Need lender for small balance commercial loan that can move fast!

[Rich Somers]

The underwriting team of a local bank I was working with in Louisville just gave me a "No" for a small balance commercial loan for a 5 unit that I currently have under contract. Unfortunately it took them 4 weeks to give me an answer. I have excellent credit, 10 years of strong W-2 income at my government job, a really low DTI ratio, and a healthy balance of cash reserves. Apparently this bank has very strict guidelines for out of state investors and since this is my first deal they weren't willing to take on that risk. They told me if I lived in Kentucky it would be an easy yes. I'm not used to getting a "no" in terms of financing anything, I now understand why having that first deal under your belt for any new investor is so valuable in terms of credibility moving forward. Anyways, the good news is: we are past the inspection contingency and still have 33 days left till close. If anyone can refer me to any good local or non local commercial lenders that wouldn't mind working with an out of state investor like myself, and can move fast, I would much appreciate any referrals.

Thanks in advance! 

[Joel Owens]

The asset is so small most local lenders want (boots on the ground) as they call it.

Regular commercial lenders barely go below 1 million and some have 2 million minimum loan requirements. It is typically easier to get loans for larger properties as they have scale and areas for dirt value tend to be stronger.

There is not much difference between a 4 unit and a 5 unit. Why not go 4 unit so you get better long term financing?

To really benefit in commercial you really have to start getting into 20,30 units and up with multifamily. You are talking about multifamily right? If it's retail underwriting is different. Make sure at the bank you are talking to one of the people that sit on the committee. Often times people talk to the grunts taking information and they overpromise and under deliver because when it gets to the decision makers they sing a different tune. See if the lender sells off the paper or holds it internally. When they hold internally they tend to be more flexible but when they sell the loan off it has to be in this pretty little box to be marketable.