All Forum Posts by: Andrew Beauchemin

@Russell Brazil I think those would be senior debt terms.  I typically see Mezz at 2nd position behind the senior note going higher up the stack, 80-85%+, with rates in the 12-14% range.

@Jacob Chaney You should run your numbers to come up with a blend of LP Equity & Mezz debt.  At smaller dollar amounts it may make more sense to give up more equity vs. taking mezz debt.

@Martin Ceja For an ideal lending scenario; i.e. a stabilized building, great borrower, primary market, etc. A Freddie/Fannie loan would likely offer the best rates. Right now, I'd expect 5/7/10 year term, 30 year amortization, rates in the mid-high 3%'s, non-recourse. Max leverage would be 80%, with rates improving at lower LTV.

Banks and credit unions are still offering strong rates on stabilized multifamily in the high-3's / low 4's, 75%+, 25-30am, burnoff or non-recourse, but may have less strict requirements than Agency

@Gannon Nikolich You should start putting together a package of information to give to lenders; including your new leases, personal financials, property information (taxes, insurance, recent repairs), etc.

Without knowing anything about the property, I'd wager that this is a deal for a local/regional bank. Start making some calls to lenders and/or brokers, and get multiple quotes. You should ask about terms such as interest rate, LTV, amortization, term, prepayment penalty, interest reserve, origination/underwriting fees, points, etc.

@Ben Smith A 30-year amortization is not uncommon for a commercial loan.

The term of the loan may be shorter (typically 5, 7, 10 years), which will have a balloon payment at the end of the term, but the payback structure can still be amortized over 30 years.

@Kelly M. I agree the terms look good, but that fee is ridiculous.  

I have had clients pay for appraisals up front, and maybe a $500 underwriting fee paid at execution of lender commitment, but $5000, nonrefundable, up front fee on a loan of this size is unheard of

@Mayer M. I have some proforma templates I can run your project through.

I agree with @Joseph Scorese that we're a bit overbuilt and due for a healthy correction in the near future.   Debt is tightening up on ground-up / for-sale products, I've gotten no's from my most aggressive hard money lenders on ground-up for-sale condo projects in the last few weeks.  Seems everyone is expecting a downturn in resi sale prices through 2020. 

Multifamily rentals are still a play in non-fringe areas and non-peak market rental rates.  If sponsor financials are strong, and you aren't pushing leverage, still lots of opportunity.

@Marquita Johnson I agree with @John Wijtenburg that a bridge-to-SBA loan would be a great option to explore.  Depending on the business and the level of rehab needed, some SBA lenders may even be able to bridge the construction themselves.

That being said, don't neglect exploring conventional loans with banks.  There are some strong options out there for owner-occupied properties, that may have less transactional fees than an SBA loan.

Consult your attorney on the LLC question - from a lending perspective, if both entities are guaranteeing the loan, and they're owned by the same principals, they should offer the same or very similar terms as if it was owned by one LLC.

It's unfortunately difficult to give you a refinance estimate without knowing anything about the real estate or the business.

@Bill Plymouth  Highly recommend Michael Adler, Law Office of Michael Adler; or Rachel Pritzker with Pritzker Law Group

@Henry Reyes  I've looked at a few larger multifamily deals in Milwaukee, Racine, & Madison areas; acting as a Commercial Mortgage broker.  Most Brokers will charge +/- 1% of the loan amount,  depending on your relationship and the difficulty of the deal.  They should always negotiate with the lender to lower their origination fee to accommodate the broker's fee.  

For a stabilized fixed-rate refi, start with Fannie/Freddie.  In addition, here are some other groups I've used:

@Nik Herrmann Let's connect, I'm always looking for new equity sources for multifamily & commercial deals in Philly area.  I have a few multifamily OZ deals that I'm funding right now (as a broker)