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RPP – Financing Using CMBS & Private Lenders with Nick Chapman

Dylan Marma and Mike Taravella interview Rand Capital’s Nick Chapman to discuss Fannie and Freddie’s lending limits for 2019 and the uptick in alternative funding sources. These alternative funding sources are CMBS and Private Lenders.

  • CMBS:
    • Very common funding source for office space, but becoming more common in the multifamily space
    • Minimum Loan Amount: $3M
    • Loan-To-Value (LTV): 75%
      • Can have higher LTV by leveraging mezzanine debt (85%)
    • Loan Term:
      • 5 and 10 year terms
      • 30 year amortization
      • Less flexible compared to Fannie & Freddie
    • Similar requirements to Fannie & Freddie when it comes to closing
    • Closes just as quickly as agency and in many cases faster
    • Fixed Rates, which are based on Swap Rates
    • Application Fee is $45,000
      • But you do receive most of that back regarding
    • Potential for Full-Term Interest Only Mortgage at 65% LTV
      • – From 1-3 yrs at a higher leverage to full term I/O at 65% LTV
  • Private Lenders:
    • Nondepository bank that is privately held
    • Minimum Loan Amount: $1M
    • Loan-To-Value (LTV): 75%
      • Can have higher LTV by leveraging mezzanine debt (85%)
    • Loan Term:
      • 5 and 10 year terms
      • 30 year amortization
      • Nonrecourse
    • Closing Time: 30-60 days depending on complexity of deal
    • Requirements:
      • Net Worth Requirement: 20% of the loan amount
      • Post-Closing Liquidity: 5% of the loan amount
        •  ~50% half of what agency debt requires
      • Much more favorable for new investors

Attend Multifamily Mastery 3 and use the discount code “RPFAM” for 20% off!

Contact Information:

Nick Chapman’s Email

Rand Capital Website

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