Over Coming Challenged Property Types in Commercial Lending

Know what you have.


Commercial real estate in some respects is not too different from residential real estate when speaking with owners of properties. In their hearts and minds their property is far better and far more valuable than that of their competition. Once you detach yourself from the emotional aspect, you can objectively look at the property.


You can list property types into two general groupings. Group A-standard commerical or general property types and Group B – Special purpose or use property types.


Standard or general use refers to any property that has a multi-use capability associated with it. The property can be used for nearly all commercial purposes and can easily accommodate a multitude of business types with little or no modifications. This type of property has a higher resale demand and has a shorter marketing time.


Special use refers to property types that have very limit use capability and have a very limited market to which reduces the demand and greatly increases the marketing time. Additionally, conversion costs can often times be greater than the value of the property in its current use.


Examples of each type:


Standard or General:


  • Warehouse
  • Office/Office Condo/Office – warehouse
  • Mixed use w/office or residential
  • Light manufacturing, Light Industrial
  • Medical and Dental offices
  • Retail/strip malls
  • Multi – Family (5+ units)
  • Mini-Mart
  • Single Tenant Properties

Special Use/Special Purpose:


  • Automotive Service/Repair
  • Assisted Living Facilities
  • Hospitals
  • Grocery/Markets
  • Single Tenant Properties
  • Mini-storage / Self-storage
  • Car Wash (Self -serve/Coin Op or Full Serve)
  • Funeral Homes
  • Restaurants
  • Hospitality (motel/hotel)
  • Bowling Alleys
  • Sport Arenas
  • Properties w/excess land
  • Churches
  • Educational Centers/Day Care
  • Board and Care Facilities
  • RV Parks
  • Mobil Home Parks
  • Heavy Industrial/Heavy Manufacturing
  • Golf Courses


Underwriting and risk pricing differences


The more common (general) the type of property and use, the better the financing and the more lenient the underwriting is to make these properties more attractive for investors and owners.


On the the other hand, the more off beat and further from the ’bulls eye’ the tougher the underwriting and the more expensive the financing will be.




  1. Borrowers with strong credit and healthy balance sheets that include high net worth are easiest to close.–Helping yourself or your client to look better on paper is first and foremost (must be verifiable).
  2. Having more than the minimum downpayment or equity postion in the property
  3. Having liquid reserves equal to or greater than the loan amount
  4. Strong long term tenants with long term leases
  5. Having regionally or nationally credit rated tenants
  6. If tenant is not credit rated, be ready to have tenant supply their financials to prove to lender tenant is financially healthy and can afford to rent your property.
  7. If seeking cash out–keep amount reasonable and be prepared to identify in detail how the cash is going to be utilized and improve the borrower’s position
  8. Seek financing within your means

At CFR Mortgage Group, Inc. we have extensive knowledge in dealing with getting loans closed on all property types. You can call us at 714-731-5282, email us at: cfrgroup@att.net or visit our web site: www.mycommerciallendingpro.com for more on lending programs and products.

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