CMBS for Commercial Real Estate Basics
Commercial real estate investors have quite a few options to consider before applying for a loan that fits their needs. CMBS loans, sometimes referred to as conduit loans, permit investors to have the opportunity to finance any type of commercial property, of any size, with a loan that starts in the neighborhood of $2 million. Any CMBS loan will be secured by a first position mortgage on some type of commercial property.
CMBS loans are held in a separate trust, and will be regarded as collateral for a mortgage-backed security. Borrowers seeking more leverage and lower fixed rates, will generally prefer CMBS loans over conventional commercial mortgage loans, since there is almost always considerably less red tape to go through, and a whole lot less hassle.
How CMBS Loans Work
The underwriting guidelines for CMBS loans are extremely flexible, and therein lies one of their greatest advantages. As opposed to traditional loans, which tend to be highly restrictive and scrutinized, CMBS loans are often made available to novice CRE investors. Real estate investors who can’t quite comply with net worth minimums and the strict conventional liquidity requirements, can choose a CMBS loan and get the financing they need without all the hassles of traditional loans.
Even better, it’s very often possible to acquire a CMBS loan with more favorable rates and terms than in a traditional loan. Because investors are able to access capital much more easily through CMBS loans, they are rapidly gaining in popularity these days with commercial lenders. Since they also generally carry a lower fixed interest rate, that is another contributing factor to their soaring appeal. Anyone who is having difficulty with securing a traditional loan for real estate, would be well advised to consider the possibility of applying for a CMBS loan.
Interested in a CMBS loan?
If so, we’d like to hear from you. Contact us at Summit Commercial Capital, so we can discuss with you the possibility of applying for a CMBS loan that will help you achieve your goals in real estate.