Commercial Loan Estimates When Running Multifamily Numbers

[Tom Saysithideth]

Hello BP Family,

How do you all determine numbers for a commercial mortgage when estimating if a property if worth purchasing? Below are numbers I have (50% rule), the main concern is how to get accurate estimates (that sounded like an oxymoron) for the commercial mortgage. Is 30% down a standard down payment for commercial properties.

Listing Price: $395,000

Type: 6-Unit Multi-family

Location: Tennessee

Gross Monthly Rents: $600/unit

Annual NOI: $21,600

Down Payment: $118,500

Rehab: $50,000

Closing Costs: $10,000

Total Cash Investment: $178,500 

[Greg Scott]

I'd start with a mortgage broker that can get loans from a number of bank sources.  Reach out regarding a specific property and they will give you feedback on the potential terms they see.  Then you can incorporate those terms in your underwriting and see if the deal still makes sense.   After you talk with them about a number of properties you will have a better sense for what properties the banks like best because usually they have the best terms.  Those with the best terms often are the best deals too.