All Forum Posts by: Eric Schleif

Check with your local lender. Most banks/lenders will want the LLC to be a single asset entity or SAE on a standard commercial deal. It gets complicated for both you and the lender if an LLC has multiple properties. The only time I see more than one property under an LLC is in 2 instances:

1. On portfolio deals where all properties are underwritten separately and cross-collateralized or as an I saw someone mention that weren't able to sell one of the properties in their portfolio loan. That's true most of the time as standard lending terms won't allow it, but you can negotiate having the lender offer release provisions in the loan documents that would allow to sell one or more properties in a blanket loan. 

2. As a one off where you form a LLC and take separate loans on each property under the LLC allowing you flexibility to sell one of the properties. Typically you close all the loans at the same time. But there was language in the loan docs that would not allow the LLC to purchase any additional collateral.

Bottom line, most lenders won't want more than one property in LLC because if another asset in the LLC if you default on one of the assets then that bank/lender can force a foreclosure and all assets in the LLC are going be part of the foreclosure.

Yeah I wouldn't say they're back. 275 - 300 bps over the treasury is not all that appealing. You'd get much better pricing going the agency route on multi-family properties. Commercial Office and Retail financing gets trickier as CMBS was a huge market for these assets and pricing and had pricing below 200 bps on the spreads before 2016.

Are you using a bank for financing? If so, there will be many legal docs to review and the bank will require that have an attorney review the docs, attend the closing, etc.

Yes it's your title policy. You'll get one and the bank that gave you the mortgage will get one. Usually your attorney handles that aspect of the closing and will keep it in his files.

Hi Seth, What size deals as you looking at on the multi-family/commercial side? I'm assuming they would be in or around Michigan. Thanks

Just a heads up, if you're being priced at 350 over the 5 year (which is a big spread in my opinion) with a floor rate of 4.75%, then your rate, if you closed today, is about 4.86%. 

I can't remember the last time I had a client take a renewal option on a loan. Like others have said before me, your situation will be different 5 years down the road with increased equity, increased rents, etc. and you'll most likely find it more attractive to refinance than take the option.

Most of the time when lenders/banks refer to lending at 80% LTV it's understood that they'll lend at the lessor of 80% of the purchase price or the appraised value. The idea is that you'll have 20% skin in the game.

Russell Brazil makes a good point in his post. Although I guess I'm biased since I work for a commercial brokerage. But all joking aside, a good mortgage broker will be able to match you up with the best banks based upon the terms you want/require. They will also have special pricing depending on how large of an outfit the brokerage is and they will be there every step of the way to make sure they can deal closes. The most important part of my job is execution. After all, we don't get paid until the deal closes. Clients sometimes forget how useful we are until there's a speed bump in the road or something makes the deal go sideways. With that being said, there's no reason you can't reach out the the credit union where you have an existing relationship. Feel them out and see what products they have and what kind of terms they can offer. Also call a good broker and see what they can bring to the table. Just be sure to upfront with them and tell them you already went to the one credit union. Good luck.

Someone else was asking about them earlier today. They were asking for upfront origination fees and offering unusually low interest rates. I'd be very careful. 

I'd be careful. 4% seems awfully low for private money and origination fees are typically paid at the loan closing, not before.