Commercial Real Estate Financing Options - What are they?
Hello,

I'm getting ready to buy a 5 unit complex that has a lot of upside potential since the rents are below market. I would need to get a commercial loan as this is considered an "investment property" (5+ units DO NOT fall under SFH mortgage procedure). Does anybody know any financial institutions that would finance an income earning property with 20-25% down? I have top tier credit and looking to buy in SoCal. My only option right now is Wells Fargo but their interest rate is a bit too high IMO (5.9% with 740+ credit score). I've been searching far and wide with no luck but there HAS to be someone out there in the business of financing properties like this. Thank you!
[{"id": "dnm41fo", "text": "PM me I'd be happy to point you in the right direction. ", "replies": [], "depth": 1}, {"id": "dnmcyd1", "text": "Chase Bank is one of the most active Multifamily lenders in socal", "replies": [], "depth": 1}, {"id": "dnmi7h7", "text": "Most local banks would be happy to finance something like that. I typically do 20% down on 5+ units with many of the local banks near me (east coast). If you are really having trouble, go with the financing arm of Marcus and Millichap or another group in socal. They will charge 1% but get you good rates and terms for securing financing.", "replies": [{"id": "dnniwn8", "text": "I'll look into that. Every option is worth exploring. Thanks!", "replies": [], "depth": 2}], "depth": 1}, {"id": "dnmlqmo", "text": "I'm assuming anything on this level is also full recourse with completion guarantees. Everything I see on the larger stuff is 35-40% equity requirements.\n\nMay want to think about finding a backer and doing this all cash (assuming it's not a huge buy) and financing after you've got the rents up and stabilized.   Granted that's easy to say and hard to do. \n\nEdit:  just realized I assumed this was a value-add scenario.   Is it just fixing operating issues or do you also need a cash infusion to bring up the rents?", "replies": [{"id": "dnnirxn", "text": "A little bit of both. Rents are currently under market. Market value is $700/month, three of them are renting for $475 and two renting for $650. It's also an industrial town full of long term contract workers. Plan is to furnish the apartment, install new appliances (washer and dryer included), very light re-modeling (more like touch up) and put it on the market for $950/month. I, myself, was a contract worker and paid $1300 for the same exact setup minus a bedroom (but in a gated community) because there was no other living space that offered furnished apartments.", "replies": [], "depth": 2}], "depth": 1}, {"id": "dnmtya8", "text": "Try https://www.plumlending.com/ and let us know if they are competitive. I haven't had a reason to go to them yet.", "replies": [{"id": "dnn3uug", "text": "I think this deal is too small for Plum.", "replies": [{"id": "dnnitt6", "text": "Yeh definitely not a million dollar deal.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "dnn41x5", "text": "This is literally why we built StackSource.com! It's the easiest way to find the right commercial lender for a given investment property.\n\nLenders you'll be matched to for long-term financing on a small 5 unit project will primarily be banks with competitive loan programs in your region. Once the loan size gets to $1M+, you'd also be matched with government agency programs and some more regional type lenders, but I'm assuming this would be less than $1M?\n\nIn addition to direct connection to the right lenders, we're also making it easy to compare and analyze different quotes, and how they affect your deal metrics.", "replies": [{"id": "dnnivwh", "text": "&gt; StackSource.com\n\nYep less than a million but I'll give it a try!", "replies": [], "depth": 2}], "depth": 1}, {"id": "dno6ggf", "text": "Wells Fargo is one of the top lenders when it comes to multifamily at that loan size, however for that product the agency lenders are also killing it. Berkadia, Walker and Dunlop, Berkeley Point Capital, Northmarq, etc are all in the national top 10 list for multifamily lenders. Then there is also CBRE and JLL who also have top 10 multifamily lending groups. Lots of competition in this space. ", "replies": [{"id": "dnv2l8z", "text": "The deal is too small for any of these lenders.", "replies": [], "depth": 2}], "depth": 1}, {"id": "dnombj0", "text": "Where is the property? I have a friend who works in commercial real estate financing. He may be able to help. ", "replies": [], "depth": 1}, {"id": "dnrtyct", "text": "I'd talk to a large regional / local bank with experience in commercial real estate lending. They are going to be more flexible and willing to work with you on a non-stabilized investment property.", "replies": [], "depth": 1}, {"id": "du52806", "text": "We have invested in such multi-family properties before and have used a fantastic firm out of Washington DC - Perenica Commercial Capital (perenica.com) - they gave us all the options and are not restricted to any one financing company. This was only a few months ago that we closed. Happy to share more if you want.", "replies": [], "depth": 1}]