How much down payment are banks requiring for a commercial loan (Retail, NNN)?

Given today's issues with bank capital, how much down payment (as a %) are they requiring investors to place? Does that % go up as the loan amount increases? Are they receptive to offering fixed rates, given that rates are historically near the all-time lows? What banks or website would you recommend for a commercial loan? Thanks!
In Buying Property - Asked by Andy K. - Aug 2, 2009
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Answer(s)

Dean L.
Broker/Agent
Tulsa, OK

Andy,
Most banks are askin for 40-20% down on just about everything. The main thing that banks are looking for is a person with a good liquidity position. They want to know the cash is there. To answer your second part of the question, banks are willing to do fixed rates but only for 1-5 yrs. If you can get it for 5 right now you got a great deal. Take a look at UMB, and RCB there are some possibilities there. Keep Selling!

Aug 3, 2009
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Chris S.
Broker/Agent
Coeur D Alene, ID

30-60% down. Fixed rates possibly but understand that commercial loans mature in 3 to 5 years, so whether it is a fixed rate or not does not have a substantial impact. My rule of thumb ...
30% down, 7% interest, 20 year amort due in 3 for a cash flow property.
50% down, 8% interest, 20 year amort due in 3 for a non-cash flow property.
Also understand that right now banks are focused on DCR, just as much as LTV.

Aug 3, 2009
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Paul S.
Broker/Agent
Glendora, CA

In most cases lenders are going to want a minimum of a 1.25-1.35 DCR or 35% down whichever is greater. Depending on the interest rate on the loan the DCR often requires more than 35% down. Simply stated a DCR means for every dollar of monthly debt payment there has to be 1.25 in net income. 1 is break even and under 1 is a negative cash flow.

Aug 3, 2009
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Andres G.
Owner/Investor
Miami Beach, FL

I've been able to structure LTV's as high as 85% using Mezzanine financing. Much of it depends on the strength of the asset and sponsorship. For retail 70% is easily attainable for me with 75% being an option. Your net worth should be very close to 1 - 1 when compared to the loan amount and you should have 10% or 6 months PITI payments in liquid reserves after the down payment. The larger the loan amount the more flexible the capital will be with loan amounts over $15M having a multitude of options as long as there are qualified principals attached to the transaction.

Aug 10, 2009
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Gregory G.
Broker/Agent
San Francisco, CA

Todays market is 50%... unless you go for hard money, SBA, etc...

Aug 14, 2009
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