Private Lending for Commercial Property?

[Matthew John]

Hey guys, 

I've always focused on the residential side, but I've come across a 4 unit commercial medical/office building. 2 units are rented out to a chiropractor & dentist, 2 are vacant & 1 needs rehab. 

This is a total value add play, listed for under 300k. I'm in the early stages of due diligence, but I'm trying to figure out the best way to approach financing. 

My partner and I have done some SFH & MF residential deals, but haven't done anything on the commercial side. Our current lender won't do Commercial and I don't think it's best to go through a bank in this situation (because it's a BRRRR).

I talked to some other Commercial lenders that told me the minimum they loan is 450-500k and that a property selling for under 300k would not qualify. 

Would it be best to seek out a private lender that would lend for the purchase + rehab and then look to refinance into a bank loan after stabilizing the property?

I think this could be a tremendous value add BRRRR, but I need to figure out financing before moving forward. 

[Don Konipol]

@Matthew John

You have a chicken or egg scenario

Most private money commercial lenders, such as myself, have a $400k minimum loan amount. However there are a few that do lend as low as $100k.

My advise Is to make an offer subject to obtaining financing, and see if you can get the property under contract. This in effect gives you a no risk short term option to purchase.

Once you have an executed purchase contract, and assuming money for a suitable down payment, you become a serious player in the eyes of a lender. Even if you are unable to attract a corporate HML, you very well might be able to attract private individuals who provide private money loans as a sideline investment. Many of these individuals work through commercial mortgage brokers. Go online to Scotsman Guide, go to their interactive lender directory, fill in a simple questionnaire about the deal your trying to obtain financing for, and all lenders in their database whose parameters are a match with your loan will appear with their contact information and a description of their current loan products. These will be direct lenders. Should this approach not work out for you, then hit the mortgage broker route.

Good luck!