Lessons Learned in the Search for Commercial Real Financing

[Corey Dutton]

I want to share this article again, one that my husband pointed me on Forbes.com recently. The article is written by Hanny Lerner who shares her experience in her first time purchase of a commercial building. An experienced real estate investor, this was her first time to purchase a commercial building, so quite a different experience compared with buying a rental home or duplex. Some of the lessons learned are shared in this article, and I want to share those lessons related to the financing of the purchase.

Financing is always the biggest piece of the puzzle in commercial real estate. As Hanny shares in this article, the process with the SBA loan took months, and the list of documentation request was endless. She also wasted a lot of time with the big banks, as many commercial real estate investors often make the mistake of targeting first. The large banks aren’t making commercial loans unless the property and borrower are stellar. She quickly discovered that the smaller banks were the ones ready and willing to lend.

With a tight mortgage contingency period on the contract, she really should have cast her net out a little wider in her search for commercial financing. She admits she really should have found a good commercial mortgage broker to assist her. She also should have sought out other alternatives for financing such as private money bridge loans. Although a bank may shut down your application over a lis pendens, a bridge lender is willing to close the purchase patiently with the borrower, in the event of title related issues such as this. In a lending climate such as this one, it’s always best to cast the net out as wide as possible when it comes to the search for commercial financing. There is never a guarantee of anything when it comes to financing for investment properties. Here’s a link to the article, it’s worth the read: http://www.forbes.com/sites/hannylerner/2013/12/31/how-not-to-get-screwed-when-buying-real-estate/