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Commercial loan Q & A

Loan for multiple units apartment complex, office building, retail shopping center, industrial building.

Mainly the income generated by the property itself in rental income.

Debt Coverage Ratio. It is the ratio in relation to the net rental income divided by the mortgage payment. Normally, lenders want this ratio to be no less than 1.2

No. normally, lenders want to see a 75% occupancy ratio at the minimum. For vacant building, borrower has to apply for a bridge financing first, re-position the property by either remodeling or rehab and apply for a more favorable rate and terms permanent financing.

25% down payment is usually the minimum down payment for commercial building.

Hard Money Q & A

People with challenging credit which doesn’t fitted into institutional lenders’ guidelines, lack of income on the tax return or just want a quick closing within 10 days. Therefore, hard money loan is also categorized as a bridge financing, a temporary measure before people can come up with a more favorable long term solution.

From 9%-11%, with the term from 12-36 months.

Since it is an asset-based, equity-driven loan, there are not much paperwork’s involved except an appraisal. Lenders might need a letter of explanation on borrower’s ability to pay, exit strategy, major degradatory items on the credit report.

Yes and it varies per the loan program but prepayment penalty can be from 6-12 months on the average.