All Forum Posts by: Dan Wallace

Hi @Garrett McIntyre I am not familiar with HUD Section 8 financing but rather Freddie Mac Section 8.

If I can answer any questions, let  me know. I will send you message

I work with hotel owners in securing financing, primarily through the SBA. The SBA is looking very closely at hotel deals recently and has put an emphasis on management experience. You may be able to substitute an experienced manager/management company but you will need to have similar business experience.

If the last recession was any indication of the next downturn, the hotel industry will be hit hard. There is a lot of new product going up across the US. In an economic downturn, one of the first areas to get hit is leisure/travel spending for consumers and business travel. If there is a downturn I would also expect financing to get much tougher. Lending on hospitality is already getting more difficult.

If you can stretch to get the sub 5% rate fixed for 30 years, then I would take it.

With the recent inverted yield curve, there may be pressure for the Fed to lower short term rates. What the Fed does short term interest rate wise does impact the overall market but the Fed does not directly adjust long term rates, which invariably is what the 30-yr fixed rate your bank is quoting is based on.

I have been doing commercial lending for some time and I have not heard of a client requiring POF. I have heard on several occasions of "private" lenders taking fees and then not executing. Sounds like your client has been through this before.

What type of transaction are you dealing with? 

@Charlie Swain in talking commercial deals you may want to specify the type of commercial properties you want to underwrite. Multi-family properties will be different than an owner-occupied industrial property. Different types of commercial properties have different underwriting nuances.

This may sound weird, but see if you can get a hold of a good commercial appraisal. If you can review a good appraiser's work you will see how they develop the three approaches to value (regardless of what anyone tells you, all properties should address the three approaches to value or why any approach is not applicable, Lesson #1). A good appraiser will show how they develop a cap rate and how investors develop that rate with comparable investments. 

Best of luck!

In your last scenario, you are underwater and the note has matured. Your current lender has no obligation to extend the note and has the ability to come after you individually for any deficiency (unless you live in a single action jurisdiction and the lender opts to pursue the collateral). If the loss of equity is a result of larger economic forces similar to the last crisis, then the answer depends.

During the crisis I worked for the FDIC in resolving large failed bank portfolios. During those special times, there were programs developed to help underwater borrowers. These programs were largely engineered for owner-occupied residences and not for investment properties. There is a lot of misinformation regarding these special programs and invariably there were will be different rules when the next downturn hits. Typical lenders do not want to take your collateral and, if possible, will work with you.

If you, or anyone for that matter, has an underwater loan that matures and we are in another economic crisis, you may want to keep my contact information handy. 

Half Price Multi-Family Financing/Agency loans

• $1,000,000 to $7,500,000
• Non-Recourse with standard carveouts
• Multifamily housing with five residential units or more, including conventional housing with tax abatements and Section 8 vouchers and properties with space for certain commercial (non-residential) uses.
• 5, 7 or 10-year fixed rate term. 20 Year Hybrid ARM with initial 5, 7, 10 Year Fixed
• Up to 30-year amortizations
• Up to 80% LTV in Top and Standard Markets. 70% Small and Very Small Markets (75% for acquisitions)
• Partial interest only; full-term interest only may be available
• Rates start currently in the mid-4's for Top market, stabilized properties
• The standard origination fee I cut in half

Don't be afraid to approach a local credit union. Even though CUs are limited in the amount of commercial loans they can have on their books, I have seen a few give ridiculously good commercial terms. The CUs are kind of the greater fool in some areas regarding pricing and credit standards, in my opinion.

To clarify, many lenders are very particular about the appraisal and the appraisal ordering process.

The primary governing regulation related to appraisal, FIRREA, provides that any regulated financial institution can use an appraisal of another regulated financial institution. I referenced this regulation regularly during my days at the FDIC. While FIRREA allows for the use of an appraisal between financial institutions, it is the financial institution's choice. I regularly use appraisals from my lender with another with or without an assignment from the appraiser.

To clarify, many lenders are very particular about the appraisal and the appraisal ordering process.

The primary governing regulation related to appraisal, FIRREA, provides that any regulated financial institution can use an appraisal of another regulated financial institution. I referenced this regulation regularly during my days at the FDIC. While FIRREA allows for the use of an appraisal between financial institutions, it is the financial institution's choice. I regularly use appraisals from my lender with another with or without an assignment from the appraiser.