Commercial financing for multifamily

[Joshua Andrews]

Seeking advice on commercial financing.

I am preparing to get commercial financing for a small multifamily purchase. It will be commercial above 4 units and 300-400k range.

I am a residential lender so am intimately familiar with pricing and figures for residential, not so much commercial. Wondering if I could bounce some basic commercial questions off you guys or if there is a resource you suggest?

[Chris Winterhalter]

@Joshua Andrews

As mentioned you need to reach out to as many local and regional banks as possible in your area. Talk with the commercial lending department...generally a few "VP's" that handle the business banking side of things and CRE lending per bank/branch. Many times these people can approve 250k on the spot by themselves, then 500k by asking their boss, and then board approval above that. Underwriting will generally be in house or will be contracted with a local third party underwriter (more common for credit unions). Ask them who has the ability to approve the loan at the bank. Get referrals from small multi-family brokers, insurance brokers (writing these types of policies), other investors, property managers etc. Be very clear about your financial situation upfront so you can weed through the highly conservative banks. Ask them what their appetite is for your size multi-families and what type of deals they have recently funded in your area. Of those examples ask if the borrower had an existing relationship or was a new client. The more banks you talk to the more term sheets you will get. The goal is to get 2-3 term sheets and negotiate down for the best rate and terms.