Banker’s Playbook: Underwriting Commercial Real Estate Investments

Taylor Farr, Commercial Lender at Journey Bank

Good evening everyone, I appreciate you all coming out on such a beautiful evening. As John mentioned, my name is Taylor Farr, and I am a commercial lender here in Bloomsburg with Journey Bank. For those unfamiliar with Journey Bank, it is the result of a relatively recent merger between First Columbia Bank and Muny Bank, which brought together two long-standing community banks. This merger merged our traditions under a new name which, thanks to our creative marketing director, became Journey Bank—a name not already taken which is quite a feat in the banking industry.

The Essentials of Commercial Financing

Commercial financing encompasses a variety of loans, including buy and hold strategies like rentals, the BRRR process for buying, renovating, renting, refinancing, and repeating, fix and flip projects, and construction of new developments. Whether it’s residential multi-units or commercial properties like mixed-use buildings or warehouses, commercial financing covers a broad spectrum. Today, I want to focus on how you can grow your real estate investment portfolio through strategic financing options.

Understanding the Lending Process

The process of commercial lending involves assessing various factors including the borrower’s creditworthiness, the property’s potential cash flow, and the overall market conditions. Banks like ours look at what we call the ‘five Cs’ of credit: character, capacity, collateral, capital, and conditions. Each of these plays a crucial role in determining whether a loan will be granted.

Financing Options and Strategies

A common question from first-time investors is about financing options for acquiring duplexes or other property types. Unlike residential mortgages, commercial loans can vary significantly and are tailored to fit the borrower’s situation. This can include adjustable rates with terms designed to align with your business strategy.

Leveraging Your Investments

One effective strategy to expand your portfolio is leveraging existing assets. Whether it’s through cash-out refinancing or using equity in existing properties, leveraging allows you to use the value you’ve already built to finance additional properties. This approach can significantly accelerate the growth of your investment portfolio without requiring large amounts of cash upfront.

Key Takeaways

  • Leverage is essential: Using the equity from existing properties can provide the capital needed for further investments.
  • Know the loan types: Understanding the differences between various commercial loans can help you choose the right one for your needs.
  • Build relationships with bankers: A strong relationship with your banker can provide you with insight and flexibility in your financing options.


Investing in real estate can be a profitable venture when done correctly. With the right knowledge and strategies, you can use commercial financing to effectively grow your investment portfolio. Remember, every property and every deal is unique, so it’s crucial to analyze each opportunity thoroughly to ensure it aligns with your investment goals.