How to get commercial mortgage and what to look for when purchasing
I want to get into the CRE game and looking for advice, until I talk to a local bank tomorrow, about how to obtain a commercial loan to buy CRE. 

What things do you look at when purchasing a piece of property?
[{"id": "f4hsj8g", "text": "You are doing the right thing talking to a local bank instead of a national. They are going to want you to have some equity in the deal and either evidence of existing income or a plan to lease the space to generate income, taking into account construction and other costs and based on realistic rental rates for the property type.\n\nIf you've never purchased property before, they are going to be looking closely at your income/credit as well. It can be helpful to go in with a partner who already has a relationship with the bank if you have issues getting financed.\n\nMake sure your underwriting for the property is realistic. If you think you are going to set a new record for rental rates and that's the only way your deal works, you need to find a different property to purchase, or negotiate a lower price.", "replies": [{"id": "f4hufzb", "text": "Thanks.\nI already have a relationship with them as I took out a $750k Lon to build brick and mortar places. That was 5yrs ago. Plus the business does about 1.6mil/yr so that should help.", "replies": [{"id": "f4hz51d", "text": "Are you building and then leasing to that company? Or buying and then TIs? Also, $1.6M gross revenue doesn\u2019t mean anything to a bank. What is that businesses cash flow, usually defined as EBITDA - earnings before interest, tax, depreciation, and amortization. The net number will determine how much the tenant can pay in lease expense.\n\nThe bank will likely want to underwrite, as much as they can, the tenant. Unless you have tons of cash and can cover the new commercial loan payments for say 5 years with no tenant.\n\nYour lease rate will need to be market rate, or at least close to, and depending on the bank, they may want that lease in place before they approve the loan. And the bank will care what structure of lease it is, NNN, modified gross, NN, whatever it is.\n\nDepending on the bank, they will likely also want to see your experience managing an income property, or your plan to manage it. \n\nLots to review and analyze. It can be fun!", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "f4i2vz6", "text": "You should also work with a broker. They can give you more info on each deal and give you an idea of what loan amount and rate you are looking at. What banks will do to qualify YOU is a global cash flow analysis. A lot of lenders don\u2019t do this up front and wait until underwriting. It\u2019s a key factor in the transaction. \n\n\nAnother main factor is property cash flow. This is typically the driving factor behind loan amount. Each property will qualify for a different loan amount based on the income and expenses it has generated over the preceding 3 years. \n\n\nThe reason I say work with a broker is banks have different appetites for different asset types. Your local bank may be great for retail but is less competitive in multi family.", "replies": [{"id": "f4ldrz7", "text": "great info but what paperwork from the property can prove its income/expenses? Tax returns? Is there a specific type of paperwork that the borrower/broker can ask the property owner for that can prove how much the property generates?", "replies": [{"id": "f4lgsjq", "text": "Just a P&amp;L for each individual year. There\u2019s not much you can get other than that you basically just need to trust the seller. If there\u2019s discrepancies the bank/broker will know based on what the typical market expenses are in the area and what\u2019s in the leases. \n\n\nNormally in the OM there\u2019s a general estimate. I go off that for preliminary quotes when I have a client looking at buying a property. Knowing what financing is available in regards to rate, amortization and loan amount is really important in determining if it\u2019s a worthwhile investment", "replies": [{"id": "f4lzoo9", "text": "interesting thanks. Also, for a first-time buyer like myself, would a local bank most likely ask for 25% down? Even despite me having zero business debts, zero personal debts, excellent credit score, and no other loans? Is there no way to put less down?", "replies": [{"id": "f4macaz", "text": "25% down is probably the absolute bare minimum and as a first time buyer they typically either underwrite with stricter guidelines (lower LTV or higher DCR), or require you partner with an experienced investor. They will definitely require you have a property management company. Depends on the lender, some are more flexible than others. \n\nThe loan amount will depend on your global cash flow and property cash flow.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "f4icayj", "text": "Age of building, rent rolls, surrounding lease rates. Type of structure IE metal framed, brick, tilt wall or wood frame. Last time a building inspection was performed. Local regulations that the building is not in complianc with.  You should provide more content on your intent and desire with the building in order for us to help you more. Foot traffic. Go visit the area on a weekend, weekend night, weekday, weekday night. Food establishments near by. Zoning restrictions.  \n\nYour broker, if good, will advise you on some of these. But you need to ask him/her for the info in case they are in it for themselves", "replies": [], "depth": 1}, {"id": "f4ink9r", "text": "It's good to start thinking about loans early in the process, but most lenders won't be able to give you accurate quotes until you have a specific property to look at.  Biggest piece of advice I can give is that as the borrower, you control the deal. Don't be intimidated by the money guys.  If you don't like the terms you get, shop around different lenders / mortgage brokers until you get something that works for you.\n\n&amp;#x200B;\n\nAs for your meeting tomorrow, you can probably walk away with a ballpark estimate of where this bank usually comes in on the asset type you're looking at.  You should try to get the following:\n\nLoan amount, i.e. 65-75% LTV based on the lower of appraisal or purchase price\n\nInterest Rate based on Treasury / Libor / WSJ Prime + x.xx %  spread\n\nAmortization\n\nPrepayment Penalty (Step-down structure or yield maintenance)\n\nTerm (5/7/10 is typical, some offer longer in special scenarios)\n\n&amp;#x200B;\n\nFor a full quote, you should come to the bank with:\n\nProperty info - 3yrs income/expenses, recent tax/ins bill, rent roll, proforma, executed agreement of sale, etc. (your broker should help you here)\n\nBorrower Info (you + anyone with &gt;20% ownership) - 3yrs personal / business tax returns, Personal financial statement,  resume / summary of experience, bank statements etc.", "replies": [], "depth": 1}]