Commercial DSCR Terms for Shopping Center Refi?

Question

Hi. I own a shopping center in Alabama. I have a very recent MAI certified appraisal of $1,345,000. It's currently 80% occupied and brings in $12,000 per month. I've owned the property for 3 years. I currently owe $520,000 and want to refi into a $1,000,000 DSCR loan. What kind of rate and terms should I expect?

Greg Scott · Answer

DSCR is a term normally used for single family. Single family has many other ways to qualify for a loan, so a DSCR loan is unique. These have become very popular lately in single family. Commercial loans have historically been based on DSCR. Since almost all of them are DSCR loans, it is not common to call them that, like it is something unusual.

Commercial loans are usually based on the corresponding treasury rate plus a spread. So, if you wanted a 10-year loan, first look at 10-year treasuries. The spread is the profit the lender wants to make over the treasuries. The spread will vary depending on the appetite for that type of commercial product at that time.

Erik Estrada · Answer

Hi Spencer,

I would recommend trying a local commercial bank first as this will help you secure favorable terms. If you are having difficulty, there are many national DSCR lenders that can help you finance this property. The rate and fees will be on the high side, however..

Andrew Postell · Answer

@Spencer Mann you have some good comments already. I'll add a couple of things here since it seems like you might be new here. We do want to help and LOVE new people. We were all new. This "Private Lending" forum is more for residential properties. Admittedly, almost ALL of Bigger Pockets is for residential...but the "multi-family" forum is a little more conducive to commercial lending. It won't be the same though. Gas Stations, Warehousing, Storage Facilities, and yes, even shopping centers are all true commercial. You would think they would be underwritten the same...but each does have it's own little nuance to it. You may get some responses here that are helpful, but I highly suggest networking on a local level for this. How do you know that a contractor is any good? An electrician? A title company? Anything? Even if they do have 20 years experience...how do you know really? And while nothing is foolproof the most consistent method of finding good vendors is relying on OTHER real estate investors that have worked with those vendors. This is why we network with other real estate investors - kind of like what you are doing here! We just need to do it locally.

So, let's try some local real estate meetup groups. Meetup.com is a good resource for those but some of the groups will also post here on Bigger Pockets Marketplace too. Even facebook might have some good local groups for you. Some of those facebook groups have thousands of members. The priority is consistent recommendations from active investors. Oh, eventbrite too. Facebook you can network virtually with. Make connections online. Meetup and Eventbrite and BP Marketplace - those are for in person networking. Don't be surprised if it's a little hard to find people in similar spaces as you are. Only 4% of Americans own two homes! And that's residential! Commercial, it's even more rare. Which is why we should be growing our network as best as we can. So, get out there and connect with some people in your state/town. You can certainly post this same question in the "Multifamily" forum - I just think the key is connecting with the right people locally for you.

Hope all of that makes sense. Thanks!

Mike Grudzien · Answer

i hope this works out for you.

Commercial DSCR Terms for Shopping Center Refi?

Commercial DSCR Terms for Shopping Center Refi?

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