash cow but you make no money and are in debt $200k why would they lend to you?

It sounds like this is not the case with you, you just no longer have a W2 but have good credit and financials. Just trying to help you understand what they will look at and dispell the myth that a lender will give you  a pass just because you have a good property.

The old saying 'Banks most want to loan money to people that don't need it' is very true.