Best loan for refi on commercial property. Insurance Company??

[Kevin Boyd]

I understand insurance companies will loan on commercial properties. Does anyone have experience with this? What kind of terms do they offer? Where do you go to get such a loan?

[Joel Owens]

Hi Kevin,

Insurance companies most all that I know of do not deal directly with buyers. They have SCREENERS which are commercial mortgage brokers they have long term relationships with. They want the mortgage broker to be the initial point of contact with a potential borrower, screen the deal to see if it fits within what the insurance company is looking for, and put borrowers financials and the property into a nice package submittal form.

They want the borrower and property screened well in advance. Will a property still might have issues while under purchase and sale agreement and deal doesn't happen? Sure but it saves greatly wasted time for the insurance company having an upfront screening process. Time is money in commercial real estate.

Just like insurance companies want to deal with commercial mortgage brokers the sellers of properties like dealing with commercial real estate brokers. They know I have a reputation for helping buyers through the process and screening upfront. I also have commercial mortgage brokers I have used many times over the years where the lenders do not re-trade loan terms mid deal. Just like the insurance company I have developed systems and processes over the years to weed out the time wasters or unrealistic buyers.

Insurance companies won't even usually touch smaller properties as the asset quality and location is not there. What loans and LTV are available depends on a ton of factors with a commercial property. A hotel is underwritten differently than large multifamily, retail, office, warehouse, self storage, etc.

If you do not know this process you should really have someone helping you with this. As an example I have a whole system and reputation so my buyers go through me and then it can help them win a deal with multiple offers because the seller or broker knows who I am. Listing brokers do not like going under contract with just anyone because if the buyer does not perform then they have egg on their face with the large owner or developer to get the listing next time or any future potential business.

Insurance companies highest they tend to go is 65% LTV and most are 60%. They are not structured like typical banks with locations and teller costs etc. so can often do longer term fixed loans at great rates but you have to fit within their box.