All Forum Posts by: Andrew Beauchemin

@Tyler Blackwell Yes, 80 is certainly possible, I just got terms for 85% from a private money lender yesterday.  This specific quote required multiple reserve escrows.

Local & regional Banks will probably cap at 75/80, agency 80% (in primary markets), some credit unions & private money 80/85

This is assuming both an excellent property & sponsor financials. 

Just be sure you're underwriting to withstand market volatility using this amount of leverage.  

@Rosanna Tran  Looks like they're a broker,  Which means they only get paid when they close.  I would not pay higher than 1% for a broker fee (I'm saying this as a broker myself)

Agreed with @Chris Mason you should not pay any up front fees.

@Rosanna Tran

I would be skeptical of that 1% application deposit & 1% commitment deposit 

These guys seem very points-heavy.  1.5% origination for a lender is a lot.  7500 attorney not bad.

Rate seems great, but keep an eye out for other important clauses: i.e. the prepayment penalties, recourse, 

Who is the lender? (local bank, private money, etc.?) Do you have any references for them?

Happy to review the offer in detail with you

@Matt Borgeson Normally Freddie is a fantastic option for small commercial deals. Unfortunately their program has a $1M minimum and it wouldn't work here.

Good luck @Manu Kaina IV - keep us posted

@Manu Kaina IV Local banks should love these deals.

If you can't find local banks any online, try calling some similar-type neighboring properties' owners and see who they use to finance.

@Ashley Wilson I broker these kinds of transactions for a living.  There are plenty of equity groups out there, but they don't all like to advertise publicly.  I'd say maybe 1/3 of my guys don't even have a website (let alone a website suitable for 2019 standards!).  Every group has a different appetite, and it can be a challenge to match the right group with your specific type of deal.  Don't be afraid to hit the phones, most of my leads come through warm referrals.

@Jonathan Seda

It's definitely possible to package into a blanket loan, I agree that a local / regional bank is your best bet.  Keep in mind that once packaged, it may be difficult / costly to dispose individual assets prior to the balloon.  

With a commercial loan you'll also be working with potentially higher interest rates, shorter terms, and potentially higher transaction fees.  There is also less lenience on self-managing, and you'll want to have air-tight financial docs.

My recommendation is to weigh the headache of juggling multiple individual residential loans vs. the extra cost of a commercial loan, and decide if it is worth it to you.

@Ante Bolling Either option could work, you'll have to run the numbers in both scenarios and see. Without knowing anything about the deal; generally I'd say hard money will be more expensive than a HELOC. Maybe use the HELOC as a large down payment toward a low-leverage bridge loan?

I would also consider just selling to another developer and taking the quick profits; with the market as hot as it is, there are a lot of developers & outside investors willing to pay top-dollar for off-market development deals in Philly.

@Todd Nurnberger No change to minimum loan size, just increase in the maximum as far as I can tell. More details are spelled out in the official memo:

https://www.fanniemae.com/content/announcement/lm1...

@Seth Williams I'm sorry, I'm not sure what you're referencing for "supplemental financing." Could you please clarify?

@Nick Schoch Freddie has been more aggressive on pricing recently, but I try to pay attention to both.  This increase could be a signal that Fannie may be willing to get more competitive.