Commercial property Refinance

[Tyler Carpenter]

Im looking for some advice on refiancing tips. I have never really looked into commerical property, so im a little unsure on the practices that compare to residential.

I have 2 properties that I may have the chance to buy, one is a 6 unit that brings in about 950/month per unit that I can get for about 285k. Probably worth 460k.

The other property is a 10 unit that brings about 625/month per unit for about the same price. Only this property I have the chance to buy under contract. If all goes thru, I plan to put 30K as down payment, with a 3 year baloon. This property is worth about 450K

What im looking for information on, is how easy is it to refinance commerical properties with a good track record of rents and positive cash flow? Is it something that is easier than residencial or harder? Should i stick to locally owned banks as I would in residencial? Is there a typical refiance percentage that most banks refi to or that you have had experience in (80% ARV)?

Any information would be helpful, Thank you

[Darryl Dahlen]

I'm a little confused. Your are asking about refinancing a property, but are looking to buy.

Buying a multi-family property requires 20-30% down. They don't care about what the property is worth, they care about the purchase price and that the appraisal supports that value. On multi-family deals, most lenders are looking for a 1.2 to a 1.25 DSCR with the property showing 80-85% occupancy for 3 to 6 months with no incentives used to fill the units.

Some will look of for landlord experience or want a property management company running the show if you are weak. They can also enforce one on larger properties.

If you are looking to refinance down the road you should have no issue providing the occupancy level is strong and the property can debt service. Usualy, lenders will will base the LTV off of the appraised value after 12 months.

Whether you approach a local lender or one that is national really makes no difference providing you know the lender is really lending.