What are some of the interest rates you're getting?

[Shin Bo]

Hello everyone,

I have a balloon payment coming up and I was wondering what are the interest rates everybody receiving lately after the interest rate increase? I'm on the east coast, PA specifically but curious at the rates all over.

Thanks

Shin

[Joel Owens]

Hi Shin,

Depends on what type of property and price point.

One of my clients is buying a Red Lobster NNN close to 7 million in price. Lender will do 65% LTV 25 year amortization and 4.85% fixed for 10 years.

Another property we closed on a retail center for 3.5 million and 4.70%, 10 year term fixed , 30 year amortization with all national credit tenants in a great location.

Another was an Advance Auto for about 1,700,000 purchase with loan of about 1 million,25 year amortization, 10 year fixed and 4.65% rate.

If what you own is the smaller commercial under 1 million in price and mom and pop then most lenders will not compete for it as 1 million is their cut off point for loans. Some have a 2 million threshold. That leaves smaller banks etc. and they know they are the only game in town so they jack the rates up into the mid 5's or worse with 15 to 20 year amortizations. That is why on smaller properties you need higher caps to maintain the cap rate to interest rate spread for basis points return.

Hope it helps.