Originally Posted by justin
Do tons and tons and tons of due diligence.* Look at length and amount of leases.* Look at weasel clauses.* Have inspections done.* Too numerous to name everything.
The payments on the loan probably won't be able to exceed some fraction of your gross revenue minus operation/maintenance/taxes/insurance costs.* The lenders like to have their payments met and then some by your free cash flow.* Might be a 1.25 multiplier (1.25 * loan payment = free cash flow required).* That might help in evaluating the financing and feasibility.* The rate - I'd say at least a point higher than the best residential rate out there.* Maybe more depending on risk and the terms.*
Re. "due diligence", you can't overdo it. I have done it for myself
many many times, and have hired myself out to others to do it.
You can count on this. No matter how much time and effort you
expend, you will still have surprises. That is just how it works.