Commercial Real Estate Financing State of the Market | December 2023
Terrydale Capital
Dec 4, 2023 8 Min read
Terrydale Capital is committed to offering an extensive array of financial solutions to our clients. Our focus is on maintaining a thorough understanding of the constantly evolving market dynamics by engaging in ongoing communication with our network of capital market experts. Furthermore, we actively seek out emerging funding sources that are gaining substantial attention. As part of our dedication to keeping you well-informed, especially in the dynamic market landscape, we have gathered a compilation of financing rates from different regions across the country.
Private Money: Rate Range of 11.00%-15.00%
Amidst the constant unpredictability of financial markets, an ever-growing number of people are turning towards alternative investment options. Private money lending has garnered attention as an appealing choice for individuals seeking to close fast, especially in the remaining days of 2023. Its inherent advantages and flexible short-term nature make it an attractive option in today's financial environment; however it can come at the expense of higher rates.
Debt Funds & Bridge Lenders: Rate Range of 9.00% – 13.00%
In an era characterized by the persistent unpredictability of financial markets, an expanding cohort of individuals is actively delving into alternative investment options. One such option that has witnessed a considerable surge in popularity is debt funds and bridge money. These loans hold particular appeal for those aiming to mitigate risk and pursue financial growth, thanks to their inherent advantages and short-term flexibility.
CMBS: Rate Range of 7.50%-8.50%
There has been a resurgence in CMBS options given the allowance for lower interest rates compared to alternative financing avenues. With options allowing for rates in the low 7's, this option can be a valuable road to take for commercial investors.
Commercial Banks: Rate Range of 7.00%-9.00%
In light of the unpredictable market conditions, traditional banks are actively adjusting their lending strategies to stay competitive. To ensure stability in their portfolios, banks are consistently implementing stricter underwriting procedures. This may include placing increased importance on existing clients and depository relationships when evaluating potential investments, rather than focusing primarily on new ones.
Credit Unions: Rate Range of 6.75% – 9.00%
Credit unions stand out from other lenders by providing borrowers with the benefit of lower interest rates, making them an appealing choice. However, it's crucial to note that credit unions typically follow a more meticulous lending approach. This implies the presence of a comprehensive underwriting process, which may lead to extended closing times, especially given the current market conditions. While credit unions present competitive rates, borrowers should anticipate potential delays in loan approval and closing due to the thoroughness of their underwriting procedures.
Fannie & Freddie: Rate Range of 6.75% – 7.80%
Despite the ongoing market turbulence, transactions involving Fannie Mae and Freddie Mac remain steadfast, highlighting their resilience. We consider these transactions to be among the most favorable choices for residential and multifamily properties. Many buyers are now opting for reduced leverage and are prepared to invest additional equity to secure more favorable interest rates. By embracing this strategy, they can capitalize on the current market conditions and secure improved financing terms for their investments.
FHA: Rate Range of 5.75% -7.75%
The present interest rate trend related to FHA loans in the commercial real estate sector offers borrowers a valuable chance to make a seamless shift from construction and bridge loans. This transition can prove especially beneficial, particularly for individuals aiming to achieve financial stability. By capitalizing on FHA loans during a period of increasing interest rates, borrowers can access long-term financing alternatives that provide enhanced stability and potentially reduced overall expenses.
HUD: Rate Range of 7.00% +
As an up and coming financing type, HUD has been a reliable vehicle for investors as of late. Boasting LTV's of 90% on acquisitions and 80% on refinances with 35-year fully amortizing, non-recourse loans. HUD is ideal for new builds, later vintages, multifamily, long-term holds and maximizing cash-flows.
SBA: Rate Range of 7.50%-10.5%
SBA has emerged as a valuable option for newer investors as well as investors seeking lower down payments at the outset. These options have also been beneficial for owner occupied properties. We have also seen an increase of investors seeking to refinance out of the SBA 7(a) into a 504 option.
Life Company: Rate Range of 7.10%-9.00%
With creative avenues and flexible asset appetites, LifeCo options are able to offer competitive rates in the low 7's. Actively lending on all asset classes. Call us to learn more.
In today’s market, there are many options available for structuring deals, and Mezzanine and Equity financing enable our clients to pursue larger projects. Experienced and qualified investors may even be able to secure a deal with as little as a 5% down payment.
Partner With Terrydale Capital for Your Debt Financing Needs
When it comes to debt financing, understanding the right timing, process, and options is crucial. At Terrydale Capital, we provide a comprehensive range of commercial loan solutions tailored to meet your business's unique needs.
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Headquartered in Dallas, Texas, Terrydale Capital is a leader in commercial real estate financing. We have close relationships with the nation’s top banks, lenders & family offices allowing us to provide the most competitive financing solutions in the market.
