I have an appt on Tuesday to see if I can obtain financing on a commercial loan for a 6 unit complex. I was wondering what would be the typical down. 20,30%, more?

Depends on the class of building A,B,C,stability of the rent rolls,and current vacancy.

Some lenders won't loan out if vacancy is at a certain level.You are just above the 4 unit threshold for regular financing.

Why not at least get a ten unit or bigger?? In this market I would go as big as you can with the deals out there. Yes you will have to put a good size deposit. You can also assume the existing loan if you have good credit and they allow it or the owner can do owner finance or partial finance (a second if the new lender allows it).

In commercial they really look at each loan as a unique property and situation.

good luck

It's a foreclosure, so I'm interested to see how much the down is now that you mentioned the vacancy rate factor. Yes eventually I would like something with more units but I think this one is a pretty good deal in my area.

How you determine price will depend on many factors. The lender will want to see the books to assess risk. If there were no books or poor books that creates more risk.

If there are gas stations etc. nearby you want to a environmental inspection with soil samples. Even though they are not on your property the contiminates might have leaked onto your property which YOU would be responsible for the cleanup. Yes you could go after the gas company or other entity but if it was franchised most likely they are bankrupt and you won't see a dime.

The reason I don't like 6 units is if you have one vacancy you are at 83 % occupancy where with a ten unit you are at only 90 % occupancy.

You have to ask yourself why did it foreclose?? Was it mismanaged?? Are rents depressed in the area?? Does it need a lot of repairs? Are there water liens by the city on the property??

Especially since the bank will be selling as-is you will need to do a ton of research.

If the property is vacant or has high vacancy most lenders will not give you a loan on it. The rent rolls will show and upward or downward trend in rent prices,vancies,etc.

You might want to find a cash investor to partner with you. If it has income you would look at the cap rate. If it is vacant you would look at cost per square foot to purchase. Don't let anyone sell you on potential of the property as that doesn't mean squat.

If YOU are going to buy at high risk then you pay low because you will be creating the value getting it leased up and turned around.Have you researched the area to see how many units are close by compared to population??

You have to know supply and demand and at what price you can purchase to make a good profit. Typically now most are wanting a 10 to 12 cap rate.

Say your 6 unit is a B building 10 years old. 4 units are rented out at 1,000 a month and 2 are vacant. Say taxes and maintenance 1,000 a month not including debt service (mortgage).

So you have 48,000 a year in income and 12,000 in expenses which gives you a NOI of 36,000. Based on that figure you can pay at a 12 cap 300,000 for that property.

This assumes there are not massive upgrades and expenses needed to the property. Million other things to consider such as if the property is really old does it come with a lot of land? If so and growth is headed that way you might sell later to a developer for a higher price than it's current use.

I look for old foreclosed houses on main highways where I know commercial is coming and pick up cheap.

Anyways a million other things to consider as well like how weak or strong the current leases you will be assuming are etc.

good luck

Another option is to look at a short term hard money loan. If this is a foreclosure, chances are it needs some work. Also, chances are it has some vacancies. There are some hard money programs that can be put together to combine the acquistion with an element of rehab allowing you to put 20-30% down, while covering the cost of upgrades or rehab.

Exploring this avenue can allow you to get in, bring the property up to snuff, get your tenants in there to the point that it is stabalized, then turn around and finance the building with a bank. It may not be a quick turn on the financing, but it is an option as it will allow you to get in now at what you consider a depressed price without the need for a partner or the need for the property to pass the stringent guidelines that many banks have right now.