Davidson, NC · Member since 2015 · 34 posts · 6 votes
I'm getting ready to redo a 5/20 commercial balloon note, currently with a local bank (5 year note is due). This is for a triplex in the Charlotte area. Can anyone tell me what kind of rates I should expect, what is being offered by the local banks? What is the best financing you have seen lately?
Real Estate Agent · Charlotte, NC · Member since 2013 · 16 posts · 7 votes
9y
@Paul Stern@Mohan Dag I spoke with a bank about a commercial loan about a month ago in Charlotte. He gave me 5.5% for 15yrs with 5 yr balloon and up 85% LTV. First bank Ive ever spoken to about a commercial loan, so I'm happy to see you bring this up and what you have found. I have another bank I am going to speak with this week and hopefully find something a little more favorable.
Investor · Bettendorf, IA · Member since 2015 · 33 posts · 9 votes
11y
I am looking now for two 6-units on a single property. Verbal commitments from local banks in the Midwest are 4.0-4.25. Some of my colleagues are telling me they have gotten 3.75-3.9 for larger MF deals recently. 5/20 with 75-80% ltv. I should have 3-4 commitments in the next week and can update my post with that.
I'm getting ready to redo a 5/20 commercial balloon note, currently with a local bank (5 year note is due). This is for a triplex in the Charlotte area. Can anyone tell me what kind of rates I should expect, what is being offered by the local banks? What is the best financing you have seen lately?
Is there a reason you have a commercial loan on a triplex? We own a triplex and 3 fourplexes and have conventional loans on all of them. We bought a fourplex a couple months ago in CO and got a 30 year fixed loan with a 4.875% rate.
Davidson, NC · Member since 2015 · 34 posts · 6 votes
11y
Good question! I should probably post the answer as a cautionary tale...I would LOVE to finance this with Fannie Mae but....
We tried to refi this property with the FNMA 5-10 properties program a couple of years back. I was going through a local broker who was working with a couple of lenders who do FNMA 5-10 loans. Everything was great until the appraisal came back. The appraisal value was good, but the lender rejected the loan becuse the appraiser had used duplexes as comps, rather than triplexes. The fact of the matter is that there are very few triplexes in the known area--probably within a 5 or 10 mile radius--and none that had sold within the last 6-12 months as required by FNMA. The entity wanting "triplex comps" was the lender--not FNMA; I think they were still a little skittish, erring ridiculously to the cautious side after the crash. They didn't even ask the appraiser to go back and try to find triplex comps; they just said no.
After going back and forth with the broker, we decided it wasn't worth taking another chance with a different lender, paying for another appraisal only to get the same sort of outcome. So we decided we would stick with the commercial note.
I'm hoping the commercial rates are a little better than they were 5 years ago.
I am looking now for two 6-units on a single property. Verbal commitments from local banks in the Midwest are 4.0-4.25. Some of my colleagues are telling me they have gotten 3.75-3.9 for larger MF deals recently. 5/20 with 75-80% ltv. I should have 3-4 commitments in the next week and can update my post with that.
Good question! I should probably post the answer as a cautionary tale...I would LOVE to finance this with Fannie Mae but....
We tried to refi this property with the FNMA 5-10 properties program a couple of years back. I was going through a local broker who was working with a couple of lenders who do FNMA 5-10 loans. Everything was great until the appraisal came back. The appraisal value was good, but the lender rejected the loan becuse the appraiser had used duplexes as comps, rather than triplexes. The fact of the matter is that there are very few triplexes in the known area--probably within a 5 or 10 mile radius--and none that had sold within the last 6-12 months as required by FNMA. The entity wanting "triplex comps" was the lender--not FNMA; I think they were still a little skittish, erring ridiculously to the cautious side after the crash. They didn't even ask the appraiser to go back and try to find triplex comps; they just said no.
After going back and forth with the broker, we decided it wasn't worth taking another chance with a different lender, paying for another appraisal only to get the same sort of outcome. So we decided we would stick with the commercial note.
I'm hoping the commercial rates are a little better than they were 5 years ago.
Oh, interesting, I figured there had to be a reason! Hmm, well, with how low rates are right now, it might be worth looking into to see if you could go conventional now and lock in a low rate. If I were you, I'd check to see if any triplexes have sold in the past year, or ask a mortgage broker if they can get you a fixed loan now. Some mortgage brokers have access to quite a variety of lenders, all with different requirements. Things have changed in the last 5 years, so you might have more options now. Good luck!
Davidson, NC · Member since 2015 · 34 posts · 6 votes
11y
Wow @Paul Stern that is so much better than what I am finding here my area. The lowest so far is 5.25 on a 5/15. The good thing about that loan they are offering is that it is fixed for the first 5 years, then converts to ARM for the remaining 10. That's better than what I've had up to now, because the ones I have now are balloons that have to be re-underwritten (including appraisals, finance fees, paperwork, etc) at the end of the 5 years.
I believe I saw someone else in a different post mentioning a rate in the 4's. Why am I not finding that kind of rate? Is it my region, am I not looking hard enough or not looking in the right places?
Do you use the banks' offers as negotiating power to try to get a better deal? I mean do you go to one and say "XYZ Bank is offering 4.5%, can you do better?" I have not done that but am wondering if that would be a good strategy.
Could be your region. Charlotte is a banking center...I try to stay away from the bigger banks. I generally use smaller, local banks. I too am using commercial loans with a 5 yr balloon. I have not used one bank's offer against another. I do have a preference, so once all the offers are in I will give them a shot at matching the lowest. I suppose that might be a strategy to have the banks compete with one another.
Charlotte, NC · Member since 2016 · 42 posts · 7 votes
9y
Paul Stern
Hi Paul, I am in the same situation working with a commercial lender. My best bet is 15 amort with 7yr balloon at 4.5ish for a duplex investment property. Can you please recommend ones that offer better rates around in Charlotte?
Real Estate Agent · Charlotte, NC · Member since 2013 · 16 posts · 7 votes
9y
@Paul Stern@Mohan Dag I spoke with a bank about a commercial loan about a month ago in Charlotte. He gave me 5.5% for 15yrs with 5 yr balloon and up 85% LTV. First bank Ive ever spoken to about a commercial loan, so I'm happy to see you bring this up and what you have found. I have another bank I am going to speak with this week and hopefully find something a little more favorable.
Charlotte, NC · Member since 2016 · 42 posts · 7 votes
9y
Hi Emery Johnston , thanks for your response. Please do let me know what you find out. I will be glad to share my contacts as well. I am looking for properties multiplexes and SFR s but nothing around the city with over 1% rule. Where are you finding yours?
Rental Property Investor · Charlotte, NC · Member since 2013 · 491 posts · 253 votes
7y
@Cliff T. - We closed our loan the end of Sept (2018) so rates are probably going to be at least 0.5% higher I might imagine, but here are some of our details.
Commercial Retail Single Tenant
under $1M with 80% LTV
5yr / 25yr
4.75%
Truliant Federal Credit Union
I know there were restrictions on the location of the property (had to be in their banking footprint), but if you are looking in the Charlotte area, that won't be a problem.