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Commercial mortgages are scary! Not to those who know how to do them. There are many who say they know how, but don’t really. That is especially true for do-it-yourselfers.  There is little that will ruin your chance of successful financing more than a bad presentation to an appropriate lender. That bad presentation will probably eliminate that lender from the list of possible mortgagors.

To me, residential mortgages used to be scary but not now. It’s just important to know that there is a big difference and learn what that is.


Both types rely on an appraisal, but the appraisals are very different, as I mentioned previously. While the residential appraisal depends on the market around at the time, commercial appraisals and commercial mortgages depend on the income being produced by the property. Not the potential income usually, but the real income from long-term or long-standing leases. This is especially so for non-residential, commercial mortgages.  For multi-unit residential commercial mortgages, above four units, monthly leases and potential rent can be used with a proper vacancy allowance applied.


The adjusted revenue from the property, less the standard operating expenses, give the Net Operating Income (NOI), to which a Capitalization Rate and a maximum Loan To Value (LTV) are applied.

Cap Rate

NOI/ Cap rate = Value
Value x LTV = Loan available

Confused? Ask your mortgage guy. I can help:

Meanwhile, breakfast.

Poached eggs on toast with tapenade, topped by chopped scallions.

There are four tricks to poaching eggs: salt the water, add a generous splash of white vinegar, swirl the water before breaking in the eggs, so they won’t stick and DO NOT BOIL the water. Three minutes will do the eggs perfectly.