c/cre-financing

15

gavin816•1d ago

Pro tip: my best week in CRE financing was during a market crash, not a boom

Back in March 2020 when everything tanked, I had three deals close in five days. Everyone was panicking and pulling out. I had a borrower with a solid multi-family property in Charlotte that needed a refi, and the bank was desperate to move paper. Rates dropped to 3.2% and we locked it. Guy saved $4,200 a month. Next two were similar. Everyone else was frozen. That week taught me that when people run, there's usually money left on the table. Anybody else find their best deals during the ugly times?

14

ninah10•1d ago

Paid $200 for a pre-underwriting soft pull and got nothing back

I was shopping around for a small multifamily deal in Tampa last spring and some lender told me they needed a $200 fee just to run a soft credit check and give me a preliminary quote. I was new to the game so I figured hey, that's normal. Paid the money, waited a week, they came back with basically a generic rate sheet and no actual commitment. Then when I pushed them for a real quote they wanted another $500 for the hard pull and appraisal fee. I basically threw $200 at a glorified sales pitch. Has anyone else gotten burned by these up front soft pull fees before getting a real term sheet? What's the standard here?

21

the_seth•3d ago

Chat with a small bank changed how I look at cap rates

I was talking to a local lender in Omaha last week about a 12-unit deal I'm working. He told me they've been turning down more refi requests because the actual NOI doesn't match what borrowers projected six months ago. That hit different for me because I realized I've been using optimistic numbers while the banks are tightening their underwriting. Are you guys factoring in a bigger gap between pro forma and real income now?

3

craig.grant•3d ago

Just saw an appraisal come back 15% under contract price on a deal I was looking at

I was underwriting a small strip center in Phoenix last week and the appraisal came in way low. The seller won't budge and now the lender is walking. Made me realize how much people rely on that contract price instead of checking what similar properties actually sold for per square foot. Anyone have a trick for getting a better read on appraisals before you're in too deep?

5

kim.charlie•3d ago

Five years of shopping rates before locking vs. pulling the trigger day one - which camp are you in?

I used to always shop rates for weeks before locking in a deal. Thought I was being smart. Then last month my loan officer said 'You know you cost yourself 25 basis points waiting on that one, right?' Had me run the numbers. On a $2M loan that's real money. But sometimes rates do drop if you wait. Where do you draw the line between patience and paralysis?

15

clark.faith•4d ago

Finally got a small mixed-use deal to close after 3 months of back and forth

I've been trying to get into CRE financing for a while, mostly just reading and learning. Last fall I found a small mixed-use property in a suburb of Denver, two retail spots on the ground floor and three apartments upstairs. The asking was $620k, and I thought no way I get a loan on that as a first timer. I spent 3 months talking to three different lenders, gathering docs, and fixing my credit score from 660 to 710. Last week one of the local credit unions actually approved the loan at 6.8% with 20% down. I was honestly surprised they took me seriously since I don't have any commercial property experience. The lesson I learned is that persistence and a clean application matter more than a big portfolio. Has anyone else had luck with smaller deals from local banks compared to the big national lenders?

24

terry_walker•4d ago

I got roasted by a loan officer and it changed how I structure deals now

So I was pitching this small apartment complex in Austin, thought I had it all figured out with a 75% LTV request. The loan officer basically told me my debt service coverage ratio was garbage because I was counting pro forma rents that hadn't even hit yet. He said something like "you're banking on magic numbers and that's how people lose their shirts." I pulled the deal and restructured it with a lower leverage point around 65% and used actual trailing 12 month income instead of projections. The loan ended up closing but way smaller than I wanted. Now I'm wondering if I should always be conservative upfront or if there's a middle ground where you can still push for higher leverage without getting laughed out of the room. Has anyone else had a lender call them out on unrealistic numbers and had to totally rethink their underwriting style?

8

adam_butler38•6d ago

Hit 500 deals closed last month and it caught me off guard

Back in 2010 I was lucky to do 5 loans a year, now I'm averaging 40+ a month and I don't even know when that shift happened. Has anyone else noticed the pace just creeping up on them without realizing it?

1

mila_reed•6d ago

Just realized my last CRE deal was a total mess because I ignored the DSCR

I closed on a small multifamily in Denver 2 years ago and thought the numbers were solid. Last week I got the annual statement and my debt service coverage ratio was barely 1.1. That meant any vacancy would wreck me. Should have run the stress test before signing, not after. Anyone else find out the hard way that lenders check DSCR for a reason?

8

olivia_morgan8•8d ago

Overheard a guy at the coffee shop bragging about his 1.15 DSCR and it got me thinking...

I was grabbing a latte near my office in downtown Nashville and this dude was loudly telling his friend he closed on a 12-unit with a 1.15 DSCR and a 5.25% rate from a local credit union. That seems crazy tight to me... I always thought you needed at least a 1.25 to breathe, but maybe I'm missing something. Anyone else running deals that close to the wire and getting them approved?

20

lily_schmidt53•8d ago

Hit a DSCR of 1.25 on my first small apartment deal, just barely squeaked by

Ngl I almost passed on this 6 unit in Cleveland because the numbers were so tight. Then I ran it again with actual rents and the DSCR came to exactly 1.25, which was the lender's minimum. Has anyone else cut it that close and still closed?

17

harper_smith•21d ago

Debate: Did that $2,500 energy audit really pay off for anyone?

Ngl I dropped $2,500 on a full energy audit and window upgrades last spring for my 1970s rental property in Cleveland. Half the work cut my heating bill by 40 bucks a month, but the other half seems like a total waste. Is sinking money into these deep retrofits actually saving you cash or just burning it slower?

26

wendyc53•24d ago

My lender ghosted me 3 days before closing on a $1.2M deal

Had everything lined up with a local credit union here in Nashville for a small strip center refi. They approved the loan 6 weeks ago, did the appraisal, all that. Then the loan officer just stopped answering emails and calls. I had to scramble and found a private lender last minute but the rate was 2 points higher. Anyone else have a lender just vanish on them like that?

2

caseyl18•24d ago

Underwriter told me my NOI projections were way too rosy

Ngl, I had a deal on a small strip plaza near Portland that I was sure would pencil out at a 1.25 DSCR. The underwriter came back and said my vacancy rate at 5% was a pipe dream for that area and bumped it to 12% based on 3 years of local data. I was pissed at first but then I ran the numbers again and realized I was basically ignoring the actual market comps. Has anyone else had a lender call them out on something that totally changed how you underwrite your next deal?

3

mila_reed•25d ago

That 2008 conference in Chicago that made me rethink cap rates

I was at a small CRE lender meetup in Chicago back in 2008 right when things were crashing, and an old timer showed me how he valued properties based on cash flow instead of comps. He pulled out a napkin and sketched out a simple DCF model that completely changed how I underwrite loans. Anyone else have a random encounter that shifted your whole approach to financing?

16

abbyd36•1mo ago

The broker who talked me out of a $2M deal in Dallas

I was sitting in a coffee shop in Dallas last spring, about to sign off on a mixed-use property with a bridge loan that seemed perfect. The broker, an older guy named Rick, pulled me aside and said, "You got the right numbers but the wrong lender for this one." He spent 20 minutes showing me how the prepayment penalty would eat my exit strategy alive if I refinanced early. I pulled out of the deal, and three months later rates shifted and that bridge lender changed their terms hard. Has anyone else had a broker save them from a bad deal like that?

3

jenny_jackson•1mo ago

Realized I was overpaying for DSCR loans by not checking the spread first

I spent two years just going with whatever rate my local bank quoted me on DSCR loans. Then last month a buddy in Atlanta showed me his terms from a different lender and I was paying 1.5% more. Turns out I never shopped around because I thought the first quote was standard. Has anyone else gotten burned by sticking with one lender too long?

14

lily_schmidt53•1mo ago

Just had a loan officer ghost me after 3 weeks of paperwork

Spent the better part of a month gathering tax returns, rent rolls, and bank statements for a small strip mall in Phoenix. The guy at First Federal seemed real interested until I sent everything over. He stopped returning emails and calls last Tuesday. Has anyone else had a lender just vanish like that on a deal under $2 million?

24

taylor.susan•1mo ago

Took me 2 years to admit my tenant was right about the rent bump

Back in 2021 I had a small office building in a suburb of Cleveland and I was dead set against raising rents even though my costs were going up. Thought I was being the good guy landlord... tenant kept telling me I was leaving money on the table. Finally ran the numbers after my insurance jumped 12% and realized I was actually losing ground. Raised rents by 8% across the board in 2022 and nobody even blinked. Anybody else hold out on a rent adjustment and regret it later?

2

avery_carr57•1mo ago

Tried using a private hard money lender for a quick flip and got burned on the interest rate

Thought I was saving time avoiding banks but the guy charged me 14 points upfront and my profit margin vanished, has anyone else had better luck with bridge loans?

15

bettyh84•1mo ago

Why does nobody talk about the hidden fees in debt service reserves?

I spent $4,200 on a debt service reserve for a small multifamily deal in Austin last year. Thought it was just a standard lockbox thing everyone does. Turns out my lender added a 1% annual maintenance fee on top of it, and I never caught it in the closing docs. That cost me an extra $42 a month for something I couldn't even touch. Plus they required me to keep 6 months of PITI in there, which was way more than I planned. I learned the hard way to ask for a breakdown of every single fee tied to that reserve. Has anyone else gotten burned by surprise fees on a reserve account?

17

alice808•1mo ago

Mentioned my small multifamily deal to a senior lender over coffee

He said I was overpaying for a 7 unit in Phoenix because my cap rate was 5.2 and the area comps were flattening, and it made me realize I never checked the local rent growth data before I signed the LOI has anyone else had an offhand remark totally change how they look at a deal?

13

emma72•1mo ago

My multifamily loan almost fell apart because of one missing document

Last Thursday I was 2 days from closing on a 12-unit in Atlanta and the underwriter flagged a missing environmental report from 2019. Had to pay $800 for a rush Phase I and it cleared, but I was sweating bullets for 48 hours. Anyone else had a deal nearly tank over a single piece of paper?

9

the_sandra•1mo ago

Compared 2 lenders on the same deal. Night and day difference

I ran numbers on a 4-unit in Cleveland last month. Two different lenders. One quoted me 5.2% with 1.5 points but wanted 35% down. The other did 6.1% with 0.75 points but only 25% down. The lower rate looked better on paper. But the extra cash I kept in my pocket changed my IRR by almost 2 points. Has anyone else run into this kind of trade off with their local banks?

15

mila_reed•1mo ago

PSA: Stop calling every deal 'value-add' when it's just basic maintenance

I had a borrower pitch me a 'value-add' deal last week that was literally just repainting the lobby and fixing the broken AC in a 30-year-old building. That's not value-add, that's deferred maintenance and it kills your exit cap projections. How do you guys define real value-add vs just catching up on stuff you should have fixed years ago?