Home Buying in Greenpoint>Question Details

James, Home Buyer in 11222

Will any bank provide a mortgage for this commercial property with a 25 or 30% down payment?

Asked by James, 11222 Mon Jan 10, 2011

Will the banks value it at the asking price? $1,900,000 96 Java Street #8, Brooklyn NY 11222

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James, the way that bank evaluate commercial property is by it's debt service coverage. The rent roll is the most important thing. You also have to know the expenses on the property, including everything. If there are existing leases, you need to know if they are triple net, or if you as the owner would be responsible for taxes, insurance, etc. If you do not include a property managers fee, the bank will add one for you. There are many buyers out there who just want the property, so will overpay, sometimes in cash, when the property will never produce the amount needed in revenue. It is totally different from residential financing, and the rates, contrary to what has been mentioned here, are not as competitive as residential rates.
What you might want to consider if you are looking for something as an investment is a multi-family up to 4 family. There are some very good properties available in Brooklyn with good projected rent rolls that you can really make money on. You will be able to buy 2, with money to spare, if that is your budget.
1 vote Thank Flag Link Mon Jan 10, 2011
Commercial mortgages are based on the income and expense of the particular property. Once you know these factors one can calulate the NOI (Net Operating Income) which is the gross income minus the expenses. Banks then calculate the debt service ratio by dividing the NOI by the yearly mortgage P&I payment and arrive at a ratio, most commercial institution look for a DSRC of 1.25 or greater. If you have additional questions please don't hesitate to call.
Best Regards,

Salvatore Licata
917 685-2440
NMLS # 7898
Senior Loan Officer
Wall Street Mortgage Bankers LTD
DBA Power Express
1111 Marcus Ave.
Lake Success, NY 11042
0 votes Thank Flag Link Wed Jan 12, 2011
Also check the lease status of each tenant in addition to the rent roll.

A few years ago we were speaking to an owner of a Brooklyn Heights building (super prime block) but the issue was the restaurant on the ground floor which had a sweetheart lease running another 7 years that killed the ratios even though we had flexibility (potential evictions) with the rentals upstairs.

Keep the community posted as to status.

Bonnie Chernin and David Rogoff
Fillmore Real Estate Branch #19
2926 Avenue J
Brooklyn NY 11210
917-593-4068 (David’s Cell)
646-318-5031 (Bonnie’s Cell)
0 votes Thank Flag Link Tue Jan 11, 2011
I did some research on the property and i see it is an 8 unit building (as per the certificate of occupancy).
The number 1 question is what is the potential rent roll. This number is the cornerstone to calculating its value, this is what lending institutions rely on.

If you have any questions feel free to call
0 votes Thank Flag Link Mon Jan 10, 2011
Robin is correct: a bank will evaluate a property based upon its income. Depending upon the type of commercial property, most banks are looking for a DCR of at least 1.25 on apartments, and they're looking for higher for retail. If you deal is strong enough, then yes some commercial lenders will do a deal at 75% to 80% LTV. On the other hand, the weaker your deal, the more they'll expect for you to put into the deal.
0 votes Thank Flag Link Mon Jan 10, 2011
Dear James,

I strongly recommend that you shop around to different financial institutions, you may want to begin with the financial instituion that you currently bank with, not all banks do commercial properties. The mortgage rate are very competitive these days.

Good luck.

Nirmala Caraballo
Licensed Real Estate Agent
Cruse Realty
Tel.: 646-479-7873
Email: nhcaraballo@yahoo.com
0 votes Thank Flag Link Mon Jan 10, 2011
Call a mortgage banker/broker - try Larry 7183395700 X103 or email laboudi@gficap.com


Jack Menashe
0 votes Thank Flag Link Mon Jan 10, 2011
Consider visiting with any qualified loan officer(s), without any of your financial details the question really can't be answered....
0 votes Thank Flag Link Mon Jan 10, 2011
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