Teach me something about commercial lending

[Loc R.]

After calling a few commercial mortgage brokers, I've realized that the game changes after 5+ units.

My experience has been with 2-4 units. Lending on it is pretty easy/straightforward. You want a 30-year fixed loan? You got it.

You want a loan on 5+ units? Everything is 5/5/30 (30 years amortized, 1st 5 years are fixed, 5 years variable, balloon at 10) or something of that configuration. Is the thinking that the borrower won't be in that building long enough? Or that the lender doesn't want to commit to today's rate for 30 years b/c a spike in rates now makes his loan worth less? Or that a jump in the variable rate gets passed on to the tenants anyways?

Give me the primer on commercial lending.