Buying Commercial property, whether it's an apartment, retail building, industrial, hotel, or shopping center, requires 20% downpayment or more. If you don't have a lot of money, there are different ways you can buy. For instance:
1) create a group of investors, offer to pay them interest for their money
2) form a group and invest together on a project.
3) ask seller to carry back some of the loan that way you put a small downpayment.
4) cash out equity from other property
When you find a potential property, make sure you crunch the numbers. Take into consideration that payments for property tax, insurance, utility and unforseen fees such as increased water bill, leaking roof, sprinkler system no longer works, will be a lot different than what your seller is paying. Make sure you verify every knitty gritty details shown on the operating statement. Seek advice of a broker who knows the area well such as cap rate, gross rent multiplier, the cost of an apartment unit, cost per square feet of a retail building. The reason for this is sometimes the displayed CAP rate on property's flyer is overstated or understated. You do not want to use this number. You want to use the current market CAP in your calculation.
Next, get approved with a commercial bank in advance so you know how much your mortgage payment will be and whether the income generated from the property alone will cover the monthly payment.
I can do commercial loan with low documentation or no documentation for many property types such as mixed use, apartment, retail buildings. Email me at ngan@gdcommercial.com or call 408 836 2973 if you are investing for the first time. I can help guide you through the process.
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