Commercial mortgage
Currently buying a lovely brownstone townhouse that is configured as an 8 family. Any recommendations for banks that do commercial or creative mortgages. We may convert some as an owner duplex.
thejourney
in Mortgage 10 years and 11 months ago
12
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12 replies
vthatcher | 10 years and 11 months ago
If you would like me to go over the numbers on the building with you my contact information is below. If you are going to live in the building, the building does not have to debt service as you will qualify on your personal income plus rent- stabilized or not. If this will be an investment property, the building would have to debt service. Hope to speak with you soon. Vanessa Thatcher Senior Loan Officer NMLS# 41404
adam_dahill | 10 years and 11 months ago
There is also the option of bridge financing. This is used to acquire a property with a low rent roll or vacant properties. The strategy is to acquire then rehab or lease out the units at market rate and then refinance into a traditional commercial product based on the DSR (debt service ratio) I have a few bridge lenders that will go as high as 70% for the right property, most are lower in the 50-60% range. I have a fund that is looking for deals at around 8%-9% which is pretty aggressive for bridge money. Most tend to be 10%-14%. Some commercial banks will also only look at deals where the loan amount is in excess of 1 million. I do loans with Flushing among other local banks where they will give you credit for unit that you will owner occupy. -Adam Dahill Mortgage Master
thejourney | 10 years and 11 months ago
Thanks for the feedback everyone. I am aware that the commercial mortgage products are different than for residential. As for creative, I hear that some banks will only count rent roll for tenants that have been there at least 90 days/ some are more flexible and include owner rent etc.
bk1lnite | 10 years and 11 months ago
To answer your question – banks that do commercial mortgages – NY Community bank; 1st National Bank of Long Island are a couple more. Don’t expect to get a 30 year fixed loan for 80% of your purchase price. Typical commercial loan terms are 5 years fixed, renewable for 5 more years (30 year amortization) and the value that they’ll use to come up with the max loan size (typically up to 70% LTV) will be based on the underwriters value (based on the rent roll) not the value you’re willing to pay. Try contacting lenders to shop around, but if you’re unsure about doing this yourself or you need a “creative” mortgage (not sure what you mean by that) you might consider using a broker, e.g. GCP Capital Group. It’ll cost a point, but may be worth it.
resident2 | 10 years and 11 months ago
From my experience with clients; my own commercial mortgages have all been total tenant occupied, most Banks will only take the regal registered rent numbers, not your inflated rent that you are willing to pay in order to get the rent roll higher to qualify the loan.. Try to look at it the way underwriters look at it….if they have to foreclose; what is the legal rent roll? You will not be there to pay your inflated rent…….
ditmarsman | 10 years and 11 months ago
That didn’t apply to me because I was renting all the units out. The guy I used was Rob Caliguri, give him a call, his number is here (click on NYC) https://www.chase.com/commercial-bank/finance/term-lending-office-locations and he will run the numbers with you. If he says he can get you the loan, I would believe him. Every bank is different, has different rules, requirements, process, etc… so no one on a message board can you give you a straight answer, best if you reach out to some lenders with hard numbers and they will tell you.
thejourney | 10 years and 11 months ago
^ Were you able to include owner rent?
ditmarsman | 10 years and 11 months ago
I recently went through this, Flushing and Maspeth will do it, but you better have very strong numbers as far as your rent versus expenses. I called a lot of banks and some had insane rates too. In the end I went with Chase Commercial lending, they told me I would close in 45 days and I did (and I never would’ve believed it had I not experienced it, all my other closings in the past took a minimum of 3 months). They also required the least paperwork and the process was not stressful at all unlike other closings I’ve done.
thejourney | 10 years and 11 months ago
Thanks so much. We already checked with DHCR about past rent registration and rent roll. In your experience have you had banks include owner rent (should we occupy space and have a lease) or a lease signed prior to closing for vacant apartments?
resident2 | 10 years and 11 months ago
You should still check the DHCR filings for at least the last 3-4 years, even for the three vacant units. I have had rent stabilized mortgages with Independents Savings Bank, now Sovereign. Flushing Savings bank and Ridgewood Savings Bank. They will lend based on registered rent roll and occupied income etc. As well as the condition of the building (HPD violations etc) The appraisal is not based on comps so much or your personal income, although they want to see that you are not depending on the building for your living! The underwriting works very differently than a conventional mortgage ( 1- 4 family). Most Bankers etc. will quote that you need to have at least 25-30% cash in the deal, but based on the rent roll you will probably need a whole lot more.
thejourney | 10 years and 11 months ago
It is rent stabalized but we will get 3 units vacant.
majorhints | 10 years and 11 months ago
Is the property vacant? If not have you checked the rent stabilization status?