Apartment Loan Tip   Here's a great tip regarding the purchase of commercial property that is currently being rented.  Always close when the rent is due.  This is done because the rents will be credited toward your purchase.  Suppose you are buying an apartment where rents are due on the 1st of the month.  Let's say the monthly income from the property is $5,000.  Each day the property generates $166 per day (based on a 30 day month).  So, you close on the 3rd, the rents were paid on the 1st, you get credited $4,666 based on the remaining 28 days when YOU are the owner of the property.  Think of it as the renters helping pay for the purchase of the property.

Creating Owner Occupied Operating History   The commercial broker to whom you have taken your owner-occuppied commercial mortgage loan request asks for a pro forma operating statement, but you have a problem.  Because you have owned the property for just four months, you have no operating expense history on the building.  What do you do? The answer is to simply assume the commercial building is leased on a triple net basis.  Just assume the tenant pays all of the expenses, except for reserves and  management.  You can simply pull  a figure out of the air and declare it to be the fair market triple net rent for the property.  (The appraiser hired by the bank will eventually determine if your guess was accurate.)  Take off 5% for Vacancy and Collection Loss to arrive at the Effective Gross Income.  Then deduct, say, 4% of the Effective Gross Income for management and another 3% for Reserves for Replacements.  Voila!  You have just produced a Pro Forma Operating Statement on a commercial property with no operating expense history.