Best way to finance a commercial property (non-owner occupied)

[Prithvi Sri]

Hello,

I am a seasoned real estate investor (for over 16 years) who worked primarily with residential real estate, specifically single family homes. I am looking into a commercial real estate property of 5mn and putting up 2mn in down payment (1mn in cash and 1mn from my home equity). When it comes to financing the other 3mn, what are your ideas? What is the best way to get cheaper loans? My personal credit score is 810+. 

Since this would be my first commercial investment, there is also another thought that this may be too big for me to handle or too big to cut my teeth in. So, please advice about financing and know that I am aware of the risk proposition. 

Thank you

[John Warren]

@Prithvi Sri I would check first with small local banks and credit unions to see what types of rates and terms they will give you. You may be surprised how much negotiating can happen with commercial mortgages. There is a lot more flex in what can be offered you. Also, your personal credit worthiness will be important but not as crucial to this as the income and condition of the property you are buying. They will be much more focused on the net operating income than your credit score believe it or not!

You will also need to be aware that there will be "terms" where the loan balloons/interest rate adjusts. This is just part of the commercial mortgage business, and helps them account for interest rate risk.