Commercial Loan

My partner and I are new to the business and have been approached about a 4 unit apt bldg that is fully occupied but needs to hurry and sell due to divorce. The appraisal was about $800K and we could probably get it for about $650K. we don’t knwo where to start with funding because we don’t want to use HML. Any suggestions?

First, a 4 unit can be financed under residential guidelines. I just want to make sure you knew that 4 units and below are funded under residential finance guidelines. As for the price, make certain the price is accurate, request comps and/or recent appraisal of the property or go to to check the estimated value on your own. In fact it may even be safer to contact your own appraiser to get his/her feedback.

Going back to financing this property, obviously this being over $413K; it would fall under the jumbo loan guidelines. What does that mean to you? not much other than paying a difference in ineterest rate. With the market as is, JUMBO loans are very comparable to non-jumbo loans. Finally, before making an offer make sure that you are approved to purchase the property, make sure you can offered payments, make sure the numbers make sense.

As mentioned by LL this can be considered a residential loan. Banks categorize their loans as follows:

Single Family Residential (1-4 units)
Multi Family (5+ units)
Commercial RE (strip center, office bldg etc.)

Why don’t you get this information for us. Then we will worry about financing.

-Purchase price ($650,000)
-Repair estimate ?
-Current Rent ?
-Market Rent ?
-Utilities, who pays what (heat, electric, water, sewer, garbage) ?
-Management (property manager or you) ?

You probably will not have to worry about financing this place. The property is likely WAY over priced. Why don’t you get the information listed above so we show you the break down of the deal.

Thanks for all of the info. I did some number crunching and there would not be profit in this unless the property was waaaaay discounted. Thanks for the help.