Guide To Navigating A Fixed Commercial 30 YR Refi Cashout Loan

[Nasir El Ameer]

Hey everyone!

My name is Nasir El Ameer.

I am a commercial mortgage specialist that specializes in creating customized financial solutions for investors when the banks fail to close or if the investor is not a fit for a traditional or commercial bank.

I assist in closing a variety of real estate transactions using my partnerships with alternative lenders. 

Just wanted to open up this topic to help those who are new to the commercial financing space as well as those who are experienced. 

I know the commercial world seems difficult to navigate on the surface with all of its moving parts but once you understand the fundementals of how the commercial world works you will see how powerful commercial loans can be. 

If you have questions feel free to ask.

So I am going to start this forum off by discussing commercial refi cashout loans and what they can be used for. I will also highlight how to get a 30yr Fixed Commercial Refi Cashout Loan that can be used for investment properties and commercial properties

A commercial loan is basically a loan from a commercial entity whether its a bank, alternative lender(non-bank lender) or private investor.

The refi-cash out loan is a vital tool to your ability to build wealth and acquire properties overtime especially if you are a BRRR practitioner.

The reason the refi cash out is vital is because it allows you to get the equity out of your property to be used to acquire more properties, pay off debt, create working capital, or invest in a business.  

The refi cash out loan from a commercial source can be used for residential non-owner occupied properties, and commercial properties.

If you own your property in a LLC you are considered to be a commercial investor as compared to the traditional bank and government sponsored programs.

The reason for this is because since the property is not under an individuals name it is considered a commercial property.  

And commercial properties are known for conducting business on the premises of the property. As opposed to personal use.  

Loan terms from commercial sources vary depending on the source and I have read in the forums that most are looking for a fixed commercial 30 yr loan but cannot find it at commercial banks or portfolio banks and I must tell ya that it is available but you will not find it through traditional sources: 

Here is why: 

Banks are highly regulated by your Uncle Sam and internal regulators, even if they are a commercial or portfolio lender.

Commercial loans are notoriously known for balloon mortgages or Adjustable Rate Mortgages

The simple reason for this is because depending on the commercial operator and property type these loans are not classified the same as residential loans which are backed by the government.

You see on the commercial side that money is the bank's  money to fund whether they sell the note or not so most banks that offer these loans offer them at these terms because the commercial balance sheet is totally different than the residential balance sheet. 

The fundamental reason they differ from residential properties is because the commercial world moves in cycles that are very cyclical based on property type,  business type, and interest rates.  Banks know that if the economy goes down and that business goes down inside of that property then their goes the loan payment to the bank...

When you combine the cyclical nature of the commercial world plus the risk associated with commercial loans then your refi cashout is a ripe scenario for uncertainty with short financing terms.

The reason its uncertain is because the bank does not know that if you cashout the equity in the property that you will actually stay in the property and make payments... 

Since the uncertainty is high lenders structure these deals at 20 yrs amortization with 5- 7 yr terms that either convert into a balloon with the full balance due at the end of the term or at a higher rate...

Your probably thinking you can get an extension before the term is out... and in some cases yes depending on rates the economy and the mood of the bank... 

if those factors do not align then the extension may not be available...

But their is an alternative...

The alternative is an alternative lender. 

To be clear an alternative lender is not a commercial bank, hard money, or private money that you may be accustomed too.

An alternative lender is a private corporation in business to originate commercial loans or secured loans based on real assets.  

These corporations are usually debt funds, mortgage funds, asset managed funds, private equity, or institutional funds. 

The coolest thing about this type of lender is that they are flexible, and fun to work with.  

They are not regulated the same as bank nor are they as restrictive in their lending criteria like a bank would be.  

Their number one objective is to lend money on their books if they don't uncle sam knocks on their door and ask for a big bill to be paid... 

So how does this help you get a 30 yr fixed refi cashout loan...

Simple they are the only sources who will offer it...

Alternative Terms:

80% LTV is availble for cashouts

75& LTV is available for cashouts as well with no seasoning

They can close in a LLC

You can design the loan term, prepay terms, and decide if you want a full doc loan option or lite or no doc option.

They also do not require any annual reporting requirements.

No balloon loans

Min 650 credit

And they can close in 17-31 days... 

No restriction on use of funds

And they do not report to credit.  

Min Loan amount is 100k-5million (these are known as small balance commercial loans)

The #1 Thing that sets these funds apart from traditional and commercial banks is that they close where banks fail to close as well as work with investors who are not bankable due to credit & other financial challenges.

The reality is this ,traditional financing is only going to take you so far in accomplishing your goals and dreams in real estate investing.  

If you truly want to scale your business, be an effective BRRR investor, multifamily investor, or an investor that wants to creatively finance then your going to have to step outside of the box...

and...

create your own box...