You Can Purchase A Commercial Investment
In Any Of The Major Categories
Below is a list of each commercial investment and by clicking on any one, you will then receive further information about the investment as well as relevant commercial loan information.
For specific details about each investment category click on that link. Each of the above commercial real estate types are treated differently by the commercial lenders and their underwriters.
Each real estate investment will be underwritten with a different emphasis as to the required debt service coverage ratio, loan to value, minimum net operating income, etc.
All of these terms relating to commercial investments will be discussed in depth by clicking here. The above terms need to be understood by the new real estate investor.
By understanding how a commercial loan underwriter will view and analyze the feasibility of your new acquisition you can negotiate from a position of strength with the seller of the property.
For example if you do a quick and dirty calculation for the debt service coverage ratio(DCR) and the number is too low, for example less than 1.05%, you can immediately tell the seller that the price is too high because the deal cannot cash flow sufficient for you to get a lender to finance the property.
A DCR of 1.05% is barely covering the expenses including the contemplated debt service. A One to One of 1.00% means that all available cash is paying for debt service of the new loan, so therefore you can see that a 1.05% or One to One. Five is just getting by and giving the investor a small bit of breathing room.
As a general rule of thumb most conventional lenders are not going to lend at a 1.05% DCR.
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