Rental Property Investor · Member since 2019 · 34 posts · 11 votes
Hello All,
Currently, i own a fleet of 65 trucks but I have been leasing inside of a few yards for some time now. The property should be between 7 and 10 acres in a light manufacturing zone or San Antonio. I am interested in financing a commercial property and I just want to know the following
- What important factors should i look for in a commercial property? - What would be the best avenue for financing my first commercial property between 1.3 and 1.9 million - What amount of capital is currently needed for a deal like this beforehand?
I have only dealt with financing for a small duplex and also trucks which is too small to compare to our current upcoming deal we want.
Can someone give me a few tips or also areas where i can do some research from previous deals?
Specialist · Lancaster, PA · Member since 2018 · 152 posts · 66 votes
5y
@Andrew Gomez 1.) Important factors to look for. With this type of commercial property, likely the most important aspect you will want to consider is the environmental aspect. It is very common for commercial properties to have underground storage tanks or USTs. These tanks can contain anything from waste oil to gasoline, for example if there was a gas station there in the 1950's, those tanks could possible have never been removed and can easily cost 10's of thousands to be remediated. So, the first step is to ask if a phase 1 or phase 2 has ever been conducted. Remember that there is no requirement for a seller's disclosure in CRE, ie. Buyer beware. I have even seen churches with USTs. There is many more factors then this but for the sake of brevity I will end this one here. 2.) Best avenue for financing. I would speak with a commercial broker and see what commercial banker they would recommend for this type of deal. CRE is a very broad but niche asset class and you want to work with the people who do this type of thing frequently not just a few times per year. 3.) What amount of capital is needed. Typically commercial loans range from 25% to 30% down. However, it could be more depending on the asset type and the risk associated with the investment. You also have to consider your budget for improvements, if any, and how would the owner participate in them, if at all. If the initial capital outlay is too intensive for you, you could also negotiate and lease with the option to purchase. Commercial property owners will typically go for this if the property is to be purchased within 5 years. CRE is truly the wild west of real estate. The best advice I can give is to team up with professionals who specialize in this arena. It is nothing like apartments and you will save yourself the time it take to establish a huge learning curve.
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
5y
- What important factors should i look for in a commercial property?Zoning, outdoor storage is fairly rare, depending where you are, condition of the improvements, are you looking for just a metal building or some office too? - What would be the best avenue for financing my first commercial property between 1.3 and 1.9 million local bank, hands down. where do you currently bank? I can introduce you for owner occupied lenders too - What amount of capital is currently needed for a deal like this beforehand? probably 20-25% plus some reserves if the land needs electrical or fencing, etc.