CRE Cash out refi on long held, LONG term tenant, looking for 25-30 year term

San Jose, California
Commercial Real Estate Investing
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CRE Cash out refi on long held, LONG term tenant, looking for 25-30 year term

Shelly Glennon
Member since 2024 · 3 posts · 4 votes

Hi, I'm new to BP forums, but been listening/reading for a few years. We have a family partnership that holds some commercial properties (light industrial) and I am looking to help resolve some family disagreements by finding a cash out refi option. The property has been owned outright for over 70 years, has had the same tenant over 50 years (a utility company), and we are looking at taking out around 40% LTV, and the mortgage payments would be covered 2-3x by the rental income, so very stable, safe lending situation.

Based on my research so far it seems the most easy to find CRE mortgages are short term (up to 10 years, though amortized 25-30), but I have also seen people repeatedly state that you CAN find longer term CRE loans. I will continue digging around for those lenders myself, but figured this would be a perfect forum to ask for advice. Thanks!

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    2y

    Our happy little database has 750 lenders in it. Local credit unions, big 5 banks, regional, everything in between. So while I can't claim to speak for every financial institution out there, it's a very broad survey, finding an option not contained there might involve making quite a few phone calls.

    When I see 30 year fixed, 30 year amortization, 30 year maturity (basically, identical terms to a consumer-friendly kid-gloves home loan), which does in fact pop up if I specifically search for it, it's almost always at a rather high interest rate, and the borrower doesn't opt for it. I'll throw it out there as an option, knowing that no one is really going to take it.

    Your proposed transaction is low leverage, so very good terms should be available, but FDRs New Deal in the 1930s (which created the kid-friendly home loan ecosystem -- home loans commonly had 10 year balloon payments before that, even if you put 50% down) was only for homes, not for CRE. Outside of the 30yf that's somewhat unlikely to happen, you should be able to cherry pick from several options in terms of PPP (length and severity), fees, fixed period, etc. And FYI not everyone is going for the 10 year fixed period, some people are saying "I'd love it fixed for only 3 years, I think rates are going to be drop, and it'd be great if my rate dropped automagically without refinancing."

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  • David Harlor
    Member since 2023 · 16 posts · 1 vote
    2y

    I am an industrial mortgage broker and I would be happy to walk you through available programs and pricing.

    You said this is a single, sticky tenant? 

    Depending on the size of the loan this might be a good fit for LifeCo money.

    What market is this in?

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  • Simmy AhluwaliaPro Member
    Lender · Atlanta, GA · Member since 2015 · 1k+ posts · 200 votes
    2y

    @Shelly Glennon - we do have an option for a 30 year fixed, fully  amortized loan.  Of course, I would have to analyze all of your numbers first.  Feel free to reach out.

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  • Erik EstradaBusiness Member
    Lender · Los Angeles, CA · Member since 2022 · 7k+ posts · 1k+ votes
    2y

    You can get a transitional 30 Yr fixed on a commercial property. But as the previous poster stated, the rate will be high 

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