Commercial Lending MultiFamily Requirements
I was wondering what it could possibly take to Guarentor against a commercial real estate loan. I am looking to invest into my first MultiFamily unit in the next year. Currently I have 2 rental SFH, and 1 Duplex. I just don't know if I have the ability yet to even atempt a loan. I have seen 2 different buildings go for sale at 500k and 620k. We would be looking at this rough area towards the first building we buy. For Example, below:

Price: $520k; Units: 11 @ $650 each+ 1 Studio used as storage. DownPayment: 20%?

We are starting an LLC, with a handful of partners. 2 of us are going to be 50%, and the rest will be roughly 10%. The Gross Income of the 2 is 220k/year. We have ownership in 5 franchises, both have 25% equity in our homes (recently purchased), and no other outstanding loans...on paper. Parents are owed some money, at no schedule.

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What should I be looking at to get closer to a potential acceptance? Please and Thanks

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[{"id": "eetu7pk", "text": "Will likely need at least 25 down for a commercial loan I suspect. Unless you have a good relationship with your bank. I have seen 20 but generally it's the former. ", "replies": [], "depth": 1}, {"id": "eeufuzd", "text": "25% down is standard but in stronger markets I get 20% down all day. Here the the typical things a bank will require on a commercial multifamily (5 units+):\n\n1) down payment (20-25%)\n2) experience in the space (you can likely get by with your ownership of the three rental properties)\n3) high credit score from people owning more than 20% (720+)\n4) 1.25 debt service coverage or higher. I.e. you need to  demonstrate that after all expenses (not including the mortgage but including vacancy and delinquency) that the income is at least 1.25x the mortgage payment each month (principal and interest).\n5.appraisal - the property gets appraised for more than your contract price.\n6. Building useful life report- shows what needs to be replaced right away and the useful life of everything that does not need immediate replacement.\n7. Flood zone report- that the building is not in a flood zone and if it is to carry additional insurance for that.\n8. Environmental report- to check to see if the site is contaminated.\n9. The guarantors combined will also typically have to show a net worth higher than the loan amount.", "replies": [{"id": "eeugei8", "text": "Net worth meaning all assets added together? So like our store ownership percentage value? Because then its good. Will having a home hurt us or help since technically the homes value doesn't make it a negative liability right? I appreciate the info, sounds like I have a somewhat better chance that I originally thought. ", "replies": [{"id": "eeui5d4", "text": "Net worth is all your assets minus all your liabilities. Money off balance sheet owed to your parents probably will not be noticed.\n\nPercentage of store if you can show the store has a certain value. Does the store generate significant income on tax returns? Do you own the underlying building that the store uses?\n\nOwning a home will not impact much unless u were underwater.\n\nI got a loan on my first 11 unit after owning 5 rental condos, so I would say you have a decent shot.", "replies": [{"id": "eeuijlo", "text": "The stores technically only have their original purchase value @300k. We own about 25% of each total. 3 profit about 30% of our income, 2 haven't paid yet but don't lose money. If they reevaluated the business it would probably be 500-600k. Given a years time we hope to get profit from the others and probably reevaluate the properties because the loans on the equipment, guaranteed by a larger partner, are almost paid off. \n\nI appreciate the insight. Spoke with Chase lender we bank at and he gave me some, but they don't lend against MF. Maybe we can get a reliable 3rd Guarantor and it helps us. ", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]