Selecting the Right Commercial Real Estate Lender in Washington State

Real Estate

Washington state is an incredibly hot market, with home prices rising by over 43% in the last five years. A low housing supply and sluggish development make rentals in hot demand, especially as the population is growing at a steady average of about 1.2% per year.

Additionally, tourism is the fastest growing sector in the state, bringing in over $21 billion in revenue each year: a number that is only continuing to rise as people shake off the pandemic depression and decide to spend more.

There has never been a better time to get into vacation rentals or long-term real estate rentals than now in this Pacific Northwest state, but it’s crucial that you carefully research mortgage lenders in Washington state in order to determine whether they have the right products for your needs. In this article, we’ll discuss some of the hallmarks of a good commercial real estate lender so that you can be sure you’re getting a great mortgage from the best company available.

Decide Which Product is Right for You

There are numerous mortgage products available for investors, depending on what they are specifically looking for. Those wanting to flip houses will want to look at hard money loans, which have very short terms that suit the fast turnaround of a house flip, while those seeking to rent a property for the long term are better served by Debt Service Coverage Ratio (DSCR) loans.

A DSCR loan analyzes the profitability of a property in order to decide whether it is creditworthy rather than requiring extensive paperwork on the borrower’s financial circumstances. Investors can also take out more than the conforming loan limit and can roll multiple properties into the same loan, making it easier to rapidly expand their portfolio without juggling several mortgages. This streamlines business finances and ensures a steady cash flow.

If you intend to buy more than one rental property at a time or if you want to borrow under an LLC rather than tie the property to your personal finances, you should find a company that provides DSCR loans. Not every lender provides these particular loans, so you will need to focus your research on investor-specific lending companies rather than your average bank.

Additionally, not every loan is meant for construction, which may prove a hindrance if you want to help expand the housing supply through development. You will need to ask the lender if they do construction loans or if they are solely for purchasing existing properties.

Seek One With Local Experience

Not every lender will work in every state, and it’s a bad sign if they do not explicitly explain where they operate. You will want a lender that is qualified to lend within Washington state, so research their page carefully and find one that demonstrates experience with loans here.

Additionally, Washington State has a unique real estate market, particularly because it has so many swathes of undeveloped land and a severe housing shortage. You need a lender who is very familiar with the local market and will understand all the requirements of investment properties in Washington state.

Review the Types of Properties They Lend For

Just because a lender provides the right loan type does not mean that they will necessarily finance any and all property types. Some work only with residential real estate rentals, such as vacation rentals and long-term rentals, while others will provide loans for industrial or rural properties, like fish processing plants or lumber warehouses. While some may loan for nearly any income-producing property, they may only have experience with certain sectors.

When you are performing research on what lender you would like to use, ask them about their familiarity with the property type that you want to buy. For example, if you are buying a bed and breakfast near the North Cascades, this would be a commercial property loan because you are operating it like a hotel. If you’re going to operate an Airbnb near Puget Sound, you need a long-term rental loan and should look for a lender who has specific experience in this type of loan.


There is vast untapped potential in Washington State, which has high incomes, extensive tourism, and strong population growth. You can develop a highly successful real estate venture here regardless of your specific niche, whether that is cold storage for fisheries or vacation properties near one of the three national parks, and a good investment loan will help you do so.

Research your options carefully to find a mortgage lender that has experience in Washington state, provides the products you need, and lends to the types of properties you’d like to acquire. Developing a strong relationship with a lender will assist you in the long-term as you seek to add more properties to your portfolio and develop your business into a West Coast real estate empire.