Commercial Mortgages - Finding the Right Commercial Mortgage Lender

If you are considering the purchase or refinance of a commercial property, securing the best possible financing is an integral part of your long-term success. Getting your commercial mortgage isn't rocket science; it's a matter of strategy and execution.

However, before you can prepare your loan proposal for success, you must understand the commercial mortgage process and how to find a lender. This article will discuss a variety of strategies that can give you insight about the commercial mortgage market and help you land the best lender and loan for your unique situation.

Understanding the Commercial Mortgage Lending Climate

Many business owners and real estate investors have realized the extraordinary profit potential of owning commercial real estate. When I refer to commercial real estate, I'm talking about any property that is owned for investment purposes. These are properties that generate a cash flow for the owner. Or in the case of owner-occupied property, these are properties where the owner runs a business.

Many business owners prefer to build equity in an owner-occupied property rather than continuing to pay an ever-increasing monthly rent to their "smart" landlord. These savvy property owners enjoy the relative safety and predictability of owning commercial real estate; they like the positive cash flow, tax benefits and appreciation their investment delivers.

Keep in mind that financial institutions are in the business of turning companies and individuals into property owners. They're eager to lend money to responsible borrowers. And even today, while mortgage success is more challenging than it has been in decades, funding is still abundantly available for qualified investors and projects.

If your transaction makes sense, there are many lenders who will work creatively with you to get it funded. Never forget that lenders WANT to make loans. And as a qualified borrower with a sound loan requirement, you have more leverage than you might imagine.

Target Your Lender

There are literally hundreds of lenders active in the commercial real estate marketplace. Each of these lenders has different criteria for the transactions that will interest them. Matching your specific transaction to the most appropriate lender is an important first step to getting your transaction funded.

When choosing a lender, make sure you're working with an institution that is willing and able to make the loan you need. If you're working on your own, you might start out by phoning your local bank and asking to speak with a commercial mortgage officer. Explain to them the specifics of your loan transaction and ask if the transaction meets their lending profile.

Key questions you might ask include:

- Do you finance my type of property?
- Is my transaction and appropriate size for your institution?
- What types of loan programs are available?
- How quickly can you close a loan?
- How does your due diligence process work?

If you have specific loan requirements, make them known at the start. For instance, some borrowers are not able or willing to provide tax returns. These borrowers require what is known as a stated-income commercial loan--but not every lender offers this type of program. Other borrowers may have low credit scores, require cash out from a transaction, need very short-term financing, have properties with negative cash flow or have other requirements that place them outside a given lenders loan parameters.
Regardless of how strong you think your loan request is, never waste time trying to get a lender to fund a transaction that is outside of "their box." Regardless of what your loan officer tells you, these loans rarely get done.

Being referred to a lender from another industry professional is a big plus. The lender will know you're probably qualified and serious, and they will not want negative feedback making its way back to the referral source. You should always ask your realtor, accountant, attorney, banker, or others professionals for a solid referral to a potential lender.

If you learn that the institution you've contacted is not interested in working with you, don't sweat it. Simply have the lender suggest another commercial mortgage broker or lender that may be more appropriate for your situation.