Refinancing a commercial property
My wife owns a commercial unit with two long term tenants. We're 13 years into a 15 year loan and so basically paying off the premium and no interest deductions for our taxes. It seems that the best next step is to refinance and find a place to invest the proceeds. I've been given this deal but how do I tell if it's any good. Any other suggestions or questions I should ask ?

Loan Amount:                   $1,200,000

 Term/Amortization:        25/25

 Rate Options:                    7+7+7+4 Years Fixed for the first 7 years @ 4.125% (pricing is the same for a 5-Yr initial fixed-rate period)

10+10+5 Years Fixed for the first 10 years @ 4.25%

Closing Costs


Deposit:                               1% deposit due at application, credited back at closing less the cost of third party reports

Lender Fee:                        1% Commitment Fee due at loan commitment

Broker Fees:                1% of the loan amount + $1,500 processing fee
[{"id": "fecg8zr", "text": "25k in broker and bank fees, ouch", "replies": [], "depth": 1}, {"id": "fech4n2", "text": "Just ask to reduce the fees.  They\u2019ll do it.\n\nOtherwise, go for better pricing.  They might improve it a little bit.\n\nWhat does your T12  NOI look like?\n\nWhat type of lender is it that made you these offers?", "replies": [{"id": "feckwtb", "text": "NOI is $130k\nLender is a large financial services group - Insurance etc. I should have added that this is the original lender.\n\nValue of Property is around $2.5 M", "replies": [{"id": "fecps8v", "text": "A 5.2% cap rate feels a little low for a property as small as this.  \n\nThese would be verified in an appraisal, but I\u2019d think you\u2019d be more 6-7% cap valuing the property closer to  $1.9-2.2mm putting you at about 60% LTV.\n\nThe $130m NOI gives you 1.40x + DSCR. \n\nYou have a 10.8% DY.\n\nYou should be able to get a little better pricing than that", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fecikdc", "text": "What's the value of the prop.  I wouldn't pay a deposit unless they're paying for the appraisal. Which they probably aren't because they're a broker.", "replies": [], "depth": 1}, {"id": "fecrp8i", "text": "I work at a national firm, our finance director may be able to help. We have solid relationships with many lenders, and can usually provide very good rates. If you\u2019re interested in a 2nd opinion, he will help you find the best financing options available on the market, and walk you through your many options. Or if the quote you\u2019ve already received is the best out there, he will confirm that for you. He\u2019s very low pressure and very helpful. \n\nLet me know if you would like his contact information.", "replies": [], "depth": 1}, {"id": "fedrppp", "text": "Assuming there are good leases in place, you would be way better off going to a regional or local bank/credit union for this. Way less fees and the rates should be about the same. This sounds like a straight forward refinance that pretty much any bank RM would love to have in their portfolio.", "replies": [], "depth": 1}, {"id": "feeh24t", "text": "It'll be hard to escape the broker and lender fees despite it being high. In today's banking landscape im surprised the bank is only requiring a 1% deposit. Ask them if you put the money in a business checking or a base rate money market if they're reduce the commitment fee to 50 bps.", "replies": [], "depth": 1}, {"id": "feeia7i", "text": "If you're interested in shopping, I work for a community commercial bank with a western US footprint and could help reduce your fees. I am not a relationship manager, so I would not get incentive from this, but willing to set you up with the right person to talk through the costs so you find the best lender, send me a PM if you're interested.", "replies": [], "depth": 1}, {"id": "ffelbae", "text": "I\u2019m a commercial lender. Not sure if you\u2019ve made your decision but I\u2019ll throw my terms in the hat. \n\n5/25 at 3.85% or 10/25 at 4.20%. Essentially the same as the 25/25 since you have re-price periods at 5-10 years. \n\nI have no lender/origination fee. Only fees are 3rd which would be appraisal fee and title/escrow fees. \n\nPm me if you want to chat", "replies": [], "depth": 1}, {"id": "fgni2ex", "text": "Just saw this. I feel like your rate is pretty high in today\u2019s environment. The fees are definitely outta wack.  However it\u2019s hard to evaluate the loan terms without understanding the collateral.\n\nAny follow up since you posted?", "replies": [], "depth": 1}]