Advice/referrals on getting a LOC on commercial building

[Ryan Zaninovich]

Hello everyone,

I own a commercial building worth $1.5 million that is unemcumbered. I purchased it a little over 6 months ago. It is leased by the doctor I purchased it from with a month to month triple net at $9200 a month. I'd like to get a LOC on this building. Can anyone give me some advice on how much I can expect a bank would be willing to loan on this? Is my credit and other income a factor (I guess a better question is how much of a factor are those items in this situation) or is the building the main consideration? Also, what type of banks/institutions would be inclined to do this type of loan? Anyone have a referral?

Thanks!

[Roger Holden]

I would ask the current tenant when exactly he is leaving and if there is someone he knows who might consider taking over the space. Sublease is an option as well. Maybe the Dr. will at least sign on for one year, giving you a stronger position in a loan. Not having a long term lease is not good for any commercial investment property. The lease agreement at the time of purchase, should have been in your favor. I would consider looking for a tenant now, while the property shows well.

Your FICO is excellent and your liquidity seems strong. If I were you, I may consider applying for a refi now. Very few lenders will consider lending on a vacant property. They are worried about the lack of cash flow that should be paying for the property. You may even have a hard time securing money with the month to month lease. 

The major thing in your favor is that you own the asset outright. That may be the only reason a lender may consider lending right now.