Order of Operations for Commercial Multifamilies

[Timothy Casallas]

Hows it going BP,

Quick and hopefully easy to answer question here that is tying me up while I try to get my first commercial property. I am confused due to conflicting information on the order of operations of applying for a commercial loan. First I thought it was 1) Open a LLC, 2) Look for properties, 3) Apply for a commercial loan.

Today I talked with an agent and he said I needed to get prequalified first which threw me off because I thought I would have to use the property itself to get qualified for a commercial loan. So his order of operations was: 1) Get prequalified, 2) Find a property, 3) Open a LLC

So I said okay and went to Navy Federal to at least inquire on commercial loans and they said I would have to open a business account first before I can apply for a commercial loan so 1) Open LLC, 2) Apply for Commercial Loans, 3) Look for properties.

Does anyone have the answer or a solid blueprint to follow here?

[Greg Dickerson]

@Timothy Casallas you need an operating company LLC set up first. This is the company that will make offers on properties and handle all up front due diligence, manage the property after closing and receive and cashflows from the profits of the property.

When you get a property under contract, complete the due diligence and decide to move forward to closing you then set up the LLC for the property in the State the property is located in as lenders are going to want the property entity located in the same state as the property.

Once you complete the DD period and set up property LLC you then submit your package to lenders if you do not have a preferred lender to get Term sheets. You then choose a lender and proceed to closing.