Buyer and Seller Guide & Tips

Commercial Mortgages

There are three types of commercial mortgages:

  • Owner-user type mortgage: buyer is the user for the commercial property, banks can finance with a down payment as low as 15% to 25%. Buyers need to provide three years business financials for bank to qualify.
  • Investment property mortgage: retail mall, multi-family apartment, and commercial rental properties, banks require 25% down payment, and the rental income shall be able to support the mortgage and all expenses.
  • Business with Property mortgage: gas station, motel & hotel, grocery store with property, restaurant with property, banks require 35% to 45% down payment, and three year financials to qualify.
Business Loan

Business loan is not the same as commercial mortgage and it is not related to a property. To qualify for a business loan, buyers need to provide two years business financials, and prove the business is making enough profit to cover monthly payment of loan. Business loan usually requires 50%+ down payment, and interest rate is usually 1 to 2% higher than commercial mortgage interest rate, due to higher risk for business loan. Instead of applying for a business loan, most buyers refinance their residential property to buy a business.

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Permit Applications – Buyers/Tenant Conditions

One important buyer and tenant conditions in commercial leasing and sales is "subject to all regulatory permits". There are several types of permit - development permit, building permit, and permit for a specific business use such as daycare and school permit, auto body permit, etc. Many business uses may also have other specific requirements such as parking requirement, fire code/two hours fire wall for restaurant and daycare, specific building code for daycare/school and auto body, distance requirement to other business, business hours, etc. For more information, please speak to one of our commercial experts.