Question about financing a small triple net property
I know usually 30%-40% is required down for these loans, my questions is how much flexibility is there in this? I know the loans are usually much larger for NNN and are assessed by the property not so much by the borrower, is that the same if it is a $330k property and the borrower makes 80k? If they have a relationship with the bank?

Would love to hear what is realistic... even if it is not what I *want* to hear, lol
[{"id": "gedynrc", "text": "A lot of moving pieces in your post/question.\n\nRelationships with lenders always matter. A lot. The longer-term it is, the more deals you've done with them, etc. then the more negotiable all these things are...LTV, LTV without PG, rate, amortization schedule, etc. Same holds for commercial mortgage brokers btw, i.e. the more you've done with them, the better they can generally perform taking your situation to market and having lenders compete for your business.\n\nTough to get more specific because every submarket and asset type is different. Sometimes very different. Is this urban core? Suburban? Growing/thriving city? Or shrinking metro area? Is this office? Retail? Medical? Single tenant or multi? What are the lease terms? Cap rate at purchase price? Any capex on the horizon not covered by the lease(s)? Any vacancies?\n\nSorry to answer your question with lots of questions. \n\nAll that said, it's certainly possible that you could get financing for the property with 30-40% down and no PG, if the lease structure and creditworthiness of the tenant check out per the underwriting.", "replies": [{"id": "gedzzgm", "text": "Don't be sorry, I appreciate you getting details you need.\n\nBuffalo, NY large area tenant there since 1988 with below market rent. Only one 3 year renewal in '23 @ 10% increase. Automotive shop like O Reiley's. \n\nI don't have as much down as I would like, but would have family that wouldn't mind to help... would love to avoid that. But I thought it's a very solid property especially for what I need. So in the loan that's the dimension I'm primarily looking at. I have a good job, credit score, and no other debt obligations.", "replies": [{"id": "gee29mo", "text": "Go chat with a local lender/bank that knows the area. But I bet you will need to ask for family cash if this is deal #1.", "replies": [{"id": "gee3fbn", "text": "Thanks good advice, will do that.", "replies": [{"id": "geep4gr", "text": "Just seconding what u/tpm319 said.  I use a 2-branch local bank who specializes in lending to local businesses and property owners.  They will lend up to 80% for me because they've known me a long time and they know everything about me and my assets.\n\nLarger banks could do the same thing, they just don't want to bother with it.  They want to fit every loan into their criteria and if a loan won't fit, they won't do it.  Smaller banks are more likely to keep their loans on their own books permanently, so if they trust you and you are making a smart purchase, they WANT to loan you the money.\n\nGood luck!", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "gee2cbk", "text": "Well, Buffalo isn't exactly a thriving metropolis from my understanding so that doesn't help. But, a (very) long-term performing tenant is always good. I would also say that so far at least Amazon hasn't found a way to disintermediate car care/maintenance (though Tesla might!)\n\nWhat's the cap rate?\n\nAlso, I wonder if the seller would be willing to work with the tenant to redo the lease to sign simultaneous with and contingent upon your closing? Maybe they'd take 10 years at the current rate with 1-2 3 (or 5) year options at smaller increases? So you give up the rent increase in 3 years - which is uncertain regardless - in exchange for 10 years of certainty (or greater certainty) which may then help with your lender.\n\nETA: who owns/runs the shop? Is it an older person who may want to retire in the near/medium term? Stuff like that is imperative to know.", "replies": [{"id": "gee3kr2", "text": "8% so not like I'd mind locking it in for that much longer. I'm going to talk to some lenders in the area and see what's important and realistic to them.", "replies": [{"id": "gee4f65", "text": "Perfect.", "replies": [], "depth": 5}], "depth": 4}, {"id": "geea4wx", "text": "Lease term is huge for NNN situations like this from bank perspective obviously.  If I read this right their lease ends 2023 and they have an option.  So good suggestion by guy above here about restructuring lease.  May be a requirement from bank before they even look at this if lease has just 2 years left.  Need to interview Tenant during DD to get a read on renewal who knows maybe current owner knows something you don't.  For record if you want a real time loan example 3.45% 25 year AM 30% down stabilized multi tenant office.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gefw9ez", "text": "Tough to say\u2026it really depends on the bank and the borrower.\u00a0 A lot of the big banks aren\u2019t lending on certain properties currently due to COVID which puts you into the smaller, local/regional banks.\u00a0 I wouldn\u2019t assume a lender would give you more than 70% LTV and the loan will most likely be recourse which brings your income into the equation and whether the bank can get on board with you making payments.\u00a0 You will fill out a PFS (Personal Financial Statement), and they will analyze all of your assets and liabilities to determine the risk of you as a borrower.\u00a0 Having a relationship with a bank goes a long way.", "replies": [], "depth": 1}, {"id": "gefxsqt", "text": "This small loan should be shopped to a small community bank in the City. And by a small bank, I mean approach at least three.\n\nThe lease term might be a problem for some lenders but everything is negotiable. The type of property and your experience will be mitigated in part by the fact that you will be more of a passive landlord with the NNN lease in place. The longevity of the business is a plus also.\n\nHowever, you really need to line up the money before given that it is retail. I don't see many lenders even non-sophisticated lenders feeling ok with less than 30%.", "replies": [], "depth": 1}, {"id": "geh3n01", "text": "One unbelievably important factor when underwriting CRE loans is the secondary source of repayment. In other words, can the property owner cover the loan payments from other revenue streams if things get wonky with the tenant? \n\nIf the answer is no, and things do get wonky with the tenant, here\u2019s what actually happens at the bank when a property is foreclosed on:\n\n1. Just simply filing the paperwork to foreclose is an expensive, annoying, and an unbelievably time consuming endeavor. \n\n2. Banks don\u2019t operate like pawnshops. Trust me, the absolute last thing we want is your property. Period. Doesn\u2019t matter if the bank is ABC community bank in your neighborhood or Bank of America. I\u2019ve worked at both. We don\u2019t want your property. Period. \n\n3. A triple net property would most likely be foreclosed due to the tenant being unable to pay rent, which makes the NNN issue a moot point.", "replies": [], "depth": 1}, {"id": "gexx40j", "text": "What is the lease term and strength of the tenant's credit?", "replies": [], "depth": 1}, {"id": "gfcr2os", "text": "I\u2019m a loan broker and one of my Leander is at 20% down", "replies": [], "depth": 1}]