If you are looking to invest in the real estate industry, you should seek information and knowledge that will allow you to navigate your options with ease. Financing a real estate project is among the many variables you must be keen about to make a positive step in the industry. This can be hectic when you lack a sustainable plan. However, with the availability of CMBS Loans, handling your financial needs becomes easier.
What are CMBS loans?
These loans are secured by the first-position mortgage for commercial real estate properties such as apartments, hotels, shopping centers, warehouses, offices, and retail buildings. As a financing option, CMBS loans offer potential investors an avenue to meet their goals without struggling in the market. Conduit lenders usually offer these types of loans. You can also secure them from commercial and investment banks.
Characteristics of CMBS Loans
They Come With Fixed Interest Rates
Unlike other types of loans you will access in the market, CMBS loans come with fixed interest rates, a spread, and sometimes a lender’s profit.
They Are Non-recourse
The borrower has no personal liability as the lender can use the property and the profits generated to settle the repayment agreement in cases where the time is overdue. For this reason, the lender has no mandate to seek further compensation or anything beyond collateral.
There Is a Long Term and Amortization Schedule
When you consider CMBS loans, you also get close to ten-year term lengths and amortization over twenty-five years. This, however, calls for a balloon payment at the end of the term. With these types of loans, you can get a minimum of two million dollars to finance your projects as an investor.
Benefits of CMBS loans
Firstly, when you consider this financing option for your commercial real estate investment needs, you will enjoy lower interest rates compared to other types of CRE loans. Secondly, there is a higher overall loan-to-value ratio, making it possible to expand your investment with ease. Thirdly, there is also increased availability of capital if you consider these types of financing options. Fourthly, being generally asset-based, underwriters do not indulge deeply in the borrowers’ financial statements and compromise the process in the end.
Financing your commercial real estate can prove hectic as an investor. However, with CMBS loans, you get the best avenue to use. Get in touch with Emerald Valley Financial Services today for productive guidance.