How much down payment is required for commercial property purchase ?

I am interested in getting some commerical property and not really sure about the intricacies and want to educate myself a little
In Buying Property - Asked by yunus l. - Dec 11, 2010
Report Abuse
Answer this Question

Answer(s)

Ra S.
Owner/Investor
Oak Park, IL

30%

Dec 12, 2010
Report Abuse
Patricia C.
Broker/Agent
San Antonio, TX

Depending on the type of property... my clients have done as little as 15% on a Small Business Loan, with the Seller carrying back 10%. They require a 75% Loan to Value. Just depends on the Lenders DCR. If it has a good CAP Rate.... I have done as little as 20% Down. Good Luck! Patricia Villarreal, CCIM, ABR - Keller Williams Realty - San Antonio TX

Dec 12, 2010
Report Abuse
Sa H.
Owner/Investor
Bothell, WA

Where would I find bank's foreclosure or REO?

Dec 12, 2010
Report Abuse
Rob B.
Chandler, AZ

Yunus....
The two previous answers provide a little right and a little wrong. For a really good education on commercial property financing you are going to need to put in a little time. For example, financing as the one answer says is based on the property. Quality properties with quality tenants are always easier to finance. Debt service coverage is important (DCR). The loan to value is a consideration. For SBA loans you may pay as little as 5% down. For conventional loans you may pay 50% down or not even be able to finance them. My best advice is structure a good relationship with a solid loan representative and learn as much as you can from him or her. Also, do the same thing with a good commercial real estate representative. Just keep in mind that both of these individuals work on commission and do not get paid for acting as a teacher and mentor. They will want to know that you are indeed a serious buyer and can be trusted to be loyal to them if they use their professional knowledge on your behalf.
Good luck Yunus....
Rob Baird, CA RE License #544165 (One of the oldest, active licenses in CA) 951 515-5855 Email: rob@capratecommercial.com

Dec 14, 2010
Report Abuse
Jeff R.
Lender/Mortgage Broker
Birmingham, MI

If its a purchase for your business than 80-90% financing is very much available. If its an investment property you'll need at least 35%.

Dec 24, 2010
Report Abuse
Dorene S.
Broker/Agent
Torrance, CA

35% is the amount for commercial property. The terms are also different then residential.

Dec 27, 2010
Report Abuse
Laurence T.
Broker/Agent
Boston, MA

Generally traditional lenders will want 25%-30% minimum. Sometimes you can get seller to carry a small "second" mortgage of say 15% and them you might only need 10% of your own funds.

Jan 2, 2011
Report Abuse
Glen W.
Lender/Mortgage Broker
Atlanta, GA

For a conventional lender on a non SBA property we are seeing 35-40% downpayment requirements. Allot depends on the quality of asset, your financials, and the strength of the current tenants. If a deal is not plain vanilla, most banks do not want to touch the deal. There are alternatives available to conventional financing: private lenders, hard money lenders, etc... that could be an option depending on the scenario

Jan 21, 2011
Report Abuse

Welcome to Answers

LoopNet Answers is where the commercial real estate community shares what they know to help each other out. And it's all for free.

Ask a question to get advice from brokers, investors, professionals and local experts.

Answer questions to raise your visibility as a trusted advisor and build new relationships.

Ask a Question

Post Question