CMBS loans is an unknown loan option for many multifamily real estate investors and not offered at traditional banks. Also known as conduit loans, this loan option could be perfect your property.
Secured by a first position mortgage on a multifamily property, CMBS loans are held in separate trust as collateral for a mortgage backed security. Real estate investors searching for high leverage and low fixed-rates could be the perfect candidate for CMBS loans. These loans are typically non-recourse, with fixed interest rate and 25-30 year amortization period.
Pros of CMBS loans:
- Available to borrowers with low credit, past bankruptcy, or don’t meet net worth requirements at traditional banks
- Typically non-recourse
- Higher LTV than traditional bank loans
- Competitive rates
- Loan is Assumable
Cons of CMBS loans:
- Prepayment penalties or yield maintenance fees make it hard to exit the loan
- CMBS loans require defeasance
- Doesn’t allow secondary or supplemental financing
– The Multifamily Review Team
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Hi, my name is Michael Avent. I founded The Multifamily Review in 2020. I’m a Commercial Agent at Northcap Multifamily located in Las Vegas, Nevada. My vision for The Multifamily Review is to be the most trusted resource for all Multifamily Investors and Industry Professionals. We strive to offer the best and most up to date content to our readers and are always open for suggestions. Make sure you sign up to join our newsletter to stay up to date on our latest blog, ebook, and more exclusive content that’s coming your way! The Multifamily Review team and I look forward to building a deeper relationship with you!
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DISCLAIMER: The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. It is only intended to provide education about the multifamily industry.