Commercial loan question

[Michael Kimmell]

So I have been in the SFH and duplex landlord business since 2003. I was very lucky and sold in 2006 and starting buying again in 2011. I am at the point where starting to look at apartment buildings over 4 units. I have done a lot of reading on commercial loans and especially on all the different ones tailored to apts. My question is, is the potential rental income from an apartment building used to secure the loan? How does that work? I have been down this road with my residential loans. I understand the property had to have been rented for two years before you can count the income and even then it I'd only count at 25% of what it makes. Thanks for taking the time to read my question. Mike

[Chris Mason]

Hi @Michael Kimmell,

...that's not true at all! Rental income can be counted at 75% of value, immediately, without any two years of tax returns. You've encountered overlays, methinks.

Anyways,

Commercial lenders have no "in general..." because each commercial lender makes up whatever guidelines they wish. Experience is always considered relevant. I'd suggest physically walking into a commercial bank or two and having a conversation.