All Forum Posts by: Conor Freeman

That is going to vary from bank to bank. There are lenders who rely heavily on your last 3 years of returns. There are also some who take a more business-like approach and will look at the asset, the cash-flow and the leverage, which would mitigate weaker tax returns. Those lenders will want to see liquidity, CRE or RE experience and decent equity brought into the deal.

As long as "closing costs" include 3rd parties and appraisal that sounds about right. The 15yr amortization is going to make your payments pretty steep and cut into your NOI, I would look for a 25 or 30 year amortization. I'm seeing multifamily priced lower than 5% as well. You should shop around a bit.

Depending on the quality of asset you could qualify for a small balance agency loan. I quoted an agency multifamily deal in Los Gatos CA today at 75%LTV ($900,000 loan amount):

3.95%   15year term / 30 year am

4.10%   20 year term / 30 year am

4.45%   30 year term / 30 year am

You would be considered owner-user and not an anchor tenant in your own building as long as you occupy more than 50% of the property.

From a lending standpoint: There are a lot of financing options through either an SBA loan (with a bank) or an owner-user conventional loan through a bank. SBA can go up to 90% LTV depending on the asset. SBA loans will vary from bank to bank.

We are closing a bridge loan in Kapa'a this week. From my experience, local banks/lenders would be the best option in for financing in the state. 

Bank's who use prime as their index will have very little movement. Like others have said, it will vary bank to bank, and asset class to asset class. Fannie Mae and CMBS firms base their rates off the 10-Year (for now) and their rate typically adjusts weekly. Freddie Mac sees daily rate fluctuation. Those firms are typically all in line with each other within about 20bps, and have varying appetites on deals. PM me if you have any questions on non-bank lending.

@Jim Wilder I would use a 30 year amortization schedule. You're likely going to see 5, 10 or 15 year terms set over 30 instead of 20. I used a higher interest rate and see your DCSR much higher than your calculations. PM me if you want to discuss. Looks like a nice deal.