So now you see that one of your investment properties loan maturity date will be coming due soon. How do you decide between the different financing options you have? 

One decision needs to be made is what your investment goal is. Are you wanting to pay off your property as soon as possible? If so, you may want to consider a shorter amortization. However, as many investors, you may want more Cash Flow from your properties.

If you are wanting more cash flow from your properties, you will want to consider a longer term amortization like 30 years that Fannie Mae, Freddie Mac, and a CMBS mortgage offers. All three are non-recourse loans to greatly reduce your personal liability.

Loan Option Smorgasbord

Fannie Mae and Freddie Mac

Fannie Mae and Freddie Mac are two financing options for commercial real estate investors to consider for their refinancing and acquisitions for multifamily properties. While their goals are very similar, the way these two operate differ in a few areas, and it’s important for investors to understand their differences in order to make the best possible choice. As a standard procedure, Howell Investment Finance always sizes your loan with both to see which will offer you the best financing terms.

HUD- also for Market Rate Properties

One of the misconceptions about HUD financing is it is only for low income housing. Nothing can be further from the truth. Yes, HUD multifamily is used for LIHTC, but HUD also finances workforce housing and market rate multifamily projects for up to 35 year term and 35 year amortization. The HUD construction loan offers a 40 year term and 40 year amortization with up to 85% Loan-to-Cost (LTC) on multifamily projects.

CMBS

The CMBS/conduit loans can finance multifamily, offices, hotels, retail, self-storage, manufactured home parks, and industrial. The non-recourse CMBS loans can range from $2 million to $100 million. Would you like to get some of the cash out of your properties to use elsewhere? The CMBS loans allow for unrestricted cash-out on refinances when the new loan amount is greater than the loan balance being paid off. 

Do you have a tired property or one that needs to be updated to compete with other newer properties in your market area? The CMBS loans are also a good financing tool for those Value-Added properties.

Allow Enough Time

Its best to always allow enough time for your refinance. While most loans take 60-90 days from application to the closing, it can take some time to gather the needed property information and documents to get you a term sheet. Howell Investment Finance recommends you start looking at new financing 1-2 years prior to your loan’s maturity date to get acquainted with the process, interest rates, and terms to help you make the right loan decision. Besides, many times your pre-payment penalty may drop off 6-12 months prior to your maturity date, so why not get ready now?

If you have questions about the available financing options, Howell Investment Finance has the answers you need. As a trusted commercial mortgage broker, they will work to simplify the complex process by explaining the differences in a clear and concise manner. Let them know what you want to accomplish with your new financing and they will go to work for you to find a solid loan option.

Howell Investment Finance will then assist you from your application all the way through to closing. If you’re looking to finance investment properties in the Des Moines, Cedar Rapids, Iowa City, Quad Cities, Dubuque, and Ames areas in Iowa, you can learn more about the services they offer by visiting them online or you can call (515) 233-8228 today to speak with Denny Howell.