I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. Call (800) 239-1103.
Buying commercial real estate in California is more complex than residential — longer due diligence, specialized financing, and unique legal requirements. This guide walks you through every stage of the process. See also: Commercial Loans CA | Multifamily Loans.
Step 1: Define Your Investment Criteria
Before you look at a single property, get clear on: asset class (multifamily, retail, office, industrial, mixed-use), target market (LA, OC, Inland Empire, San Diego, Bay Area, Sacramento), minimum return metrics (cap rate floor, cash-on-cash yield, IRR target), hold period (short bridge with value-add exit vs. long-term cash flow hold), and total capital available. A clear acquisition criteria prevents wasted weeks on deals that don’t fit your return requirements or capital capacity. Most experienced California commercial investors use a one-page criteria sheet that they share with brokers upfront.
Step 2: Source the Right Properties
California commercial properties come from multiple channels: CoStar and LoopNet listings (on-market), commercial broker relationships (off-market pipeline), direct mail campaigns to owners of target property types, auction platforms (Ten-X, Crexi), and direct owner outreach using county assessor data. Unlike residential, many quality California commercial deals never appear on a listing platform. Building relationships with 3–5 commercial brokers who specialize in your target asset class and market is one of the highest-ROI activities for a new commercial investor.
Step 3: Financial Underwriting Before the Offer
Before making any offer, run a basic P&L: gross rents minus vacancy (typically 5–10%) minus operating expenses (35–45% of gross rents for most CA properties) equals NOI. Calculate cap rate (NOI ÷ purchase price) and compare to market cap rates for similar assets. Model DSCR at your target financing terms to confirm the loan qualifies. Project cash-on-cash return. If the numbers work on paper, make the offer — but build in contingency periods to refine these numbers with actual documents during due diligence.
Step 4: Due Diligence (45–60 Days)
Commercial due diligence is comprehensive by design. Review the rent roll in detail, audit all leases (estoppel certificates from tenants confirm their understanding of terms), order a Phase I environmental report (required by most commercial lenders), engage a commercial property inspector (structural, mechanical, roof), review title for liens, encumbrances, and easements, verify zoning compliance for intended use, and review 3 years of operating statements. Don’t compress this timeline — surprises found after closing in commercial real estate are expensive and often uninsurable.
Step 5: Financing and Close
Submit your loan application with the rent roll, 3 years of operating statements, the appraisal, and the purchase contract. California commercial escrow timelines: 45–60 days for traditional bank/agency financing, 21–30 days for portfolio/DSCR loans, 10–14 days for bridge financing. Get your financing pre-approved and your lender engaged at the start of due diligence — not after. A financing contingency is appropriate for first-time commercial buyers; experienced investors often waive it with a pre-committed lender.
Get Pre-Qualified for Commercial Financing
Call me before you make an offer — I’ll confirm your financing capacity and structure so you can compete with confidence.
Frequently Asked Questions
How much down payment do I need to buy commercial property in California?
Most California commercial loans require 20–35% down depending on loan type, property type, and borrower profile. DSCR and portfolio loans for investment property typically require 25–30% down. Traditional bank commercial loans for investor-owned property require 25–35%. Owner-occupied commercial property financed through an SBA 7(a) loan requires only 10% down — one of the most capital-efficient paths to commercial ownership for business operators. SBA 504 loans for owner-occupied commercial real estate also require just 10% (15% for new businesses). Bridge loans for value-add acquisitions typically require 30–35% equity at close. The specific down payment for your deal depends on the asset class, the loan program, and your credit/experience profile. Call me with your deal details and I’ll give you a precise number.
How long does it take to close a commercial property purchase in California?
Commercial property closings in California take 30–90 days depending on the financing type and due diligence scope. Bridge and hard money financing: 10–21 days (fastest, asset-based underwriting). Portfolio and DSCR loans: 21–35 days. Traditional bank commercial loans: 45–60 days. Agency multifamily (Fannie Small Balance, Freddie SBL): 45–60 days. SBA 7(a): 45–60 days. SBA 504: 60–90 days. The due diligence period (Phase I environmental, commercial appraisal, lease review) is typically 30–45 days and runs parallel to financing. The overall timeline is usually set by whichever takes longer: financing or due diligence. Working with an experienced commercial lender from day one compresses the financing timeline significantly.
What is a Phase I environmental report and do I need one to buy commercial property in California?
A Phase I Environmental Site Assessment (ESA) is a review of a property’s environmental history conducted by a licensed environmental professional. It examines records of hazardous material use, underground storage tanks, historical industrial uses, and regulatory database listings to identify Recognized Environmental Conditions (RECs). Most California commercial lenders require a Phase I ESA as a condition of financing. The assessment takes 3–4 weeks and costs $1,500–$3,500 depending on property size and complexity. If the Phase I identifies potential contamination, a Phase II ESA (actual soil and groundwater testing) may be required, adding 4–8 weeks and $5,000–$25,000+. For most office, retail, and multifamily acquisitions, Phase I comes back clean. For industrial properties, gas stations, dry cleaners, or automotive sites, Phase II testing is more common. Budget for Phase I as a standard due diligence cost on any California commercial acquisition.
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | In lending since 2000, founded DiVita Home Finance in 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
