Case Study: $500K Credit Union Loan for a Net-Leased Auto Service Center in Zanesville, Ohio

The Deal That Walked in the Door

We are Commercial Lending Solutions, a commercial mortgage brokerage based in Los Angeles, California. Commercial Lending Solutions specializes in credit union and community lender placements for net lease and out-of-state real estate investors nationwide. This deal paired a hometown ownership group with an unglamorous but dependable property class: a net-leased auto service center more than 2,000 miles away in Zanesville, Ohio (OH). The ownership group, managed through a Santa Monica-based commercial holding company, wanted permanent financing on the property structured to fit the way they actually hold real estate, jointly, across a single-purpose LLC and two family trusts standing behind it.

A single-tenant, net-leased quick-service auto property like this is exactly the kind of asset that lets an investor operate at a distance. The tenant handles day-to-day operations, and the owner's job is largely to make sure the real estate and the lease are financed sensibly, ideally through a credit union or community lender willing to look past the loan's small size. That is precisely the loan the ownership group needed.

What Made It Hard

• A small loan far from either party's home turf. At $500,000, this loan was too small for most national conduit or institutional lenders to prioritize, and the ownership group needed a lender comfortable financing out-of-state, single-tenant retail without treating it as an afterthought.
• A three-party borrowing group. The loan needed to bind a single-purpose LLC alongside two separate family trusts as co-borrowers, each with its own trustees and signing requirements, adding documentation complexity disproportionate to the loan size.
• Matching structure to a long hold. The ownership group wanted rate certainty for a meaningful stretch of the hold period without locking into a rigid, unbending long-term rate, which meant finding a lender willing to build in a mid-term reset rather than a simple fixed-for-the-full-term note.

"A $500,000 net lease loan two time zones away is easy to overlook. We just needed a lender willing to underwrite the real estate and the lease credit on their own merits instead of passing because the ticket was small."

How We Ran the Process

Trevor Damyan, a California-licensed real estate broker (CA DRE 02244836), placed the loan with a state-chartered credit union based in Illinois, willing to lend against strong, credit-backed net-lease real estate regardless of where the property or the borrower happened to sit. The loan closed on May 29, 2025:

• $500,000 secured by a first mortgage on the Zanesville, Ohio property
• 6.60% fixed for the first five years of the loan (through May 28, 2030), then resetting to 2.550% over the 5-year Treasury Constant Maturity Rate, with a 6.60% floor that guarantees the rate never resets lower than where it started
• Effectively 30-year amortization: the initial monthly payment of $3,204.55 was calculated on a schedule running through the reset date, and at reset the payment is recalculated to amortize the remaining balance over a period ending in 2055
• 10-year final maturity (May 29, 2035), meaning the borrower gets one full rate reset built into the note before the entire balance comes due, a middle ground between a 5-year balloon and a fully amortizing 30-year term
• A 1.20x pre-distribution / 1.00x post-distribution debt service coverage covenant, with a rate-adjustment remedy, up to 1.0% higher, rather than an automatic default if the property underperforms in a given year
• Open prepayment with no premium, on any scheduled payment date with three business days' notice
• Joint and several liability across the borrowing LLC and both family trusts standing behind the ownership structure, executed by all managing and trustee parties at closing

The note and mortgage closed together, giving the ownership group a single, cleanly structured loan against the property rather than a patchwork of separate obligations across the different entities involved.

Why We Won This One

Small-balance, out-of-state net lease loans are an awkward fit for a lot of lenders: too small to move the needle for a large bank, too far from home for a regional community bank, and often too vanilla for a specialty CRE lender chasing bigger tickets. Matching this deal to a credit union willing to underwrite the real estate and the lease credit on their own merits, rather than discounting the deal because of its size or geography, is what got it financed on favorable, long-term terms.

The mid-term reset structure was the other piece worth getting right. Rather than forcing the ownership group into either a rigid long-term fixed rate or a short 5-year balloon that would force a refinance in a rising-rate environment, structuring one reset into a 10-year note gave the borrower a longer runway with a known floor on the other side of the reset.

Is This Structure Right for Your Deal?

If you are financing a net-leased, single-tenant property outside your home market, credit union and community lending relationships can offer terms that larger institutions overlook for smaller loan sizes. We arrange permanent loans and net lease and owner-occupied commercial financing from a network of more than 1,000 capital sources nationwide.

Apply for financing or call us at 310.708.0690 to talk through your net lease property.

Trevor Damyan

Commercial Mortgage Broker, Commercial Lending Solutions | CA DRE 02244836

Trevor Damyan is a commercial mortgage broker at Commercial Lending Solutions with a background in structured finance at CBRE and Marcus and Millichap Capital Corporation. He specializes in bridge loans, construction financing, SBA programs, DSCR loans, and complex capital structures for investors and developers across all 50 states.

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