As we often discuss here at Advise RE, commercial real estate financing is fundamentally different from residential mortgages. Many investors assume they can approach a 20-unit apartment building the same way they financed a single-family rental — and that assumption can cost them time, leverage, and even the deal itself.
In this episode, Stephen Morris sits down with Kevin Wong of Quantum Capital Partners to break down how commercial loans really work — and why working with the right broker can dramatically improve your financing outcome.
If you’re buying multifamily (5+ units), hotels, retail centers, or office buildings, here’s what you need to know.
What Makes Commercial Loans Different?
Unlike residential mortgages, commercial lenders care less about your personal income — and more about the property’s performance.
Instead of focusing primarily on your W-2s and debt-to-income ratio, lenders evaluate:
NOI (Net Operating Income)
This is the income the property generates after operating expenses. The higher the NOI, the more financing the property can support.
DSCR (Debt Service Coverage Ratio)
This measures the property’s ability to cover its loan payments. Most lenders want to see a DSCR of 1.20–1.30 or higher.
LTV (Loan-to-Value)
This determines how much leverage the lender is willing to offer. Commercial loans typically range from 60%–75% LTV depending on asset type and risk.
These three metrics — not just your credit score — drive approval, interest rate, and loan size.
What Does a Commercial Mortgage Broker Actually Do?
A commercial mortgage broker is not just “shopping rates.” They are structuring your deal.
According to Kevin, a strong broker:
• Matches your property to the right lender (banks, credit unions, debt funds, agencies)
• Helps position the deal to improve underwriting results
• Identifies weaknesses before submitting to lenders
• Negotiates better terms
• Guides you through lender conditions and documentation
Because commercial lending is relationship-driven and not standardized like residential mortgages, having access to the right capital sources matters.
Why Commercial Loans Take Longer to Close
One of the biggest surprises for new investors is timeline.
Commercial loans typically require:
• Detailed rent rolls
• Operating statements
• Property inspections
• Third-party reports
• Income-based appraisals
Unlike residential appraisals that rely on comparable sales, commercial appraisals are driven by income projections. A small adjustment in projected NOI can significantly change valuation — and therefore your loan amount.
This is why commercial closings often take 45–90+ days.
Common Financing Challenges Investors Face
Investors moving from single-family into commercial often struggle with:
• Underestimating liquidity requirements
• Not preparing clean financials
• Assuming loan terms will mirror residential loans
• Failing to plan for appraisal risk
The commercial lending world rewards preparation and strategic positioning.
Final Thoughts: Financing Is a Strategic Advantage
Commercial real estate is a performance-based asset class. The better your numbers, structure, and lender match — the better your financing terms.
If you’re scaling into larger properties, the lending strategy should be just as intentional as your tax and entity structuring.
Watch the full episode here:
👉 https://youtu.be/q9VTzrReGKs?si=lE5lgOQKe7SCYF7K
For commercial financing questions:
📞 Kevin Wong – kwong@quantumcp.com
For tax strategy & structuring:
📧 info@advisere.tax
🌐 www.adviseretax.com
