Lending on a commercial property under $1million?

[Scott Spicer]

Does anyone have financing suggestions for a 14 unit apartment complex that is under $1,000,000? I'm looking for a 30yr fixed, 80% LTV. The lenders I've found only offer a 20yr amortization, which greatly diminishes my cash flow. The other lenders that offer a 30yr want to lend on $1M+.

Any suggestions?

[Rick Martin]

@Scott Spicer anything under that $1M threshold will be recourse debt, where they can come after personally. The terms you are seeking would be from agency debt, and if you can get over that $1M loan balance, you could pursue a Freddie Mack Small Balance Loan. You can borrow from $1M to $7.5M; terms can range from 5 - 20 years, with a 30-year amortization. Your current 14 units would require you to seek a bank loan, and yes, the amortization usually maxes out at 20, and the rates are a bit higher.

This wouldn't work for your 14 unit, but what if you found a JV partner and purchased a more expensive, higher-quality asset that did get your loan balance into that SBL range? Then you would have your terms and have non-recourse debt where you are not on the hook. You would want to JV with someone who already has loan experience.