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Commercial scenario
Greetings all, I have a commercial scenario, below are the details. What rate could we offer?
commercial
refinance
in LA
on Westin
currently occupied to child care center
government program
DSCR is 1.49
building appraised for $1.2mn
$500k loan currently on property
mortgage she’s paying is $3500
income from child care center is $5400
good DSCRYou can email me at taylorgilmore86@gmail.com
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2 Replies
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Pleasure to meet you, Taylor. I am Danny Vesokie and I am the owner and operator of Affiliated Financial Partners, Inc. in Sacramento, California. Affiliated Financial Partners is a commercial loan officer training school and commercial lending broker. I work closely with Gustan and Nelson Thompson of Lending Network. Give me a shout whenever you have any question or post your question here at GCA Mortgage Forums. I have know Gustan Cho and the team at Gustan Cho Associates for over 20 years. I will answer the case scenario as best as I can, Taylor.
Commercial Refinance Scenario for a Property in LA
Based on the provided details, here are the specifics:
- Type of Loan: Commercial Refinance
- Location: Los Angeles (LA)
- Property: Westin building currently occupied by a child care center
- Current Loan: $500,000
- Appraised Value: $1.2 million
- Monthly Mortgage Payment: $3,500Income from Child Care Center: $5,400 per month
- Debt Service Coverage Ratio (DSCR): 1.49
Understanding the DSCR and Financial Health
The DSCR is an essential metric for lenders. A DSCR of 1.49 indicates that the property’s net operating income (NOI) is 1.49 times greater than its debt obligations, which is generally considered good and suggests a lower risk for lenders.
Government Programs and Loan Types
Considering the property is occupied by a child care center, certain government-backed loans or programs might be available to support the refinancing:
Small Business Administration (SBA) Loans:
- SBA 7(a) Loan: Good for general refinancing purposes, offering competitive interest rates and long terms.
- SBA 504 Loan: Suitable for refinancing commercial real estate and offering low down payments and fixed interest rates.
- Interest Rates Generally range from 5% to 8%, depending on the lender and specific terms.
USDA Business and Industry (B&I) Loans:
- Purpose: To improve, develop, or finance business, industry, and employment.
- Eligibility: Available in rural areas, but specifics must be checked for urban areas like LA.
- Interest Rates: Typically competitive and often in the 5% to 6% range.
Estimating Interest Rates
Considering the current commercial mortgage rates and the financial health of the property, we can estimate the interest rate range:
- Standard Commercial Loans: Interest rates for commercial loans can range from 3.5% to 7%, depending on the borrower’s creditworthiness, loan term, and lender.
- SBA 504 Loans typically offer between 3.5% and 6% rates.
- SBA 7(a) Loans: Rates can range from 5% to 8%, depending on the lender and loan specifics.
Possible Rates for Your Scenario
Given the provided details, here are the estimated interest rates:
- SBA 504 Loan: Around 4.5% to 5.5%
- SBA 7(a) Loan: Around 5% to 7%
- Standard Commercial Refinance Loan: Around 4% to 6%
Next Steps
Contact Lenders: Contact multiple lenders to get specific quotes and compare the rates and terms offered. Gustan Cho can definitely help you because he used to be an owner of close to a billion dollars worth of properties.
Prepare Documentation: Ensure all necessary financial documentation, including income statements, the current mortgage details, and property appraisal, is ready.
Consult a Mortgage Broker: A broker can provide personalized advice and help find the best rates for your specific scenario.
Resources: Lending Network: https://www.lendingnetwork.org/
By exploring these options and contacting lenders, you can secure a competitive interest rate for refinancing commercial property in Los Angeles.
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Danny, I will pick you up at Mitchell Airport when you fly in, my man. Let me know when and time. I will be at United departure gate lane.
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