I was discussing commercial real estate financing with another agent this evening. This agent is very experienced in real estate in general, but she mostly works with residential real estate. I realized that many if not most real estate agents don't fully understand the difference between financing residential and commercial real estate. I'm sure that this is true of most residential real estate investors as well. Commercial mortgages do not fit into the neat little boxes that residential mortgages do. Figuring out the best way to finance a commercial real estate deal is just as much an art as it is a science.
This may be why there aren't more investors that make the leap from residential to commercial real estate investment. Credit scores and DTI become much less important, and DSCR and LTV become more important. Also, if you're using mezzanine or equity financing it's crucial to understand IRR and yield to investors. If you are interested in purchasing commercial real estate in Reading, PA and you'd like to work with an agent that has experience with commercial loans from $40K to $40MM, give me a call today.