Not finding the rates being discussed on podcasts

[Horace Mann]

I have been hearing that commercial apartment rates are in the 6.5% range from several podcasts recently. I am working on a 7 family and a 9 family deal, but all of my local lending contacts for commercial loans are quoting me between 7.5% and 8%. For DSCR qualification that 1%-1.5% makes a big difference. Do I just need to look harder or is what I am hearing mostly geared toward the 50+ unit deals? Thanks everyone!

[Dan Thomas]

NBT Bank had/has a promotional 6.5% commercial rate they were advertising this month.  They seem to be pretty aggressive in New England.  May be worth reaching out to them.  Other than that I am seeing 7.5ish as the norm right now.

[Erik Estrada]

Quote from @Horace Mann:

I have been hearing that commercial apartment rates are in the 6.5% range from several podcasts recently. I am working on a 7 family and a 9 family deal, but all of my local lending contacts for commercial loans are quoting me between 7.5% and 8%. For DSCR qualification that 1%-1.5% makes a big difference. Do I just need to look harder or is what I am hearing mostly geared toward the 50+ unit deals? Thanks everyone!

This will depend on the type of loan, size of the deal, experience, FICO, and property location. Commercial rates vary on several factors since there is a lot more gray area in this space. It is not as cookie cutter as 1-4 conventional and FHA rates. Each bank has their own set of credit limits and rate differences.

[Brandon Croucier]

5-9 Unit DSCR below 7 doesn't exist right now. I wouldn't spin your wheels.

I'd love to connect and see what I can do for you on a 5-9 Unit DSCR product.

[Horace Mann]

Quote from @Dan Thomas:

NBT Bank had/has a promotional 6.5% commercial ....

 Thanks Dan!  I reached out and waiting for a call back, I appreciate the lead!

[Ko Kashiwagi]

Hi Horace,

You could get below the 7's on a 10+ Commercial multi-family, and these programs typically have minimum loan amounts of 750k-1M. For 5-9 units, you could get to the low 7's assuming the DSCR is excellent.

[Jacob Sherman]

they're talking about arms and full doc 

[Erik Estrada]

Quote from @Brandon Croucier:

5-9 Unit DSCR below 7 doesn't exist right now. I wouldn't spin your wheels.

I'd love to connect and see what I can do for you on a 5-9 Unit DSCR product.

Yes it does exist, but on loan amounts $1 mil or more for a Freddie Mac SBL loan. Albeit, a lot harder to get approved for these compared to a regular DSCR loan you can find at a mortgage shop that mostly focuses on 1-4 Units.

[Brandon Croucier]

Quote from @Erik Estrada:

Quote from @Brandon Croucier:

5-9 Unit DSCR below 7 doesn't exist right now. I wouldn't spin your wheels.

I'd love to connect and see what I can do for you on a 5-9 Unit DSCR product.

Yes it does exist, but on loan amounts $1 mil or more for a Freddie Mac SBL loan. Albeit, a lot harder to get approved for these compared to a regular DSCR loan you can find at a mortgage shop that mostly focuses on 1-4 Units.

An SBL is not DSCR.

[Erik Estrada]

Quote from @Brandon Croucier:

Quote from @Erik Estrada:

Quote from @Brandon Croucier:

5-9 Unit DSCR below 7 doesn't exist right now. I wouldn't spin your wheels.

I'd love to connect and see what I can do for you on a 5-9 Unit DSCR product.

Yes it does exist, but on loan amounts $1 mil or more for a Freddie Mac SBL loan. Albeit, a lot harder to get approved for these compared to a regular DSCR loan you can find at a mortgage shop that mostly focuses on 1-4 Units.

An SBL is not DSCR.

 Then what is it? 

[Erik Estrada]

Quote from @Brandon Croucier:

Quote from @Erik Estrada:

Quote from @Brandon Croucier:

5-9 Unit DSCR below 7 doesn't exist right now. I wouldn't spin your wheels.

I'd love to connect and see what I can do for you on a 5-9 Unit DSCR product.

Yes it does exist, but on loan amounts $1 mil or more for a Freddie Mac SBL loan. Albeit, a lot harder to get approved for these compared to a regular DSCR loan you can find at a mortgage shop that mostly focuses on 1-4 Units.

An SBL is not DSCR.

[Ian Stuart]

The podcast you mention is referencing (i) Freddie Mac Small Balance Loans ("SBL"), and (ii) Fannie Mae Small Loans, which are essentially government-backed CMBS loans.

Freddie & Fannie small balance loans range from 5-30 year loan term. Standard loan sizing 75-80% LTV; 1.20-1.25x DCR; 30-year amortization in Top & Standard markets. Partial term IO @ 1.20-1.25x DCR, full term IO @ 1.35-1.40x DCR. Rates are in the high 5.00% - low 6.00% range for "Mission Driven" assets with rents <=80% AMI Net Max Rents. These loans are all non-recourse, with carveouts for "bad boy" acts (IE - fraud, deliberate misrepresentation, abandoning property, etc.). Prepayment is typically either (i) Greater of YM / 1.00%, or (ii) YM; 3 Mos Open @ 1.0%; 3 Mos Open @ Par. Flex prepays (stepdowns, etc) are available but will cost additional bps. Cash out refis ok, but may result in slightly lower loan sizing.

With Freddie Mac SBL, you rate lock at loan application (no interest rate risk during underwriting). With Fannie Mae Small Loans, you can't rate lock until Loan Commitment is issued, typically ~2 months after you go under application. 

Berkadia is the #1 Freddie Mac and #2 Fannie Mae multifamily lender in the nation. Reach out with questions. 

Agency Multifamily Small Balance Loan Rates (05.31.24)

-Ian

[Alex Hunt]

Happy to connect further on this. 
for a lower rate as for less leverage and that should lower the rate. Also a different degree of lender, more of a government sponsored program or CMBS.

[Horace Mann]

Just to update everyone...first off thank you for all your responses, very helpful.  I settled on NBT bank for my 7 family purchase.  Some details, 25 year AM, 10 year fixed then converts to 5 year adjustable, 6.91%, and no pre payment penalty.  With no prepayment it is reassuring to know I can refi in a year or two if rates do drop.  If i wanted to do a 20 year AM they would have knocked off another 25 basis points.  They have been very professional and responsible and easy to work with.  Thanks to everyone for your help and good luck out there!