Can someone explain to me about commercial real estate financing?
Theoretically, this would be a not an owner- occupied building. 

From my understanding, if it is a new purchase financing, the lender would finance 75% of the purchase price and they would need 3 year's tax returns (I assume provided by previous owner). If I am wrong please correct me. 

What if the building was bought cash and the new owner wanted to cash out refi afterwards? I understand that they would finance 75% of the purchase price but is there a seasoning period where the new owner can finance 75% of a new appraisal of the said building? Would the new owner also have to prove 3 years of tax returns even if the new owner hasn't owned the building for 3 years? Would those 3 years tax returns have to be provided by the previous owner?

Also, does the lender need proof of my personal income? Does my personal income really matter in this case?

&amp;#x200B;

thanks!
[{"id": "fyzb48n", "text": "Hire a debt broker. Is this an office building? 75% of PP is going to be tough in this market. Yes your personal net worth and liquidity will be important.", "replies": [{"id": "fyzn3oo", "text": "I am in a secondary market and do office and industrial. I am not seeing 75% LTV for a non-owner occupied building on office. Deals I did before covid for wealthy individuals were roughly 65% of LTV.  Industrial where I am at may have a shot depending on the lender, property, and purchaser.", "replies": [{"id": "fyzokkq", "text": "I've seen it but very rarely, and mainly in the agency/MF space.", "replies": [{"id": "fz1l3jg", "text": "Which lenders have you seen still lending in your market?\n\nThe big big banks are slow and have put pencils down in most cases where I am at. A lot of the credit unions are pencils down as well. \n\nHard money loans are popping up here and there at 12 - 15% for 2 - 3 years. Seller leasebacks are now in vogue again.", "replies": [{"id": "fz1naub", "text": "Most are back now, as of 2-3 weeks ago. Spreads are a little wider, but we\u2019ve been getting quotes from local banks, life co\u2019s, Freddie/Fannie", "replies": [{"id": "fz23ylp", "text": "Interesting. What are you seeing on the buy/sell side? I am seeing a big difference in what Buyers think a property is worth and what Sellers think a property is worth?", "replies": [{"id": "fz2ujae", "text": "Yea there was a massive slow down in trades. Was mainly working on refi\u2019s during the last two months. It seems sales activity is starting to pick back up though.", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fyzclyz", "text": "I'm a debt broker. \n\nYou're asking a multi-layered question here. If you're concerned about tax returns, your best bet would be an asset based lender. They care more about the property they're lending on, as opposed to your personal financial history (tax returns, net worth, etc). \n\nHaving equity is the most important value for asset based lending. You can gain more equity by putting down a bigger down payment or finding a below market value deal. \n\n*For Example, an owner agrees to sell you a property for $100k, when the the current value or upside value is actually $150k. You immediately will have equity and the lender may finance a larger portion of the $100k you need to purchase the property.*\n\nThere's no absolutes in commercial lending, I've seen 90+% financing of the purchase price, especially if the property has some sort of upside (value-add, increased rents, superior management, etc).\n\nThere's typically no seasoning requirements, as commercial lending is not regulated by the federal government. More than likely, there will be a pre-payment penalty for early payoff of the loan. If you do a cash out refi within the first year.", "replies": [{"id": "fyzogqo", "text": "I do purchases based on ARV or appraised value, not purchase price.  You're still going to pay the bump but it if it's a great deal at discount, it gets you in the door.  And cashout no seasoning up to a 30 unit.", "replies": [], "depth": 2}, {"id": "fyztjvx", "text": "I run a growing debt brokerage, and I disagree with the point \"*You immediately will have equity\".* Lenders will typically only give you credit for the equity based on the *lesser of* the purchase price or the appraised value.\n\nAlso disagree about \"no seasoning requirements\". That's a lender by lender thing, but the largest capital sources in the country (Fannie, Freddie, and the largest banks) *all* have very defined seasoning requirements.\n\nAre you new at this?", "replies": [{"id": "fz2ajm9", "text": "/u/tmilazzo \\- he's definitely new (and is unfortunately spreading bad information); I just looked up his post history. Two months ago he was doing residential.\n\nGreat blog by Huber the other day; still want to get one on the board with you guys.", "replies": [], "depth": 3}, {"id": "fz3my4r", "text": "I understand what you mean. \"Immediate equity\" is typically more aligned with new construction as opposed to traditional acquisition. Touch\u00e9\n\nAlthough I have seen lenders deploy loans based on the upside value. \n\nFannie and Freddie do have seasoning requirements, however they don't participate in asset based lending which is most likely the solution for this specific borrower if they're worried about tax returns, net worth, or liquidity. \n\nI am new to this! I'm 23 and I previously worked in residential lending. I've since quit, and brokered 2 commercial loans. Would love to ask you some specific questions!", "replies": [], "depth": 3}], "depth": 2}, {"id": "fzc2pvz", "text": "This is good info thx", "replies": [], "depth": 2}], "depth": 1}, {"id": "fyzhdwp", "text": "Commercial properties appraise based on the cash flow they generate.  If you have long term leases with strong tenants the building is worth more and lenders are willing to extend more credit against that asset. Inverse is true as well. You could buy a building for cash and the tenant moves out or the lease is way above market and NOT get 75% of the purchase price in a loan because it wouldn't appraise or the cash flow wouldn't support it.\n\nYour personal income is impactful to your strength as a guarantor.  Which you will probably be at a 75% ltv/ltc.", "replies": [], "depth": 1}, {"id": "fyzvjfd", "text": "Commercial Lender here. There are 2 worlds in commercial - recourse and non recourse loans. For recourse deals, yes your personal tax returns will be key as the lender is assessing the risk of lending to YOU.\n\nFor non-recourse loans, the Lender is almost exclusively focused on the collateral (ie the property). They are assessing the risk that the PROPERTY will be able to pay the debt service and that it will maintain / increase in value such that the loan can be refinanced at maturity. There are many factors that come into play - product type, leverage, amortization, market, and sponsorship (ie the Borrower\u2019s experience) to name a few, that are analyzed and assessed.\n\nGenerally, you will want to hire a mortgage broker to help navigate you through these - going direct will be a bloodbath unless you know what you\u2019re doing. Frankly, I wouldn\u2019t waste my time with a Borrower who doesn\u2019t know what they\u2019re doing. I have too much shit to deal with and plenty of good deals to work on - I personally review around 500 debt requests a year and I\u2019ll close 5-10. I can afford to be very selective and even turn down good business if I\u2019m too busy. \n\nA broker will know the capital markets, the lenders\u2019 sweet spots, etc.\n\n75% LTV will get you laughed off the phone right now unless you\u2019re prepared to pay loan shark rates.", "replies": [{"id": "fz1zxtf", "text": "Sounds like 8 figure plus deals, no?", "replies": [{"id": "fz2ee3c", "text": "Yea my min is 20M", "replies": [], "depth": 3}], "depth": 2}, {"id": "fz2bbqu", "text": "Bridge lender here - couldn't have said it better myself... I saw 500 deals last quarter. Occasionally I'll throw out what I know could have been a good deal (sponsor direct or from a low quality broker) just for the fact that I know it won't be worth the brain damage and the time spent for our team to get it done.\n\nAs several others have said - hire a competent debt broker that you like and trust fully is the best advice I can give. STICK WITH THAT PERSON. One of the worst things to come across my desk is seeing a loan from multiple brokers at different shops. The sponsor couldn't even stay loyal to a broker - how do I know that they aren't going to take my quote and shop it to all of my competitors. I don't play bidding games like that and that's an automatic way to get me to drop a deal I'm looking at.\n\nI've closed a loan with one of /u/tmilazzo 's employees - he has a great team. There are lots of good debt brokers out there from the big teams at CBRE/JLL/AY etc to the small one and two person shops.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fz09lvg", "text": "In my commercial loans I've been offered higher than 75% LTV. I've gotten offers of 80% though haven't checked recently. I've usually only had to provide 2 years of tax returns though I have a history with some lenders and brokers which helps.\n\nI usually finance at the highest LTV offered that does not trigger a PG.\n\nCommercial loans as a general rule are underwritten based on the building's stats, not your personal income. That said, they certainly look at your overall financial picture, and obviously if the loan carries a PG they're going to do a deep dive into your personal financial picture, income, etc.\n\nI've never paid cash and then cashed out, so can't answer that.", "replies": [], "depth": 1}, {"id": "fz0bi2j", "text": "They need your taxes and a PFS to understand your creditworthiness. Even non recourse debt requires bad boy carve outs. Not to be a dick, but based on your highly limited understanding, I\u2019d suggest holding off right now.", "replies": [{"id": "fz2bdfc", "text": "OP is in no danger of getting debt.", "replies": [], "depth": 2}], "depth": 1}]