Most borrowers who have significant equity in their commercial real estate properties but not a lot of cash on hand struggle to efficiently purchase new properties. They assume the only method to generate the down payment for a new acquisition is to complete a cash-out refinance of existing real estate assets and use the cash-out proceeds together with an acquisition loan to purchase the new property. This involves two loans, two sets of closing costs and likely two different lenders.
CMBS conduit loans provide a more efficient approach. We at ValueXpress can provide a single loan secured by both the existing property and the property to be acquired if there is enough equity in the existing property to meet the equity requirement for the new property.
For example, suppose a borrower owns a shopping center that is worth $10 million, and the property has a $6-million existing loan. The borrower is under contract to purchase a $5-million shopping center but has only a few hundred thousand dollars for a down payment. We would make a combined loan of $11,250,000, which is 75% of the value of the existing property ($7,500,000) and 75% of the value of the new purchase ($3,750,000). This way, the borrower does not need any cash at closing and has $250,000 left over for closing costs!
To obtain a combination refinance/purchase loan for your next commercial real estate investment, contact Mike Sneden (firstname.lastname@example.org), Dennis Suh (email@example.com) or Gary Unkel (firstname.lastname@example.org).