How to interview commercial lenders?

[Edward Stephens]

BP Family -

  Soon I’ll be in the market for a commercial loan.  I’ll be buying a 5-20 unit apartment building.  I am a residential real estate agent, so I have a lot of experience talking with residential lenders about all kinds of things.  I can spot the good ones from the bad ones.  But on the commercial side, what questions should I be asking these commercial lenders to ensure I’m getting a good lender?  Are there any common mistakes you’ve made when interviewing a lender that you could share with me so I don’t make the same mistake?  Thanks in advance!
  

[James Kojo]

@Edward Stephens

To be honest, the question that will filter 90+% of the people you talk to will be: are you interested in working with me?

5-20 units is on the smaller side of commercial transaction, so you'll have to find players that work in that niche. Some of the larger players are willing to talk with you if they think you're going to move-up the value chain, and some are not. 

If you are in the loan-limit size of $1M-7.5M, you'll then qualify for Freddie Mac SBL program (which is a great program, btw.) You'll be able to find at least a handful of local brokers willing to work with you on those.

Any smaller than that, you're probably talking to local banks and credit unions. You'll have to know somebody-that-knows-somebody to find those folks, or you can just make a lot of phone calls.

I have done all of the above, if you have specification questions on any.

After that, you can get into terms such as ammo, term, rates, pre-pays etc.

Finally, my last bit of advise is to go with someone local to the market. Commercial real-estate is much more hands-on in terms of lenders, so you'll want someone who knows the intricacies of the particular market.

Hope that helps.

James