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Updated 2 months ago on . Most recent reply
![John McKee's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/358998/1698271646-avatar-johngmckee.jpg?twic=v1/output=image/crop=210x210@105x58/cover=128x128&v=2)
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My dilemma of trying to refinance a commercial property
I have a property where a tenant moved out that was paying high rent of $7,400 a month including NNN. However the market dictates that rent is about $6K for a new tenant. The loan rate is about to adjust to 6.9% which is more than double what it currently is, making the property in the negative for monthly cash flow. The bank is saying that I need to put more money down (which I don't have) or kick the can down the road until a higher paying tenant comes along which is not likely. What would you do?
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Quote from @John McKee:
loan is due every 5 years and it is currently up now. Renting at 6K lessons the value of the property but nothing I can do about it because I may never find a tenant that pays 7,400 again.....this is the downside of paying for a class A NNN tenant that eventually leaves.
Bank won't allow to refi back to a 25 year amm. @Greg Kasmer spot on about using other paid off properties on the loan. The bank said they can act as a cosigner on the new loan without being collateral.
The only problem is that I am still upside down about $500 dollars a month with cashflow.
A new lender with 25 year amortization and maybe a lower rate, will have a lower payment. That lower payment, in turn, helps the DSCR, and now you don't to come in with as much. Most of the loans I do are on 25 to 30 year amortization, and included in that is people calling me b/c their current bank would only do 15 or 20 in cases where they've had the property for 15 or 10 years already.
Every time your car insurance is up for renewal, that's an opportunity to make the carrier earn, or re-earn, your business. Same thing here, just on a much larger and more important scale.