I am convinced that there are ways to get a higher LTV/CLTV. I have been talking to a lender that will do 80 to 85%. They have also mentioned that CLTV up to 95% is permissable, but I am not in a position to put that part of it to the test immediately.
I have found that rates are a little higher and conditions a little stricter, but for larger loans there are some great deals out there.[ Edited by Marcher on Date 12/17/2003 ]
It's important to distingish between residential commercial loans (i.e. apartments, multi-family) and non-residential commercial loans.
Residential commercial loans generally receive better rates and terms than other commercial property types. 80-85% LTVs and 90-95% CLTVs are commonly available for residential commercial, with terms of 30 years (or even more). You're not likely to find these terms for other types of commercial properties. However, final rates and terms will still depend upon the strength of the borrower and property.
I bought a 6-unit residential commercial, another 3-unit residential, made down payments of 25% in both cases, 15-yr amortization; paid much higher rate for the 6-unit
The rates aren't "usually higher." Its that the terms can be different than in residential so that the rates can be manipulated differently.
For example, the shorter the amortization the higher the lender's rate of return. So the rate may be lower than in residential, but with a shorter amortization. So your payment is higher, even with a lower rate.
Then there are ARMs with different level periods before adjustment and at different amortizations.
So the rate isn't the most important thing to worry about with a commercial loan. I'd be concerned with the entire package. For example, if you paid a higher rate without a prepayment penalty, it might work out if you're flipping the property or refinancing it soon to pull out cash.
I've found that typically the rates are LOWER but the terms are much different than residential loans.
With 5+ units, lenders look at the property almost exclusively instead of credit, Debt-to-income, and all that other bs.
The most notable problem is that lenders often will not do above 70-80% LTV and often will only allow up to 90% CLTV.
There are exceptions to every rule and there is a way to finance every project.
Yes anything above 4 units is definitely commercial, so you'll need about 20-25% to put down.
Thanks!!!
I am convinced that there are ways to get a higher LTV/CLTV. I have been talking to a lender that will do 80 to 85%. They have also mentioned that CLTV up to 95% is permissable, but I am not in a position to put that part of it to the test immediately.
I have found that rates are a little higher and conditions a little stricter, but for larger loans there are some great deals out there.[ Edited by Marcher on Date 12/17/2003 ]
myfrogger is right on.
As a general rule they'll want to do shorter ammoratizations also. (15-25 years).
It's important to distingish between residential commercial loans (i.e. apartments, multi-family) and non-residential commercial loans.
Residential commercial loans generally receive better rates and terms than other commercial property types. 80-85% LTVs and 90-95% CLTVs are commonly available for residential commercial, with terms of 30 years (or even more). You're not likely to find these terms for other types of commercial properties. However, final rates and terms will still depend upon the strength of the borrower and property.
I bought a 6-unit residential commercial, another 3-unit residential, made down payments of 25% in both cases, 15-yr amortization; paid much higher rate for the 6-unit
The rates aren't "usually higher." Its that the terms can be different than in residential so that the rates can be manipulated differently.
For example, the shorter the amortization the higher the lender's rate of return. So the rate may be lower than in residential, but with a shorter amortization. So your payment is higher, even with a lower rate.
Then there are ARMs with different level periods before adjustment and at different amortizations.
So the rate isn't the most important thing to worry about with a commercial loan. I'd be concerned with the entire package. For example, if you paid a higher rate without a prepayment penalty, it might work out if you're flipping the property or refinancing it soon to pull out cash.