Hello all. I’m a newb here and have a pretty simple question. Are the rules for purchasing / leasing commercial space fairly similar to residential or are there some major differences to be aware of?
I am aware of certain codes like fire extinguishers, egress laws, bathrooms per capita and the like… but are the loan structures pretty much the same?
In other words, can the techniques of … say Carleton Sheets… work in the commercial market as well?
Any and all input is greatly appreciated.
commercial financing is not the same bird as conventional.
Commercial requires a more in depth review of your financials, property, etc.
Depending on the size and property type of your loan there are some small commercial lenders that are easy to work with
The loan structures are fairly similar. However, there may be some different terminology and formulas. For example, in commercial a second lien is call a “mezzanine piece”. Pretty much the same thing, though. Also, instead of DTI ratios (debt to income), DSCR (debt service coverage ratio) is calculated. This is the income available for debt service after all expenses are paid, before debt service.
You can also get stated loans on commercial property, just like in residential.
Good Luck!!!
Don McClain
Managing Partner
Freedom Capital, Ltd.
www.freedomcapital.com