Traditional Bank Loans
Bank Loans For Apartment Buildings and Commercial Real Estate
All bank loans are not created equal. If you are looking to finance your apartment building or commercial real estate with your local bank, you may think there is no reason to use an intermediary. Think again. Banks each have their own niches, especially when you are talking about the differences between community banks, credit unions, regional banks, and national institutions. Some banks offer fully amortizing loans, others cap amortizations at 20 years. Your favorite bank may cap leverage at 70% whereas one right down the street, a bank you never thought twice about, is comfortable financing multifamily properties at 80%. Maybe you need a floating rate bridge loan, a commercial mortgage with no prepayment penalty like yield maintenance or defeasance. Perhaps you have some documentation constraints. For the aforementioned reasons, you need to work with an intermediary that has hundreds of banking relationships. An intermediary that can leverage those relationships to your benefit. For the same reasons as those above, are why you want to look at bank financing as an option and not rule it out just because you qualify for a CMBS, Fannie, or Freddie loan.
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
- Will do smaller loan amounts.
- Can finance troubled assets as long as the borrower has strong supporting financials.
- Faster close than agency.
- 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.