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Multifamily
A
general property type or building type classification characterized
by its usage for multifamily residential purposes. Typical subtypes
include: Low-Rise Garden Apartments, Mid-Rise Apartments, High-Rise
Apartments, Student Housing, Military Housing, Townhouse style,
Co-op, Other.
Multifamily (5+
Units) (Condo / Townhouse Style, Garden Apartments, Mid-Rise
to High-Rise Apartments, Military Housing, Student Housing, Co-Op, Other
Apartments)
Multi-family
Property
A
general property type or building type classification characterized
by its usage for multifamily residential purposes. Typical subtypes
include: Low-Rise Garden Apartments, Mid-Rise Apartments, High-Rise
Apartments, Student Housing, Military Housing, Townhouse style,
Co-op, Other.
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Low-Rise
Garden Apts.
A
Multifamily subtype; a one-, two- or three-story apartment building
or development with 5 or more apartments characterized by a garden-like
setting and its location in a town or unincorporated developed area
in a close proximity to a city. Suburbs, largely residential, are often
dependent on the city for employment and support services; generally
characterized by low-density development relative to the city; usually
one to three story structures in a suburban or rural-urban fringe development.
Mid
Rise Apts.
A
Multifamily subtype; a four- or more story apartment building or development;
typically elevator-serviced.
Townhouse
Style
A
Multifamily subtype; a one-, two- or three-story apartment dwelling;
typically a row house on a small lot which has exterior limits common
to other similar units. Title to the unit and its lot is vested in the
individual buyer with a fractional interest in common areas, if any.
Student
Housing
A
Multifamily subtype; a multifamily or multi-unit dwelling primarily
occupied by students (e.g. college students).
Student
Housing (Building Info.)
Identifies
whether the property is occupied by students. In commercial underwriting,
properties that are occupied by students may experience seasonal variations
of vacancy and rental income.
Corporate
Housing (Building Info.)
Identifies
whether the multifamily property is occupied by corporate tenants. In
multifamily underwriting, clauses may be included in leases that allow
the tenant to terminate the lease without penalty if and when the tenant
is transferred to another location.
Military
Housing
A
Multifamily subtype; a multifamily or multi-unit dwelling primarily
occupied by military personnel; leases often contain a clause which
allows the tenant to terminate the lease without penalty if and when
the tenant is transferred to another location.
Military
Housing (Building Info.)
Identifies
whether the property is occupied by military personnel. In commercial
underwriting, properties that are occupied by military personnel may
experience variations of vacancy and rental income. In multifamily underwriting,
clauses may be included in leases that allow the tenant to terminate
the lease without penalty if and when the tenant is transferred to another
location. Demographically, areas exhibiting poor occupancies, low rents,
plant or military base closings, or low sales may result in lower appraised
values.
Similar Residential Surrounding Land Use
Identifies
the general land use of the surrounding and/or adjacent properties in
comparison to the collateral property. Similar Residential includes
residential dwellings similar to the collateral property.
Multi-family
Property - Class A (Building Info.)
Properties
are above average in terms of design, construction and finish; command
the highest rental rates; have a superior location in terms of desirability
and/or accessibility; and generally are professionally managed by national
or large regional management companies.
Multi-family
Property - Class B (Building Info.)
Properties
frequently do not possess design and finish reflective of current standards
and preferences; construction is adequate; command average rental rates;
generally are well- maintained by national or regional management companies;
and unit sizes are usually larger than current standards.
Multi-family
Property - Class C (Building Info.)
Properties
provide functional housing; exhibit some level of deferred maintenance;
command below average rental rates; usually located in less desirable
areas; generally managed by smaller, local property management companies;
tenants provide a less stable income stream to property owners than
Class A and B tenants.
Lower Scale Residential/Retail Surrounding Land Use
Identifies
the general land use of the surrounding and/or adjacent properties in
comparison to the collateral property. Lower Scale Retail includes retail
properties with a lower-scale use as compared to the collateral property
(e.g. a neighborhood strip center would be a lower-scale use as compared
to a regional mall).
Below
are typical issues and required calculations we address for each type
of commercial property.
Multifamily
Financing (5+ Units)
Best Rates are associated with: Properties with >1.20 DSCR, <80%
LTV, <5% vacancy, appropriate Cap Ex reserves
Issues:
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Spreads
are typically lower for properties exhibiting a stabilized Trailing
12-24 Month Net Cash Flow
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Net
Cash Flow calculations include Replacement Reserves ($250-$300/unit)
-
Lenders may reconcile property value using the Direct Capitalization
Approach on NOI and NCF
General
Required Calculations: (we
do these calculations for you)
Rent
Roll illustrating
in-place occupancy and Potential Gross Income
Effective Gross Income - Potential Gross Income minus the greater
of underwritten or market vacancy
Net Operating Income - EGI minus operating expenses
Net Cash Flow - NOI minus Capital Expenditures
Debt Service Coverage Ratio - NOI divided by Annual Debt Service
Cap Rate - should be applied to the stabilized income stream
to estimate direct capitalized value to support loan request
For
Definitions of Commercial property types etc...
(see Commercial Glossary)
Commercial
property loan rates are at all time low.
March 01, 2006 - National Average on a $1,000,000
loan amount,
amortized at 25 years.
-
Fixed rates are based on a 10-Year fixed rate term.
-
Fixed rates reflect conduit lenders and
-
Variable rates reflect portfolio lenders.
Multi-Family
Financing Permanent Loan Amounts - $25,000 - $1
Billion
- Fixed
Rate Retail Property Loans 5.51
- 8.10%
- Variable
Rate Loans for Retail Properties 4.66
- 6.25%
Colorado
Rates remain below the above National Avg.
See our rate page for all markets effecting
rates
Commercial mortgage lenders typically require specific loan level data
about a property in order to analyze the underwriting risk, prepare a
loan quote, and ultimately fund a loan. Mortgage brokers are a primary
source of commercial loan originations today. As a result, lenders' expectations
regarding the level of reporting, analysis and overall quality of the
origination are increasing.
Unfortunately,
there are many brokers who can't obtain financing for commercial properties
because they use a residential loan application to submit
to lenders
- BIG MISTAKE !
See Example Loan Package Extracts
Unlike
Residential financing where the Borrower must qualify for the
mortgage product; Commercial financing differs whereby
the Property must qualify (not the borrower).
How MTG Brokers Corp. Gets You the Best Rate for Your Commercial
Property
Commercial
mortgage rates are commonly based on the 10-Year US Treasury yield
plus a lender Margin/Spread.
The interest Rate Index change is based upon market and trading conditions,
while spreads are influenced by loan/property factors - primarily
Debt Service Coverage and Loan To Value.
Property that demonstrates a high DSCR and low LTV will likely command
a lower interest rate.
MTG addresses DSCR/LTV issues via calculations to analyze reserves,
fees and other lender underwriting constraints that can impact a properties
Net Cash Flow and therefore, the overall interest rate and loan pricing
at the time of your loan origination.
This is where others fail to obtain you a lender commitment and why we
don’t collect any fees until after an offer
is submitted by a lender to you “for your approval”
(Typically, A National, Regional or Colorado Lender You Know and Trust
!)
Commonly
Required Property Data and Format
While loan
submission requirements may vary among lenders, most lenders request the
inclusion of the following core loan data:
General
property and building description
Current
rent roll to reflect lease start/end dates, square footage or unit type,
contract rent, rent escalations, reimbursement issues, and estimated market
rent
Property
income and expense worksheet including calculations for net operating
income (NOI) using at least two historical years of income and expense
Calculation
and support of normalized net cash flow (NCF) including appropriate reserves
based on property type (e.g., vacancy & collection Loss, management,
capital expenditures, tenant improvement costs, leasing commission costs
(TILC)
Reconciliation
of direct capitalized value to purchase price
Loan
amount constrained by maximum loan to value (LTV) and debt service coverage
ratio (DSCR)
For
a Retail Commercial Loan (Click Here)
Construction, Purchase, Refinance, Bridge,
Hard Money
Or
Visit One of These Pages
Office
Building Commercial property Loan Rates and Financing Info.
Office
Includes: Central Business District (CBD) Office, Suburban Garden Office,
Suburban High Rise Office, Medical Office, Other Office, Doctor Office
(for patients requiring bed space - Choose Health Care)
Retail
Commercial property Loan Rates and Financing Info.
Retail Properties Include: Grocery, Strip Center, Mall,
Outlet Center, and Specialty Center (Car Wash, Golf Course, Auto Repair,
Dry Cleaners, Cemeteries.....), etc...
Industrial
Warehouse Commercial property Loan Rates and Financing
Info.
Industrial and Warehouse
include: Warehouse with Office, R & D, Manufacturing, Flex
Space, etc...
Multifamily
Commercial property Loan Rates and Financing Info.
Multi Family: Apartments, Condos, Townhomes, Military and Student
Housing, Community Developments, etc...
Lodging,
Hotel, Motel Commercial property Loan Rates and Financing Info.
Hotel Include all Lodging, Motel, Economy, Luxury,
Resort, Extended Stay, etc...
Mobile
Home Parks Commercial property Loan Rates and Financing Info.
Mobile Home Parks: RV and other Pad rental space
Healthcare
Commercial property Loan Rates and Financing Info.
Health Care: Nursing Home, Cognitive Care, Assisted Living, Hospitals,
etc...
Self
Storage Units Commercial property Loan Rates and Financing Info.
Self Storage (Mini-Storage, Climate Controlled / Refrigerated Storage,
Yard Storage, Other Storage)
Mixed-Use
Commercial property Loan Rates and Financing Info.
Mixed-Use: A combination of usually two of the following: Office,
Retail, Hotel, Multifamily, Industrial
Including:
Community Development & Financing
Agricultural Use Property
Rural
Area Lending
Land Financing
for
other available financing options - Please see:
Hard
Money
Please Visit
Bridge Loans
for for the development of new commercial properties, or the renovation
and repositioning of existing properties, for both pre-leased and speculative
development.
For Commercial Mortgage industry...
see our page on CMBS (Commercial
Mortgage Backed Securities)
2nd mortgages not allowed...we show a way around this
see Mezzanine Loans
...for Commercial Mortgage Loan Financing
How to get a Junior Lien (similar to second mortgage)
1
- 4 Unit Financing (Typical Bank Loan Products for Investors),
and 2nd home financing.
Fix-N-Flip
for 1-19 unit investment financing
Investment_Specials
Also see Balloon Mortgage for
Variable
Rate & Cap Rate.
Please
see the Commercial Only Glossary
(see Commercial Glossary)
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