Can I borrow against a Commercial Mixed Use Property

Question

Hi Fellow Investors,

I'm not too familiar with commercial lending, so hopefully I can learn something.

I have a Mixed use commercial property that paid off,  my questions are:

- Can I borrow against it? and what's the criteria for borrowing? is my credit score or property income matters most to the bank?

- What's the max can I borrow ? Do they need to Appraise it ?

- Any Recommendation of Commercial Lender?

Thank you in Advance,

Matthew Crivelli · Answer

Hi Franky,

You should be able to refinance and pull cash out.

Your credit score will 100% matter (like always)

The property will need to be appraised for sure. I would expect no more than 70% LTV on the cash out.

The criteria for lending will be different every where. You could use a commercial lender from a bank or you could explore private financing if you are okay with holding the property under an LLC. Rates will most likely be high and you want the place fully rented. Also expect it to take some time to close. (45 - 60 days +)

Eric Goldman · Answer

you can cash out on it. mixed use is different. the lender may require long term lease for the retail/restaurant/ what ever you have in that space.

they most likely will keep the LTV on the lower side 70/75%. @Jared Rine hit the nail on the head. its not one size fits all with commercial.

My family owns a 2 unit in Bayonne!

Jared Rine · Answer

@Franky Juwana..are you a partner in both of the LLC's or at least the majority LLC?  What's probable value?  Where is the property?  Given it's mixed-use, is it majority residential or commercial?  Do you live in this property?  ...there's a lot more info to be gathered before providing suggestions...answering your questions - property income is going to usually matter more but borrower strength is still going to be taken into consideration.  Criteria is going to be dependent from lender to lender; it's not cookie cutter on the commercial side vs. residential where you if you fit the box, you get a loan.

Ned Carey · Answer

@Franky Juwana

As @Matthew Crivelli said,  Yes you can borrow against it. The criteria will vary tremendously from lender to lender. Your credit score will matter but not as much for a commercial property as it would for a residential property. Yes it will have to be appraised and typically commercial lenders will offer A 75% LTV.  Most commercial loans are shorter terms like 5 years. Then they readjust or have a balloon.

Search for DSCR lenders (Debt Service Coverage Ratio) like Lending One, Lima One etc. I am not sure if they do comercial properties or just SFHs but they might offer 30 year terms.

Camile Case · Answer

@Franky Juwana

Can I borrow against it? Yes - are there any issues or red flags?

and what's the criteria for borrowing? DSCR Asset Based, FICO determines LTV and Interest Rate

is my credit score or property income matters most to the bank? Property Income & Occupancy

- What's the max can I borrow ? Depends on your FICO, but can go up to 80%

Do they need to Appraise it ? Yes, AS IS Appraisal

Alex Hunt · Answer

I can recommend BrrrrLoans for this. I saw your comment on the bank denying the ownership of 23/76, as long as the borrowing entity owns more than 20% this would be able. A cashout refinance of 70- 75% LTV would be expected on a 30yr fixed. Credit, cashflow, are considered and new appraisal would be needed unless you had an appraisal done in the last 120 days through and approved AMC, that could be transferred.

Franky Juwana · Answer

Hi @Jared Rine ,

Yes, my single member llc own a percentage and my partner own the bigger percentage. We bought it last year at 500k, so if I have to guess, the value of the property now is between 550k-575k. We own it free and clear. It generating income $4250/month.

The property is in Bayonne, NJ, a mixed used where residential 3/1 on 2nd fl, and commercial on 1st. total sqft is 2600sqft plus basement about 1200sqft.

Hope that clear things out a bit.

Franky Juwana · Answer

Thank you @Matthew Crivelli

My property is fully leased, in my case the property is owned by 2 different llc's which has different percentage 23/76 , I just called one bank and they criteria is to have only 1 llc that owning the property (bummer), but I'm sure there's a way for my situation in order to borrow.

Can I borrow against a Commercial Mixed Use Property

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