17 Unit in Cincinnati Purchased on Stated Income, No Tax Returns Necessary!

This was a nice buy in Cincinnati for an out-of-state investor who lives on the East Coast and found this diamond-in-the-rough commercial rental that cash-flowed very nicely. However, going to a traditional bank would pose three specific problems:

1. A bank would have to underwrite the commercial rental property based on the tax returns of the seller who didn’t have great records and would be a non-starter for a bank.
2. They would also want to analyze the borrower’s global income through his tax returns and they would not be sufficient for this sized loan considering all the real estate holdings he already has.
3. Most banks won’t do out-of-state investors. If the borrower is not in the general vicinity of the building they are purchasing they do not want to take on that loan even if there is a very capable property management company in place.

Well, none of this mattered because we were able to secure our borrower a stated income loan with a bank-like rate of 4.97%. And an amortization of 30-years which is five years longer than what most banks will offer. Neither the borrower nor the seller had to provide any tax returns or verify income. We based it off the leases and profit & loss statements of the seller and the credit-worthiness of the buyer.