Posted by George on July 23, 2006 at 13:25:25:
All I can tell you is that I arranged a 20 year self amortizing loan on a property with a triple net lease and a national tenant with a very strong credit rating. Don’t know what’s possible with multi-family or others. Personally, with the low interest rates we’ve seen in recent years, I don’t understand why self amortized loans aren’t used more often to lock in the very desirable rates.
Need financing advice. - Posted by john
Posted by john on July 19, 2006 at 18:20:48:
I had a quote from a banker on the phone of 8 and 1/4 percent on an 800,000 loan with 200,000 down and a 25 year amoritazation ($1,000,000 purchase price). It’s a triple net lease property. He said that this comes out to $6,500 a month payment. The rate is fixed for 5 years, then it will adjust according to the market rate at that time. Does this sound like a reasonable loan in today’s market?
Re: Need financing advice. - Posted by john
Posted by john on July 20, 2006 at 17:15:56:
Let me try this again. I would like to know your genral opinion about financing. It’s a triplenet lease which means I don’t pay for taxes, insurance, or CAM. The property has a longterm private tenant in a 25 year lease.
My questions are about the financing of commercial real estate. How is it different from residential?
What is a typical term of fixed interest in this business is it 5 or 10 years over a 20 or 25 year
amortization? What are the going rates? I’m asking for some general info here, I realize every deal may be a little different, but can someone give me a summary of how most deals are structured with these kind of properties? Thanks.
Re: Need financing advice. - Posted by wes
Posted by wes on July 20, 2006 at 16:00:12:
Cannot see why you would need to pay over 8% and you could get 30 year amortizaton instead of 25 which would help monthly cashflow.
With interest rates the way they are (short term rates higher than long term), you could get a 10 year fixed rate for about the same as a 5 year rate. If you are looking longer term.
Be happy to offer a quote if you wish.
Re: Need financing advice. - Posted by Kisha
Posted by Kisha on July 20, 2006 at 15:19:16:
Email me in regards to your deal. I wanted to see which property you have chose to finance and possibly what you are looking to do to see if i can help you.Also, I can bring you a Single Tenant Triple Net Lease Properties along with funding in place $2 million and up.Feel free to contact me.
Re: Need financing advice. - Posted by Patrick S. Lawson
Posted by Patrick S. Lawson on July 20, 2006 at 12:54:27:
Looks high. What is the property type, occupancy, maint., etc?
Re: Need financing advice. - Posted by AsifInNJ
Posted by AsifInNJ on July 20, 2006 at 10:00:53:
It depends a lot on who the tenant is, how long the lease is for, how good the area is. I think you can get better help if you tell:
- Tenant details (credit, private, if private how big the tenant is)
- High level lease terms like length, options etc.
Re: Need financing advice. - Posted by George
Posted by George on July 21, 2006 at 01:17:38:
You can’t get the same terms for commercial that you can for residential because of all of the government and other supports in the system for residential loans. But with a solid national tenant, with a good credit rating, and a 25 year lease, I believe you can get pretty attractive terms, and a lot better than the terms you listed previously. If you want a 10 year loan with a balloon payment, you should be able to get a 10 year fixed rather than 5 years fixed and then adjustable. I believe you should at the very least be able to get 2 percent above the 10 year treasury as your loan amount, giving you a loan of a bit more than 7 percent with current rates. Your amortization can be 25 or 30 years. You should be able to get this type of loan from a conventional local or national savings and loan bank. Just shop around and tell them what you want. If they want the business, they will give you a decent deal. One final thing that isn’t conventional on this board. Hardly anyone in commercial gets self amortizing loans. If you think that you are going to hold this property for a long period of time, you can also get a self amortizing loan of 20 or 25 years. You can only do this with a very strong commercial tenant. I see interest rates being much higher in future years. That’s why I might consider this unconventional approach.
Re: Self Amortization - Posted by Dan WA
Posted by Dan WA on July 22, 2006 at 16:44:49:
George or anyone,
I’ve been doing some research on self amortization and I haven’t found much information. Would George and/or anyone else shed some light on a self-amortizing commercial loans? Can it only be applied to grade A NNN tenants or are there other applications such as multi-family?
Thank you for your support,