All Forum Posts by: Tim Milazzo

@Dulce Beltran - I wouldn't waste your time looking into SBA. Seems like that commenter missed the fact that you're talking about Multifamily or is confused about the SBA program - it is only for Owner-Occupied Commercial (like a retail store buying out their own building).

Fannie/Freddie could be a fit if you have the right net worth, liquidity, and credit, but as mentioned upline already neither agency likes an out-of-state buyer who doesn't have direct experience/ties to the market they are acquiring in, so likely not an option for commercial loan #1.

StackSource can arrange a CMBS (commercial mortgage back securities) loan for eligible commercial property investments. CMBS lending is typically a fit for loans $3 Million or greater, on stabilized office, industrial, retail, hospitality, or multi-family assets. Your StackSource capital advisor will be able to analyze your property to determine suitability for a CMBS loan. If so, you'll be able to compare both CMBS and non-securitized loan options.

CMBS loans are non-recourse (subject to industry standard "bad-boy" carve-outs), meaning the borrower is not responsible for the full loan amount out of pocket in the case of a default. This does not mean the loan sponsor cannot suffer a loss of equity on their investment.

One Loan Request - Quotes From Multiple CMBS Lenders

1. Submit One Loan Request

2. Multiple Lenders Review

3. Compare Loan Offers

StackSource CMBS Financing Options

Conduit Loans

Conduit loans are pooled with other commercial mortgages and then securitized and sold to bond investors.

SASB Loans

Single-asset, single-borrower (SASB) loans are a fit for much larger loan sizes, typically $100 Million or more.

Create Your Loan Request

StackSource is a tech-enabled commercial real estate loan platform. We connect investors who are developing or acquiring commercial properties with financing options like banks, insurance companies, and private lenders through an easy, transparent process. We’re taking the best of commercial mortgage brokerage and updating it for the 21st century. Learn more at StackSource.com.

StackSource can arrange a CMBS (commercial mortgage back securities) loan for eligible commercial property investments. CMBS lending is typically a fit for loans $3 Million or greater, on stabilized office, industrial, retail, hospitality, or multi-family assets. Your StackSource capital advisor will be able to analyze your property to determine suitability for a CMBS loan. If so, you'll be able to compare both CMBS and non-securitized loan options.

CMBS loans are non-recourse (subject to industry standard "bad-boy" carve-outs), meaning the borrower is not responsible for the full loan amount out of pocket in the case of a default. This does not mean the loan sponsor cannot suffer a loss of equity on their investment.

One Loan Request - Quotes From Multiple CMBS Lenders

1. Submit One Loan Request

2. Multiple Lenders Review

3. Compare Loan Offers

StackSource CMBS Financing Options

Conduit Loans

Conduit loans are pooled with other commercial mortgages and then securitized and sold to bond investors.

SASB Loans

Single-asset, single-borrower (SASB) loans are a fit for much larger loan sizes, typically $100 Million or more.

Create Your Loan Request

StackSource is a tech-enabled commercial real estate loan platform. We connect investors who are developing or acquiring commercial properties with financing options like banks, insurance companies, and private lenders through an easy, transparent process. We’re taking the best of commercial mortgage brokerage and updating it for the 21st century. Learn more at StackSource.com.

Hi Anthony,

There are a couple of situations that would support an interest-only loan option for multifamily. Three of the most common:

1. Short-term (bridge) loan from a private lender - if you're purchasing a property in need of a lot of love and have a solid track record, you can often find a bridge lender who will put up a 1-3 year interest-only loan. Rates vary, but we're seeing 7-10% right now.

2. Interest-only period from agency or bank - if a property is cash-flowing but has some upside, there are options where the first X years are interest-only, then switches over to amortizing.

3. Full-term I/O from CMBS - here the lender would need to see a stellar track record, large portfolio, and a fully stabilized property with strong cash flow. In that case, it's possible to get interest-only for the full term of a loan with great pricing. Note that the loan would be securitized and you'll be dealing with an independent servicer, and exiting out of the loan early wouldn't be simple or cheap.

Can you share more about the project you're looking to finance? Location, cash-flow, size?

- Tim

Hi Chris,

Here's my two cents on the situation. I also happen to live in the area!

- I would definitely advise financing the two separately, and the second property doesn't sound like you should be going with a bank right now. If you can add value to that second property by securing quality tenants for the apartments on one year leases, lock commercial tenants into longer term leases, and show that the property can cash flow well, you'll be able to refinance and cash out. If you lock into a longer bank loan now, that refinance would be more painful, as there would probably be a prepayment penalty. The best bet here might be going with an Interest Only bridge loan. There's a class of private lenders in between banks and hard money which provide these.

- I'm not sure what you're citing as LTV, which is usually displayed as a percentage, and calculated as Loan Amount / Property Value. Maybe you mean DSCR?

Would one commercial loan be able to cover both properties here? Sure. But I don't think that's ideal because they are in two very different financial states.

- Tim

Houston - is the property damaged? Is this a repositioning play? What does the Capex needed look like?

2000 Unit Multifamily - how many are occupied? What's the NOI or Cap Rate?

Brad's team - how much equity is being brought to the table? Do you have other assets in Texas? Have you asset managed multifamily at that scale? 

The answers to the above question will fork the answers in different directions.

If stabilized, strong track record, not much capex: insurance companies, Fannie/Freddie, major banks, HUD

If repair/transitional: Major bridge lenders, debt funds, certain banks

If no track record or not enough equity: good luck

I'll just piggyback to answer one of the questions, about where to find commercial listings. In addition to Loopnet, check out:

• CREXi
• Brevitas
  
• QuantumListing.com
  

Definitely the time for a bridge loan. If you can get traditional financing on the property now, you probably will regret it a year from now if you get a great commercial tenant, because you'll be stuck at a very low relative leverage point. I say "stuck" because your typical, traditional commercial mortgage will have a prepayment penalty if the rate is fixed, so refinancing isn't cheap or easy.

Close with an interest-only, no prepay bridge lender and then you'll have the time to lease up, and to refi, without stress.

Ditto @Salvatore Lentini - drop that loan broker like a bad habit. They shouldn't get paid until you get your loan.

I'll also add that there are now some newer online platforms for commercial loans that will charge you nothing, if they can get paid by the lender (not only bridge loans anymore). Otherwise, you shouldn't pay more than a point unless your loan is tiny (less than $500k).

90% won't happen from a local or regional bank. 75%, sure.

Someone already mentioned that Fannie/Freddie agency loans can go up to 80%, but there are a couple of requirements to hit:

- Net worth equal or greater than the loan value.

- 9+ months of liquid reserves to cover loan payments.

If you don't qualify for agency, or the loan amount is less than $1M, expect 70-75% LTV, 20-25 yr amortization from local banks. All other terms and the rates will be specific to the geography, the property's history, your financials and track record, and how good you are at negotiating commercial loan term sheets.