Interest rate for commercial mortgage?

Question

Can someone please give me a rough estimate of what interest rate I should expect to pay for a 16-unit apartment complex? I would prefer a 30 year fixed loan, but I'm not sure what is typical for commercial. I have 790+ credit score and would be able to pay a 30% down payment. Cap rate is ~10%. I'm not sure what other info is needed.

Paul Kestenbaum · Answer

[SOLICITATION REMOVED] 10 Year Fixed Rate @ 6.06%, & with at least a 25 Year Amort.

Darryl Dahlen · Answer

There aren't any unit restrictions as they are more focused on the loan amount. It varies by lender since it's their money on the line, but most have a loan minimum of 1.5-2M, and cap out around 17M or so.

Here is some information taken directly from my lender's program sheet to give you some more details.

Eligible Projects:
Existing multifamily projects more than three years old.  Three years is calculated from the date of issuance of the final certificate of occupancy to the date the Firm Commitment application is submitted for FHA mortgage insurance.
Minor repairs and replacements are allowed and are payable from mortgage proceeds.  Such repairs cannot exceed 15% of the projectâ€™s replacement cost after repairs or $6,500 times the applicable high cost factor on a per unit basis.  Additionally, no more than one major building system may be replaced, i.e., roof structures, HVAC systems, elevators, etc. Appliances and life-safety systems and equipment are exempt from these limits.

Commercial Space:
Commercial space is limited to 20% of the net rentable area of the project and 20% of the total effective gross project income.

Acquisitions:  The mortgage amount is limited to the lowest of:
1)85% of appraised value
2)85% of certifiable transaction cost.
3)85% of net income capitalized by loan constant (minimum 1.17 debt service coverage)	
4)Statutory per unit loan limits established by HUD

Refinancing:  The mortgage amount is limited to the lowest of:
1)85% of appraised value
2)The greater of:
	a)  100% of certifiable transaction costs
	b)  80% of appraised value
3)85% of net income capitalized by loan constant
4)Statutory per unit loan limits established by HUD

Mariah Jeffery · Answer

What is typically the smallest # of units HUD will lot at? Are there any other requirements for the HUD loan?

Darryl Dahlen · Answer

I don't know as you can get a 30 year fixed these days. If you can, run with it. My lenders are offering 5-10 year loans with 20-25 year amortizations.
HUD can offer you a 35 year loan, but I suspect a 16 unit isn't large enough for them to look at.

Wayne Qualls · Answer

Mariah,
                    
                    Typically on apartments the quote would be the "10 Tear U.S. Treasury" plus a margin of 2% to 2.5%. The T Bill was running around 3.76 the last time I checked this week.
                    
                    3.76 + 2.0% = 5.76% - 30 year Fixed Rates (No Balloons)
                    3.76 + 2.5% = 6.26% - 30 year Fixed Rates (No Balloons)
                    
                    Non Recourse and Assumable Loans
                    
                    I hope this was helpful.
                    
                    [SOLICITATION REMOVED]
                    
                    [PHONE NUMBER REMOVED]
                    
                    Wayne Qualls

Jeffrey K. · Answer

I am not getting anything better than a three year arm in the sevens