I have $ 80,000 as a down pymt for industrial property. How much could I borrow from a lending Company.

I want to buy industrial property to house my operation. Been in business in this area for 2.5 years and 28 years in the industry. My lease is up in dec. 2012. I just don't know how much I can borrow with my $ 80,000.00 for a down payment. I can afford @ $ 2000.00 a month for a payment fairly easily. I think what I can afford monthly will kind of determine how much I should borrow . Whats the thought pattern of a bank on lending money in this area ? Want loan paticulars ! How do I choose a lending institution ? Pros and cons! Any advice on this issue ?
In Buying Property - Asked by SCOTT P. - Jul 14, 2011
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Answer(s)

Marcus R.
Researcher
Smyrna, TN

Well depending on the price of the actual building, you typically are going to need a 20% down payment, plus an additional 3-6 months worth of mortgage expenses ready to deposit. The banks will require that because they need to see that if something where to happen you will be able to cover the mortgage. To answer how much they lend, typically 75-80% but again that's based on down payment, business and/or personal credit and if applicable any collateral. As far as choosing a lender, you would really have to shop around and have banks compete for your business. You also have to look at the terms that best fit your business' needs. If you want to pay the property off you can use a 15 yr fixed interest rate but keep in mind the mortgage will be higher than that of a 30 yr loan and a fixed interest rate. Also if the property you are looking at happens to be 200K, just take 20% of that (40K) and the bank should loan you the other 80%, because you would satisfy that requirement, because of the 80,000 you already have. But the best way of knowing anything is to ask your local lenders in the area. You may have to try the bigger banks first because they have the ability to handle larger commercial transactions than those smaller institutions. Hope this helps!! Good luck..

Jul 14, 2011
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Rob M.
Lender/Mortgage Broker
Houston, TX

Most commercial notes will mature in less than 3-5 years, not 15-30, and will be a balloon or single pay (interest only). A note of that size will probably best be served by a local bank. They are more apt to serve a business like yours, relationship banking vs the big 3. Different lenders will have different DSC requirements, but 1.25 is typically the minimum.

Jul 15, 2011
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James B.
Broker/Agent
Oakbrook Terrace, IL

As an owner occupant, you should qualify for SBA 504 loan program which will give you access to long-term fixed-rate financing with as little as 10% down.
Jim Blanchard
Inland Real Estate

Jul 19, 2011
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Tai N.
Broker/Agent
City Of Industry, CA

I agree with James B., if you want to leverage your money and lock in a fixed rate over the term of the loan, SBA is the way to go. There are basically 2 programs: the 504 & 7A. You should talk with your bank to see if they have a SBA department (all the large banks have them). Shop around and ask around. There are many pros that go with SBA as long as you have all your financials ready for their review. Usually 3 years tax returns (business and personal), P&L's, etc. basically your financials. If your business cashflow is not strong enough, ask the banker to do a "Global Cash Flow" analysis (which basically ties in your personal info ontop of your business)... I must say that you must work with someone who has experience, preferably a minimum of 5+ years in the SBA department... just because the loan officer has SBA Loan Officer under their title does not mean they know what they are doing... there is a ton more, but I think this is a good place to start.

Jul 22, 2011
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Eric V.
Broker/Agent
Corona Del Mar, CA

Yes, James B. gives you the best option for your ROI leveraged. Lending is coming back but at the small amount that you are borrowing, you're best with an SBA loan since you do qualify. Most transaction sunder $5MM are cash or private lending. My recent quotes have range from 65-75% max. I'm not too familiar with deals done under $5MM but most of my owner/user purchases have made deals with their lending relationships via a credit line or SBA. Typically that type of underwriting looks deeply into the sponsorship (borrower). My transactions are income producing so we look at the economics of the real estate and tie in the sponsor after the RE makes sense. Hope this helps.

Jul 28, 2011
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Eric V.
Broker/Agent
Corona Del Mar, CA

Yes, James B. gives you the best option for your ROI leveraged. Lending is coming back but at the small amount that you are borrowing, you're best with an SBA loan since you do qualify. Most transaction sunder $5MM are cash or private lending. My recent quotes have range from 65-75% max. I'm not too familiar with deals done under $5MM but most of my owner/user purchases have made deals with their lending relationships via a credit line or SBA. Typically that type of underwriting looks deeply into the sponsorship (borrower). My transactions are income producing so we look at the economics of the real estate and tie in the sponsor after the RE makes sense. Hope this helps.

Jul 28, 2011
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Scott V.
Appraiser
Las Vegas, NV

Scott-My name is Scott Voltz and I am a Vice President with ACI Capital in Los Angeles. We only do commercial and industrial loans and apartment loans over 5+ units. You can get an SBA loan for 90% of the value of the property you are purchasing if you are cash flow is sufficient. Rates are around 5.95% for an SBA loan. Based on my preliminary analysis, you could qualify for a loan amount of about $280,000 for a total property purchase of $360,000 and you will have 22% down payment, more than enough. This is too small for our firm to handle, but keep me in mind for your referrals.

Aug 1, 2011
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