| >Typical terms for Commercial Multifamily real esta |
| Posted by: Raymondo Aug 18 2004, 12:25 PM |
| What are the typical terms for a commercial real estate laon. I have purchased a 2-unit on a 30 year loan, have that going for a while and think I am suited to landlording, but would like to get a 9 or 10 unit building in upstate NewYork. Assuming the price is $250 K, what are the typical terms I can expect to have offered to me? and what are the evaluation criteria a lender will use in their decision? |
| Posted by: loanuniverse Aug 18 2004, 03:06 PM |
| Raymondo: From the point of view of a bank lender located in a market that is about 2,000 miles from New York, the following is my feedback: ” Assuming the price is $250 K, what are the typical terms I can expect to have offered to me?” You will need anywhere from 20% to 25% of the purchase price {assuming that the appraisal comes in at $250,000. If the appraisal comes in at $200,000 the bank will only be willing to finance 75% to 80% of the lower valuation}. You will be offered either: – A five year term loan at a fixed rate. – A ten year term loan with a repricing at the end of the five years. – A fifteen year term loan at a fixed rate. Your pricing depending on the the amortization and maturity will be anywhere from 5.5% to 8%. Your overall relationship with the bank will come into play. ” what are the evaluation criteria a lender will use in their decision?” Cash flow from rental income has to be enough to pay the debt as well as provide a cushion. We are talking that the cash flow has to be at least 125% of the debt service. Take a look at my page on sensitivity analysis located at http://www.loanuniverse.com/sensitivity.html There is a spreadsheet there that you can use. Good luck |
| Posted by: Commercial Lender Aug 20 2004, 02:35 PM |
| Assuming you have good credit, you will be able to get 75-80% LTV. If you go with a stated income option, the seller will able to hold a second mortgage. For stated loan programs you are looking at rates from 7.25% to ~10.00% depending on credit and a full doc program has rates between 6-8%. Usually any combination of amortization is available 15/20/30 years but your pre-payment penalties will vary. Let me know if you have any specfic Qs. |
