Episode 44

44 - Residential vs. Commercial Real Estate Lending? Here is What You Need to Know

Episode Summary

In this episode of Get Real Wealthy Season 2, Quentin talks about the differences between getting a residential mortgage and a commercial mortgage loan.

Quentin says that when you are getting mortgages for your rental properties, they're going to look at the debt coverage ratio on the actual rents that you get, your income, credit history, tax records from the last few years, etc. So, in the residential space, it involves a lot of paperwork. Commercial properties on the other hand are very different, as you would get a mortgage on commercial property because it is a business. They look at whether the building supports the loan on the property or not. If it does, they'll give you a mortgage based on how much that building can support. If you're looking at a conventional lender, like a regular bank, they can give you a loan, perhaps with a debt coverage ratio of 1.1, based on the net operating income of the building. Commercial loan-to-value ratios generally fall into the 65% to 80% range.

These lenders would look at things like your credit report, net worth, etc. As different lenders have their own criteria, you should consult with your banker or mortgage broker. He adds that typically, the building takes priority in commercial, and in residential, it's the person that takes priority. In conclusion, he says that depending on what you're doing – commercial or residential, it's going to depend on either the building or more on you, depending on the type of mortgage that you're getting.

Important Links and Resources




· https://GetRealWealthy.com

·  https://DurhamREI.ca

About the Podcast

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Get Real Wealthy
A Real Estate Investers Journey

About your host

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Quentin DSouza

Quentin D’Souza is a multiple award winning Real Estate Investor, and a trusted authority on real estate investing. He is an Ontario Certified Teacher and holds two university degrees, which includes a Master’s in Education. Quentin has appeared on local and national television and radio, interviewed in national publications, and has been a keynote speaker to large audiences of real estate investors. He owns a real estate portfolio in excess of $80 million dollars of assets under management across Canada and the US and transacted on 80+ properties since 2004. Quentin is the author of several books available on Amazon. He is also mentors real estate investors as the Chief Education Officer of the Education for Canadian Real Estate Investors and Durham Real Estate Investors Club.