Property Type Is A Major Issue

One of the best things you can do for your clients is to have an understanding of how property types play an important part in how lenders evaluate and analyze your deal. When most people think of commercial real estate the first thing comes to their mind is restaurants, hotels and gas stations. Ironically these types of properties are considered the most risky and have highest turnover rate and therefore have the highest interest rates and lowest loan to values.

The most lender-friendly property type is Multi-family, Mixed -use and apartment buildings. These property types will have the best rates and highest Loan to values because the residential component of their income.  Many lenders offer full – doc pricing with out having to provide tax returns and W2’s on Multi-family units and apartment buildings. The rent Roll and leases will be the only thing that the lender will use to evaluate the deal. If the income from the property is sufficient enough to offset the expenses each month then the property will Debt service and you'll be able to get funding for your deal with the property as the qualifying instrument instead of your borrower.