Great financing still available for users
Thursday, January 22nd, 2009
In the course of one of my transactions I was presented with the following quote from a bank for a user to acquire a warehouse to occupy. The contemplated transaction was in the $7 million range:
- 80% loan to purchase price
- 25 year amortization
- 10 year term
- Rate fixed at 300 basis points over the 10 year treasury
- 50% recourse
With the 10 year treasury at around 2.6%, that equates to a phenomenally low fixed rate of 5.6% and a 7.4% loan constant!
In this particular circumstance, we have a seller willing to sell at a price that is arguable 20% or more below 2007 levels. Combine that with amazingly cheap financing and it’s a wonderful opportunity for an owner occupant.
Investor financing tends to be more expensive but not as bad as investors think. The catch is that some recourse is generally being required by these banks and leverage is somewhat lower. Overall for borrowers willing to deal with banks and share some of the risk, there is still acceptable financing out there.
If you enjoyed reading this post subscribe by entering your email in the field in the right!
