First and foremost is "net cash flow" based on net operating income "NOI".  It is important to commercial lenders that the property can support itself economically. After all other expenses are paid, how much is left over to service debt?  Most lenders require a cushion of 15-25% more cash than needed to cover annual loan payments.  This is referred to as Debt Service Coverage and is usually represented as "1.25:1 DSC".

Lenders will use either "historic cash flow" based on the most recent last two years financial statements or Federal Tax Returns, as well as interim year-to-date operating statements OR they may accept projected cash flow numbers based upon signed, long term leases from qualified tenants.

Next comes "loan-to-value" ("LTV") and property type. Lenders will typically use the lower of Cost or Appraisal value in their determination of the LTV.  However, the maximum loan amount can not exceed what will be supported by either the historic cash flow or projected cash flow. If a property is specialized or too unique, it may be considered "special use" and require a lower LTV.

The stability and type of the rental/leases are important, as determined by the rent rolls, the term & type of the leases and the number & quality of the tenants.  Lenders will take all these factors in consideration when underwriting the loan. Properties with a single tenant occupancy and/or with short term lease/rental agreements will generally be a concern.