Commercial Real Estate Financing State of the Market | May 2023
Brian Gramlich- TDC Founder and CEO
May 4th, 2023 · 4 min read
At Terrydale Capital, we strive to provide our clients with a comprehensive array of capital solutions. To ensure that we remain current with the latest market trends, we maintain regular contact with our capital market resources and actively explore emerging sources that have gained traction. We encourage you to stay informed by reviewing our latest financing update, which offers a succinct overview of the current market conditions and how we’re leveraging them to create opportunities for our clients.
Private Money: Rate Range of 12%-14%
With financial markets remaining unpredictable, more and more people are turning to alternative investment options. Private money loans are a compelling choice for those looking to minimize risk and achieve financial growth, as they provide short-term flexibility.
Debt Funds & Bridge Lenders: Rate Range of 8.75% – 9.50%
Debt funds have gained popularity among investors due to their competitive interest rates and convenience. With rates having come in a little, they present a great opportunity for leveraging and generating high returns, particularly when investing in properties that have the potential for added value, such as buildings or land.
CMBS: Rate Range of 5.75%-6.50%
Despite the recent slowdown in CMBS loan activity, industry experts predict a market rebound as rates stabilize.
Commercial Banks: Rate Range of 6.50%-7.75%
To remain competitive amidst the volatile market conditions, traditional banks are adapting their lending practices. While some projects continue to move forward, there is now greater emphasis on development, refinancing, and rehabilitation. To maintain stability, banks are adopting more selective underwriting processes, which may prioritize established clients over new ones when evaluating potential investments. With the recent Red meeting, it can be expected for rates to similarly rise.
Credit Unions: Rate Range of 6.00% – 7.50%
Compared to other lenders, credit unions often offer lower rates, but they also tend to have a more aggressive lending approach. It’s important to keep in mind that their rigorous underwriting process may result in longer closing times, particularly in the current market.
Fannie & Freddie: Rate Range of 5.50% – 6.25%
Despite the ongoing market turmoil, transactions involving Fannie Mae and Freddie Mac remain robust. We consider this as one of the best options for properties at the moment. Many buyers are going in at lower leverage and coming up with additional equity to lock in better rates.
FHA: Rate Range of 5.00% -7.00%
The increasing interest rates of FHA loans in commercial real estate present an opportunity for borrowers to transition seamlessly from construction and bridge loans. This is especially advantageous for those seeking financial stability.
Life Company: Rate Range of 6.0%-7.5%
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.
*Rates are estimates and based on the assumption of Max LTV. Lower LTV options would allow for lower rate options in the market
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