What are y'all getting for rates?

[Jacob D.]

In the Boston area, I was quoted at 7% for an investment property (25% down) conventional 30 year with 800 credit score and really good W2 income history. Anyone get cheaper than that recently?

[Jevon Shaw]

Most recent I got was 7.25% back in December. Would love to meet a lender who can beat that by a significant margin in these times. 

[Lien Vuong]

Try commercial - they're offering about 6% at the moment, no pre pay. 

[Sean Kelly-Rand]

@Jacob D. I agree with @Lien Vuong that if you go commercial (5yr fixed rate, 10yr term) you can get rates in the high-5's low 6's. 

I looked at purchasing a commercial office condo (not the favorite asset class today) and had quotes for 75% LTV at 5.8% and 5.4% for 65% leverage. If you are buying multifamily you can get lower rates especially if it's in a CRA area. (My brother is a debt broker so he scours the market of 50+ commercial banks for the best rates and you can find a good rate if you know the bank that want's to lend on that property or win your business as a client).

We're a non-bank lender (FixnFlip/Bridge) - our rates are 10.95%-11.95% for 12 months and that pretty much market these days (maybe even below market) - 9 months ago we were at 8.95% and even lower in some cases (rates have spiked in such a short time)! 

Feel free to reach out if I can give you more color.

[Colin Kelly-Rand]

@Jacob D. @Lien Vuong @Sean Kelly-Rand

I have closed a 6.125% on a RI 6 unit mixed-use last week - should be getting the same rate for the client for his next property in RI. I got 4 term sheets for him and one bank was particularly more aggressive. (Contacted about 40 banks).

Most local banks have a spread between 2% and 2.75% over the 5yr FHLB which is 4.54% today so I would expect rates between 6.54% and 7.29%. 

Part of the conversation is all lenders are predicting in 2-3 years you are refinancing - so negotiation is both on the rate today and structuring the deal (prepayments) so that its easier to refinance when rates fall.

Because lenders are predicting short term rates to rise more, its hard for them to decrease their spread, although they can. 

However, many bridge/construction loans are +1% over Prime - and prime is 7.75% , so rates for those products are around 8.75%. 

Three weeks ago RE SBL rates were down to around 5.5% for boston (top market) - but I think those are up to around 6% after the last fed increase.  

If either of you want me to find financing for you - I typically charge 50bps to 100bps at closing (on the loan amount). 

[Justin Hammerle]

@Jacob D. -  sounds about right; no reason to think they are going to do anything other than continue to rise.  I did hear some banks offering portfolio products in the 5s, not limited to commercial properties.  

[Colin Kelly-Rand]

@Justin Hammerle The 5s a recent quote? 

I was in Eastern bank yesterday and they were offering 3 Months CDs at 3.5%, and 6 months CDs at 4%. Point being, even portfolio lending cost of capital is way up. I saw a 5.5% rate from a portfolio lender recently, probably still holds, but it had a bunch of other strings attached (they didn't just want the loan). 

[Justin Hammerle]

@Colin Kelly-Rand - It was this month, I didn't get into the details of the terms but I would suspect as you said there is likely to be some take.

[Albert Bui]

Quote from @Jacob D.:

In the Boston area, I was quoted at 7% for an investment property (25% down) conventional 30 year with 800 credit score and really good W2 income history. Anyone get cheaper than that recently?

 If its Fannie Freddie Agency paper you'll be in the 7's for sure either lower or higher 7's with multiple pts/cost and especially more if its cash out refinance (this adjustment is .625-2 pts potentially) or if its 2-4 units (1 point more for this adjustment)

It just depends on what product you're pricing with, a local bank commercial porfolio product, an agency product, an interest only portfolio local lender, or other?

There are pros and cons to each. So long as it conforms to your investing goals and timeline you'll be solid.

@Carlos Valencia

[Albert Bui]

Quote from @Sean Kelly-Rand:

@Jacob D. I agree with @Lien Vuong that if you go commercial (5yr fixed rate, 10yr term) you can get rates in the high-5's low 6's. 

I looked at purchasing a commercial office condo (not the favorite asset class today) and had quotes for 75% LTV at 5.8% and 5.4% for 65% leverage. If you are buying multifamily you can get lower rates especially if it's in a CRA area. (My brother is a debt broker so he scours the market of 50+ commercial banks for the best rates and you can find a good rate if you know the bank that want's to lend on that property or win your business as a client).

We're a non-bank lender (FixnFlip/Bridge) - our rates are 10.95%-11.95% for 12 months and that pretty much market these days (maybe even below market) - 9 months ago we were at 8.95% and even lower in some cases (rates have spiked in such a short time)! 

Feel free to reach out if I can give you more color.

Yes but the darkside of commercial (it has pro's too) is that its DSCR based so if the going in cap or acquisition cap rate is not enough to service the current loan to the full LTV of 75-80% then what will happen is the loan proceeds (loan amount) will be reduced till it meets 1.25X which might mean your loan going from 75-80% LTV down to 50-60% LTV with lower "as is," cap rates. This means the buyer/investor will need to raise 15-25% more equity or down payment or be prepared for this eventuality.

The other dark side of commericial notes are:

- balloon terms that are 36-120 months terms but they're based on 25-30 year amortizations, after the term period is over the borrower has to prepare for refinance or complete payoff/renewal when the future is uncertain (both in values and in DSCR guidelines at that future time and future rates).

- prepay penalties sometimes on commercial notes

- convenants and warranties from the lender that may require annual financials and requalifications or financial metrics to be maintained otherwise the note could be considered in "technical default."

Technical defaults and convenants can be met and "cured," however its another thing to consider when looking at agency 1-4 unit paper that is done once its sold its gone and there are no annual checks versus local commercial portfolio options.

I like them both and use both but food for thought...of course.

@Matthew Kwan

@Carlos Valencia

[Sean Kelly-Rand]

@Albert Bui - fair points. I will say commercial is significantly more flexible though than you indicate and its a must once you own enough properties. We typically sign 10 year commercial deals with 10yr fixed rate and 25-30yr amortization. Pre-payments are an issue but if you are locking up for the long-term its a fair deal plus there is a fair amount of flexibility with commercial terms - you and the bank can work to make it fit the transaction. Also there is a value to shopping around as each bank prices differently. DSCR isn't always and issue if the bank understands how you can fund the delta if it doesn't cover day 1. And if you have investors so need to use an LLC/structure than it's really the only way to go.

@Colin Kelly-Rand

[Zach Wain]

What day did you get that quote and how many points?  Sometimes we get 3-4 different rate sheets a day, so you have to be super specific otherwise you really can not compare.  Rates have gone up 1.25% roughly the past 3 weeks, timing matters!

[Sage Souther]

Just closed on my 1st property on 2/17. The property is a duplex in Amesbury Massachusetts. 780ish credit score, 25% downpayment with 30-year ARM @ 6.8% total monthly payment $1,831

[Colin Kelly-Rand]

@Sage Souther

Congrats! How much rate shopping did you do before choosing your lender?

I am assuming you purchased as a owner-occupier? 

Cheers,
Colin 

[Sage Souther]

@Colin Kelly-Rand We got the best rate we could for the time. All in all we went through 2 applications to find the right bank to finance the property (it's in rough shape, barley financeable). We are implementing the BRRRR strategy so we aren't to concerned with the rate on this mortgage because we are looking to refinance out 8-12 months from now when all the work is completed. It's a non-owner-occupied investment property so we had to do 25% down on $210k pp

I’m doing a DIY construction video series on this project on my YouTube channel. Feel free to check it out and let me know what you think. Link is in my bio, Thanks for reading.