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If history is any indicator, we may not see rates this low again for a long time. In fact, the last time commercial property rates were this low was in the 1960s. As we wind-up 2015, there is much speculation about how fast rates will increase in the coming year and how lenders will be adjusting underwriting cash flow.
At Atlas, we finance transactions nationwide with over 700 of the nation’s top lenders. Many of these institution’s loan officers have expressed that their underwriters have already started to use higher underwriting cap rates and debt yields. Since financing commercial real estate is typically a 3-5-7 or 10 year balloon, lenders are looking at today’s cash flow and also have to consider the refinancing potential when these terms come due. As we move forward into 2016 closings, I believe that any rate increases will be gradual rather than fast moving like we experienced in the 1980s. Providing the increases are gradual, most investors should be in good shape with pending purchase transactions at least through the end of the first quarter. This is due to the increased underwriting standards put forth as mentioned above.
Having so many lender affiliations allows Atlas to consistently deliver better and quicker results. We are able to get competing quotes which equates to better terms for our clients. Another great benefit we provide is our pre-underwriting reviews. Our review is based both on the subject property and on the borrower(s). We provide this service directly to borrowers as well as to the real estate brokerage community. This pre-check benefits borrowers since they will know upfront an approximate underwriting outcome before spending money on due-diligence costs or on loan application fees. This pre-screening has been popular and very beneficial to our real estate broker referral sources since they know whether a potential offer is from a qualified buyer. With this service, the due-diligence becomes focused on the asset and naturally, closings can and do occur quicker.Atlas closes deals nationwide with strong loan closings in the Southeast and Mid-Atlantic regions. We have no loan limits and will entertain even small transactions. While a majority of our business is conventional low rate first mortgages, we also have programs for properties in transition (bridge loans) and even low document loans designed for the new investor.As 2015 draws to a close, now is the time to lock-in these low rates on stabilized assets. For loans maturing in 2016, it is never too early to get started especially since some of our lender partners are also offering forward rate locks up to 12 months. It is always in your best interest to work with Atlas when speed, accuracy, relationships, trust and getting great financing terms matter.
As managing partner of Atlas Commercial Capital, Kevin Meehan has personally closed loans in 40 states and financed all types of commercial real estate assets.