Bank Loans

Not all bank loans are created equal. Whenever you are planning to finance your apartment building or commercial real estate utilizing your regional financial institution, you might assume there is very little need to work with an intermediator. Think again!

Every bank has its own niche, particularly when you are referring to the distinctions among community banks, credit unions, regional banks, and national institutions. A number of banks provide fully amortizing loans, others cap amortizations at 20 years. Your preferred bank might cap leverage at 70% whereas another bank might be comfortable funding multifamily properties at 80%. Perhaps you are in need of a floating rate bridge loan, a commercial mortgage without any prepayment penalty such as yield maintenance or defeasance. Maybe you have a few documentation restrictions.

With regard to the previously mentioned factors, you should collaborate with an intermediary who has dozens of banking connections – someone who is able to take advantage of those partnerships to your advantage.

Sample Bank Terms For Apartment and Commercial Property

Size:                          $2 million to more than $50 million

Term:                         Up to 30 years

Interest Rates:           4.25% to 5.75% fixed
From 2.30% floating over LIBOR

Amortization:             Up to 30 years

Maximum LTV:           75%

Minimum DSCR:         From 1.20

Interest-Only Period:  Partial-term and full-term available

Fixed-rate and floating-rate loans available

Advantages:

• Will do smaller loan amounts.
• Can finance troubled assets as long as the borrower has strong supporting financials.
• Faster close than agency.

Disadvantages:

• Occasionally more rigid down payment, income verification and credit score requirements.
• Sometimes requires some sort of recourse for borrower.
• Often shorter amortizations and shorter fixed periods than CMBS and agency loans.
• Stricter with cash out refinances.