Commerical Mortgage with a 2nd lien - Posted by Aron

Posted by ray@lcorn on August 10, 2003 at 15:13:42:


The lender will be concerned with the debt coverage ratio for their loan, and some will use the cumulative debt coverage ratio of all financing. Depends on their criteria and underwriting standards. Also, they will calculate the DCR after deducting for fee management and capital reserves from the NOI if you haven’t already done so.

Much will depend on the size of the loan and your track record (experience level). With no cash in the deal, you’ll need to peg the meter on credit, capital reserves and experience. The property will have to be stable, no deferred maintenance, and professionally managed.


Commerical Mortgage with a 2nd lien - Posted by Aron

Posted by Aron on August 10, 2003 at 13:48:17:

I have the opportunity to purchase a commerical property where the seller is willing to finance 40%. Therefore, my plan to get the remaining 60% from a bank.
With the 100% financing, the property will still produce positive cash flow.

  1. Will the bank allow the 2nd lien from the seller?
  2. What will the bank be looking for when I apply for the mortgage?
  3. Will they care about my personal finances if I can show the property to be cash flow positive with 100% financing?

Thanks in advance,

Re: Commerical Mortgage with a 2nd lien - Posted by Don Dion

Posted by Don Dion on August 10, 2003 at 17:54:02:

What state is it in? What kind of property is it? How old is the property? What is the occupancy now and what has it been over the last 60 months? What is the purchase price and what does 60% of the purchase price represent for a loan amount? With the seller holding a 2nd do they have any first right of refusal wording in their agreement?