Bay Area Capital Commercial Mortgage Loans
Commercial Mortgages for California and the Western US
Especially in our current market, it is a difficult task to try and secure an attractive commercial mortgage. Unlike residential lending, there is no "unifying force" such as Fannie Mae or Freddie Mac. Every lender has its own rules and requirements. They set their own rates and terms.
Most have prepayment penalties. Some will offer you only a 5 year loan, others will go longer. Some banks may not accept your financials, or the condition of the building, or where the building is located.
Understandably, one of the first questions we’re asked from potential commercial borrowers is “What will my interest rate be?” Unfortunately, that question cannot be accurately addressed until we understand your situation. Any lender who gives you a quick answer to this question is either inexperienced, naïve, or deceptive.
The final interest rate on your new loan will be based on your past credit history, the loan-to-value (LTV) of the property, and many other risk components including tenant mix and stability, debt service coverage, condition and location of the property, reserves and many other issues as well. So before we can provide a valid financial quote we’ll need to work together to build a suitable package for analysis and submission. The final rates and terms you receive will be based largely on you and your property, the quality of the collateral property, and the quality of your documentation.
In addition to interest rates, the terms of a commercial mortgage loan are just as important. Any pre-payment penalties could affect the overall cost of your mortgage should you wish to sell or refinance the property. So it’s wise to carefully review the covenants that the lender requires on the loan.
If you’re new to commercial real estate financing, you’ll want to get a firm understanding of the differences between a residential and commercial mortgage loan. Residential real estate uses a debt-to-income formula for judging your ability to repay a loan, while commercial loans are based on the debt coverage service ratio formula to qualify. This means that to qualify for a commercial loan, you’ll have to know what your projected and historical return on investment (ROI) will be when making a commercial property purchase or refinance. We can calculate these numbers for you.
The cash flow generated from your commercial real estate property will be one of the factors in determining both the value of the property as well as the rate you will qualify for. The type and loan size of your commercial loan is also dependent on other factors, including your business and personal credit history, your net worth or financial strength, the type of property and its overall condition, its cash flow, the geographical location of the property, and possibly other issues also.
After you’ve identified a potential property, you’ll want us to analyze its current and future cash flow. So give us a call today, and we’ll help you get started and answer any other questions you may have.
iCal Commercial and Bay Area Capital Commercial is the commercial operating company for Bay Area Capital Funding, Inc. located in San Carlos California. Bay Area Capital Funding Inc. is a residential (California only) lender and a construction lender and can be found at: