Are Commercial Loans Harder to Get than Residential Loans?

As a whole, commercial loans are “much more difficult” to get than residential loans, DeShong said. “Whenever you get a commercial loan, you have to show you have some kind of history.”

Banks like to see that investors know what they’re doing, and that they have experience in real estate — specifically commercial real estate.

Commercial loans “require quite a lot of hoops that you need to jump through,” DeShong said, “whereas if you’re a residential investor, and you want to buy a house, you could just get a Fannie Mae 30-year fixed rate mortgage, just like you would on a purchase loan.”

Commercial real estate private equity loans tend to be more flexibile than traditional mortgages, but may come with higher interest rates that affect your cap rate.