Investor · Member since 2018 · 260 posts · 74 votes
I have a very unofficial survey to conduct!
For those of you buying CRE right now, I'm very curious to hear the following:
1. Your property type. E.g. multi tenant industrial.
2. The lending terms you're seeing. E.g. 60% LTV, 6.75% interest, 5 year term, 30 year AM
3. What cap rate you consider "good"? E.g. 7 - 7.5%
4. What your expected COC return is with your underwriting? E.g. terms above yield 5.5% COC.
I'm struggling right now. Was stoked to find a property with a 7.5% cap but b/c of the lending terms, my cash on cash sucks. Do need to take tax savings into account though. $1 in my pocket would be better than paying a gazillion bucks in taxes...
My last deal was 8.5% cap NNN flex industrial. Loan rate was 6.25%. 25% down. 7.5% is a good cap rate as long as your financing is below 6.5%. My only metrics are it has to be a class A location (easy to rent) and at lease a 1% spread between cap rate and Loan rate. My financing was done through the standard (insurance company) as banks are becoming more conservative.
My last deal was 8.5% cap NNN flex industrial. Loan rate was 6.25%. 25% down. 7.5% is a good cap rate as long as your financing is below 6.5%. My only metrics are it has to be a class A location (easy to rent) and at lease a 1% spread between cap rate and Loan rate. My financing was done through the standard (insurance company) as banks are becoming more conservative.
My last deal was 8.5% cap NNN flex industrial. Loan rate was 6.25%. 25% down. 7.5% is a good cap rate as long as your financing is below 6.5%. My only metrics are it has to be a class A location (easy to rent) and at lease a 1% spread between cap rate and Loan rate. My financing was done through the standard (insurance company) as banks are becoming more conservative.
Wow tell me more! I have deal FOMO. ;) Where did you find an 8.5% cap and how? And 25% down is incredible even for insurance companies. My insurance companies are saying 35% down at a minimum. Would love to hear more.
The deal I'm looking at is a 7.5% cap rate and rates are at 7.25% with 50% down! No prepayment penalty though so I could refi if rates come down. 5-year term.
My last deal was 8.5% cap NNN flex industrial. Loan rate was 6.25%. 25% down. 7.5% is a good cap rate as long as your financing is below 6.5%. My only metrics are it has to be a class A location (easy to rent) and at lease a 1% spread between cap rate and Loan rate. My financing was done through the standard (insurance company) as banks are becoming more conservative.
Is it multi or single tenant industrial? We specialize in multi-tenant industrial as well. Would love a property with that cap rate!
I think I just got lucky. A friend forwarded me the listing. He just didn't have enough money to put into the deal to make it worthy for both of us so I stretched a little bit to do it myself. I'm always willing to partner on these deals especially since it was multi tenant and these type of units are the most in demand over any other asset class.
I think I just got lucky. A friend forwarded me the listing. He just didn't have enough money to put into the deal to make it worthy for both of us so I stretched a little bit to do it myself. I'm always willing to partner on these deals especially since it was multi tenant and these type of units are the most in demand over any other asset class.
That's awesome. I'm also just amazed at that interest rate and also the LTV! Haven't seen that anywhere.
I'm a big fan of using insurance companies for financing. There is no appraisal or fees after 5 years, just an automatic adjustment. Also if you wanted to sell the property the new owner can assume the loan. You also have flexibility on your adjustment period for the rate such as 3,5,7,10 etc. Only downside is they take a little longer to close the deal. When judging a property on the financials alone I like to insure there is a 1% spread between your cap rate and your loan rate and at least a 1.2 DSCR. Once that is covered then you know what a fair offer should be assuming there are no other capital variables.
I think I just got lucky. A friend forwarded me the listing. He just didn't have enough money to put into the deal to make it worthy for both of us so I stretched a little bit to do it myself. I'm always willing to partner on these deals especially since it was multi tenant and these type of units are the most in demand over any other asset class.
Love Flex Industrial. Thats my focus but in the Florida area. Originally from the DC area though. Nice find John.