What Are Some Non-Traditional & Uncommon Financing Options?
Conduit Loans Including Fannie Mae:
Conduit loans offer investors high leverage with a standard 80% LTV and an option for a Mezzanine program to increase leverage to 90%.
Conduit Loan Program provides the lowest permanent fixed rate commercial real estate loans for the acquisition or refinance of stabilized, income producing commercial real estate properties located in most market sectors, including small and medium markets for commercial mortgages up to $25 million plus. Conduit loans offer borrowers the lowest fixed rate commercial financing available. Interest rates start as low as 70 BPS over the comparable rising Treasury rates.
Conduit loans require no personal guarantees, except for standard spin out for borrower fraud and other illegal behaviors.
The Conduit Loan Structure:
1. Minimum Loan Size $1 Million. Maximum 80% LTV
2. Fixed Rate terms from five to twenty years
3. 25 and 30 Year Amortizations
4. Mezzanine Option to 90%
5. No Personal Guarantee Required
6. Non-Recourse / Standard Spin out
7. Defeasance or YM Prepayment
8. Typical 2-5 Year Lockout
Capital Markets and Non-Bank Loans, including Fannie Mae:
Income producing properties on Multi-Family Properties, Self Storage, Mobile Home Parks, Retail Strip, Multi Tenant Office that are generally recourse and are limited to 80% LTV. Rates vary between 120 and 250 basis points over the 10 Swap Rates and have fixed periods to 10 years with 30 year amortizations. Fannie Mae DUS loans would be included in this type used to finance Multi Family properties providing lower rates than a bank loan and greater flexibility such as, 30 year Amortizations, loan assumptions and subsequent second mortgages for equity takeouts or sales. This is a popular commercial loan type since it is scrutinized through commercial banks to Wall Street.
Owner Occupied loans is defined as a borrower purchased building or “space,” supported from borrower resources, arranged “take-back financing” with the seller and/or bank financing. An Owner Occupied loan is secured by a first deed of trust on the building, typically with the borrower renting and occupying the space. The lease payments directly support principal and interest payments on the loan. How much space in the building does the owner have to occupy to qualify? It depends on the lender – some banks require at least 50 percent of the building; some require 100 percent. These are the properties that are occupied by at least 51% of improved square footage that may be owned by a holding company, LLC, Trust, Corporation or Individual that may or may not earn additional income from rent paying tenants. Owner Occupied loans are priced at a long-term, fixed interest rate, which are currently relatively low.
Capital Market loans that have been developed by non-bank institutions, including brokerage firms on Wall Street, and other non bank lenders that compete with SBA and conventional bank loans. These loans products have their place for high leverage income producing property turnarounds, a need for stated income on purchasing an investment property requiring borrower recourse, closing in less than 45 days, guarantors with just fair credit, property types considered undesirable by banks, conduit lenders or government agency backed lenders. These programs can provide flexibility with a 40 year amortization if needed; rents underwritten to lease and not to market; and where a guarantor has only 10 % down or less. These loans are mostly full recourse and provide flexibility at bank rates and longer fixed rate periods on transactions that a bank would decline without an SBA guarantee
When conventional financing fails to meet your needs, Bridge funding can help you bank on an opportunity. A Bridge loan can provide the flexibility and speed you require to act fast on a break. Bridge loans can be structured as short-term, interest-only loans with a possible exit into permanent financing. This loan product permits a savory borrower to purchase a property that if repaired and returned to market, would have a greater value that the purchase price and the cost of repairs. Sale Leaseback:
When a company would rather keep its assets in cash than bricks and mortar, it’s time to think Sale Leaseback .That means the company can purchase real estate from your credit-worthy corporations, give you the full value of the property in cash, and keep you on the premises for as long as you so desire. Another words, it is a financial arrangement where either a borrower sells an owned property to us or another third party and continues to occupy the property by leasing the property. Can be a great vehicle to raise cash and not lose your business location and allow a borrower to run a business instead of manage a property.
The property types are:
1. Owner occupied commercial
2. Self Storage
3. Office Building
4. Retail Strip
6. Single Tenant
8. Manufactured Housing Communities
9. Hotel/Industrial/Mobile Home Parks