All Forum Posts by: Dushyant Ravi

Yup, once the project stabilizes, refinancing using conduit is an option. I specialize in conduit debt and hospitality is close to 50% of what I finance. But increasingly our LTV's are much closer to 65% than 75% (given where we are in the cycle it makes sense) and our amort is often 25 years for hotels, and 30 years for other product types.

When you say 15 year loan, do you mean 15 year term or 15 year amort. You can get 15-30 year amort, but term I would say 3-10 is more likely. 

Adventures in CRE, Property Metrics are good resources for CRE underwriting. As a commercial real estate banker, I have underwritten CRE deals for my institutional clients like Blackstone, Brookfield and Related. From my debt perspective, the underwriting is simpler. But from the equity side, the underwriting can be pretty complex with dynamic waterfalls that can handle subordination of pref and/or return of capital, promote or CF split, funding priority, project IRR versus LP IRR hurdles, clawback/catch-up capability. But diving into all these first is diving into the deep end of the pool without learning to swim first. The articles from Property Metrics will help you get you feet wet and then the more advanced underwriting videos and models from adventures in CRE will help you to learn to swim. They also have a new course on CRE that might be helpful for you.  Once you have a good foundation, you can build on your skillset. 

Some of my favorite books:

1. Real Estate Finance & Investments: Risks and Opportunities - Can be a little theoretical. 

 2. Other People's Money: Inside the Housing Crisis and the Demise of the Greatest Real Estate Deal Ever Made is a fantastic read, but real estate people are definitely the "bad guys" in the story. I was rooting for the "villain" the whole way.

3. Hines: A legacy of Quality in the Built Environment. Tells the story of how Gerald Hines build one of the largest real estate firms in the world.

4. Trammell Crow, Master Builder: The Story of America's Largest Real Estate Empire

5. Poorvu's The Real Estate Game. Please read this one. It's a very easy read, and doesn't require prior real estate knowledge. It's very high level, back of the envelope way of looking at real estate and shares what's proven to be a very effective approach to small-time commercial real estate investing.

Natalie, I am a commercial real estate lender and I focus on CMBS lending nationwide in the US. I work on 10 year term, 25-30 year amort, fixed rate non recourse deals for multifamily, office, retail, industrial, self storage, manufactured housing, hotels, etc. Our leverage is max of 75% and we are often in the 60-70% range atleast as long as it executes from a securitization standpoint. Our minimum loan amounts are $1.5MM but ideally we like to see atleast $3MM. Besides CMBS, local banks and agencies are other options. But check with them if they require the borrower to be local. We dont require borrowers to be local. Agencies will offer non recourse financing as well but I am not sure about the local banks, they can definitely offer higher than 60% leverage but they could be full recourse or partial recourse loans. Let me know if you have any questions about CMBS in particular, happy to be a resource and help in any way I can.

The rent roll and expense sheet is crucial. If you only have the T-12, you can inquire about historical operating statements. That will allow you to to see historical trends with occupancy and expenses. You might also want to know about the maintenance history and the list of capital improvements. This might be sufficient before putting in an offer and during DD, you might want to get copies of actual leases, detailed information about tenants, Estoppel Certificates, survey, title policy, etc. 

Minimum loan amounts are typically $1.5-2MM. Though ideally we prefer atleast $3MM. We lend on stabilized products across the country even in secondary and tertiary markets. Thats the beauty of CMBS. Our balance sheet platform only lends on primary and top secondary markets. The way CMBS is structured, we are able to lend on tertiary markets. Our most recent CMBS transactions were in small markets like Nacogdoches, TX and Goose Creek, SC. CMBS allows borrowers in small markets to obtain non recourse financing.

Minimum loan amounts are typically $1.5-2MM. Though ideally we prefer atleast $3MM. We lend on stabilized products across the country even in secondary and tertiary markets. Thats the beauty of CMBS. Our balance sheet platform only lends on primary and top secondary markets. The way CMBS is structured, we are able to lend on tertiary markets. Our most recent CMBS transactions were in small markets like Nacogdoches, TX and Goose Creek, SC. CMBS allows borrowers in small markets to obtain non recourse financing.

I am a commercial real estate lender and I focus on CMBS originations. 10 year term fixed rate non recourse deals with 25-30 year amort is what I lend on for multifamily, industrial, hotels, retail, self storage, manufactured housing, office, etc. Let me know if you have any questions on CMBS and feel free to use me as a resource, happy to help in any way I can.

Do you have a financing plan for the property? I am a commercial real estate lender that focuses on CMBS originations. If you are interested in a 10 year fixed rate non recourse loan, 30 year amort, I can help provide pricing guidance and a quote. If you already have financing in place but have some queries, feel free to use me as a resource, happy to help in anyway I can.

I am a commercial real estate lender focussing on CMBS originations. You can expect to pay .5-1 point in closing costs. Minimum 25-30% down should be your target. And 30 year amort is not unreasonable. For multifamily, we will be okay with 30 year amort. Only for hotels, we are increasingly quoting 25 year amort due to pushback from B buyers. Our standard CMBS terms are 10 year fixed rate, 30 year amort. For CMBS, you want to be at a minimum $1.5-2MM loan amount. Even for agency CMBS (Freddie/Fannie), the minimum loan amount is $1MM. Below that, local banks will be your best bet but those will typically be recourse or partial recourse. CMBS loans are non recourse loans.

While your lack of commercial history experience might be a concern, in my cmbs world, that is not unusual. The property's financial performance, historicals, dscr, dy, rating agency execution, your net worth (atleast 100% the loan amount), liquidity (atleast 10% of the loan amount) is more crucial. 

Some general points about multifamily. 

- 30-50% expense ratio is typical. We underwrite expenses based on T-12 unless you can prove that the T-12 had major one time expenses. 

-Management fees is very different from the single family world. I mostly deal with 100+units. We underwrite 3% management fees while I have heard some of my residential buddies tell me that they underwrite 10% management fees. So, the more units you have, it looks like management fees dont increase linearly. The same can be said for overall expenses. 

-We underwrite $250/unit for replacement reserves and $300/unit or $150/bed for student housing. The dscr and dy we calculate will be based on NCF, so it takes into account replacement reserves. 

Let me know if you particularly have any Q's about financing, happy to be a resource and help in any way I can.