Consider CMBS Loans for Flexible Commercial Real Estate Financing
If you’ve been in real estate for some time, then there’s a good chance that you’ve heard of CMBS loans. Often referred to as a conduit loan. CMBS loans are specifically for commercial real estate, as evidenced by their very high starting minimum of about $2 million. As they say, the devil is in the details – so let’s dive right in.
CMBS Loans: The What and the Why
Conduit loans are non-recourse loans that work primarily for income-producing real estate properties. The non-recourse aspect means that the borrower need not worry about personal property being seized as collateral in the event of a loan default. CMBS loans are a lot easier to obtain than the traditional bank loan, and you have between 25 and 30 years to repay at a fixed rate of interest. There should be, however, the expectation of a sizable balloon payment after the repayment term.
Reasons to Secure CMBS Loans
As stated earlier, the conduit loan is optimal for properties that produce income – commercial real estate, primarily. Under this large umbrella are office buildings, multifamily properties, hotels, buildings used for storage, retail and industrial properties. Given the minimum amount of $2 million for a conduit loan, it is better suited to commercial properties than single-family real estate alternatives – but the latter is by no means excluded. You may be seeking to acquire property in exclusive neighborhoods, for example.
Making Sure That the CMBS Loan Works For You
One of the biggest benefits the conduit loan confers is accessibility. New entrants into commercial real estate often have difficulty getting the traditional loans they want, as the requirements often mandate length of time in business – among other attributes related to having an established real estate presence. CMBS loans, on the other hand, are considerably more flexible. To learn more about these and other options, contact Atlas Capital Solutions.