I've been in Commercial Mortgage Banking for 10-15 Years - AMA
Hi Everyone!

I just found this sub today and thought I might be able to contribute some industry knowledge. A short introduction:

I'm a Senior Analyst / VP at a national mortgage banking company where I've worked for 10-15 years. I had a short stint working on the sales side of things but found out quickly that I suck at sales. I was too honest with clients and lost deals because of it. I'm more of a numbers person anyway.

I primarily work across the Midwest, but see deals from all over the country across all asset classes. I have the most experience within multifamily / mixed-use developments. I've funded deals with Fannie Mae, Freddie Mac, HUD, and a plethora of Life Insurance Companies ranging from $1M to $100M.

I create models, investment books, and do a bit on the data analytics side with Python.

Feel free to shoot me questions and I'll do my best to get back to you in a timely fashion.

Thanks!
[{"id": "hwyuhml", "text": "Thanks for offering your time to Redditor\u2019s. Can you suggest any resources like courses, books etc. to learn about underwriting various types of CRE deals from lending perspective. I\u2019m interviewing with few private lenders for Analyst, Underwriting positions and  want to present a model to them in the interviews.\n\nBackground - CFA level 3 candidate and work in residential real estate lending.", "replies": [{"id": "hwzck68", "text": "Congrats on the level 3 CFA candidacy! I quit after the first test as I didn't perceive the CFA designation as particularly valued within the CRE industry.\n\nUnfortunately, I really don't have any resources in terms of books or courses. My undergrad degree was in Finance and I really had to learn on the job. When we're hiring a new analyst, we want to see the ability to think critically and problem solve, strong math skills, and solid writing ability. Having really strong Excel skills goes a long way as well. If you're good at Excel, with a background like yours, modeling should be fairly easy for you.", "replies": [], "depth": 2}, {"id": "hx1bops", "text": "You could look into Adventures in CRE if you\u2019re in switch to the commercial side. Happy to answer any questions about their courses.", "replies": [], "depth": 2}, {"id": "hx1bs60", "text": "Try the Bruggeman and Readfern books. ULI also has an underwriting book that is pretty basic.", "replies": [{"id": "hx1mkjt", "text": "&gt;RedFearn book\n\nWhat is the RedFearn book? Haven't heard of that one.", "replies": [{"id": "hx1mvfz", "text": "https://www.amazon.com/dp/0128159898/ \n\nI think autocorrect caused a typo in the original post I have no corrected.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hwyut81", "text": "How much do you make?\n\nHow much do your counterparts make?", "replies": [{"id": "hwz0gm9", "text": "I'd also like to know this", "replies": [{"id": "hwz8vg3", "text": "I\u2019d also additionally like to know this", "replies": [], "depth": 3}], "depth": 2}, {"id": "hwzbxem", "text": "I'm likely towards the top of my company in terms of analyst compensation. My base is $110k and my bonus this year doubled that (had a pretty good year last year).\n\nThis can really vary widely across the industry and even between offices within the same company. I would expect that an analyst with 3-5 years of experience would be in the $60k to $70k range, with a 20% to 30% bonus. Again, this really can vary widely.", "replies": [{"id": "hwzs0uy", "text": "I\u2019m a first year analyst making $62K. Do your numbers vary by state?", "replies": [{"id": "hwzsppy", "text": "I would very much suspect so.\n\n$62k in NYC or Miami probably doesn't go very far, but in a smaller markets like KC or Minneapolis, it probably takes you much further.", "replies": [{"id": "hwzt0i0", "text": "I just DM\u2019ed you. Hope you can answer my questions :)", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hwyv4h1", "text": "Are things slow/bad right now for commercial RE?\nI\u2019m in western New York and every strip mall I see has a for lease/sale sign in it. It\u2019s been this way for a good bit now.", "replies": [{"id": "hwz8tt9", "text": "Uhhh western NY has gotta be one of the worst markets to try and extrapolate to the rest of the US. \n\nHigh taxes, decreasing population, high costs\u2026", "replies": [{"id": "hwz9pfh", "text": "Yea it\u2019s got an out flow of people and businesses", "replies": [], "depth": 3}], "depth": 2}, {"id": "hwzcy7d", "text": "In the markets I'm predominantly working in, CRE seems to be chugging right along. We did record numbers last year and things seem to be on a pretty good trajectory this year as well.\n\nThat said, office, retail, and senior housing haven't quite recovered from the pandemic.", "replies": [], "depth": 2}, {"id": "hwze1t1", "text": "That should mean lots of properties trading hands.", "replies": [{"id": "hwzjevk", "text": "Or a lot of bag holders", "replies": [{"id": "hwzmn1m", "text": "Bag holders meet their maker eventually. Strip malls are the new apartment sites in my market.", "replies": [{"id": "hwzolop", "text": "May I ask how you prospect strip malls ??", "replies": [{"id": "hwzsaa7", "text": "I call the owner and see if they would like to sell. If yes can they provide the rent roll / leases.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hwyvfu3", "text": "Buying my first duplex/multi fam unit soon. 1-4 fam if not duplex, any suggestions for the financing route you recommend with least amount down?", "replies": [{"id": "hwyw8rl", "text": "Don\u2019t know how to link another sub but check out the real estate investing sub Reddit. That has tons of information on how to house hack", "replies": [], "depth": 2}, {"id": "hwzd72s", "text": "This is pretty far outside my scope, as we deal in significantly larger assets. I would go with the advice posted and check out the real estate investing sub.", "replies": [], "depth": 2}, {"id": "hwzwrpz", "text": "This is residential, not commercial real estate.  There are specific programs that help people like you that I don\u2019t know about.", "replies": [], "depth": 2}, {"id": "hx11fij", "text": "Bigger pockets has loads of info in this arena. I'd start there. Look into house hacking and you may find what you need.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwywfsr", "text": "What\u2019s the most you\u2019ve made in a year?", "replies": [{"id": "hwzcmew", "text": "\\+$200k", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwyygwb", "text": "What software do you use to create investment books?", "replies": [{"id": "hwzd8b7", "text": "MS Powerpoint", "replies": [{"id": "hx1msxq", "text": "Do you have an example of what an investment book looks like that you can share (Your or someone else's)?", "replies": [{"id": "hx1rkka", "text": "Unfortunately, I wouldn't be able to share these. High level, it's a summary of the property, the underwriting, the loan request, and wrinkles in the deal that may require structure, borrower summary, market data, photos, maps, sales comps, rent comps, etc.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hwz3qvt", "text": "Are you worried we are in a huge bubble in real estate? Do you think we will see a huge pullback?", "replies": [{"id": "hwzek2v", "text": "I'm worried we're in a huge everything bubble. IMHO, and this is not in any way financial advice, I think we're set for a huge downturn.\n\nI think inflation is higher than is being reported. Interest rates will be going up (they should have been going up the last ten years). As interest rates and asset prices are inversely related, we should see asset prices decline or at least stagnate.\n\nBut that is all just this dummy's opinion.", "replies": [{"id": "hwzwvqa", "text": "Why should interest rates have been going up for the last ten years if we had record low inflation for that time (except the last ~6 months)?", "replies": [], "depth": 3}, {"id": "hx3yzyd", "text": "What are you putting your money into if you think everything is in a bubble? Gold, Bitcoin, energy fuels?", "replies": [{"id": "hx4qyx6", "text": "I moved my 401k into a money market last summer. Honestly thought the bubble was going to pop in the fall, but I'm happy to wait and forego some gains and get back in at a steep discount. I know I'm losing to inflation here as well, but I feel comfortable riding it out. \n\nBrokerage account is heavily invested into some negative beta stocks.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hwz3z8e", "text": "Thanks for offering this up. I work in the banking side of CRE also in the Midwest and do deals nation wide. \n\nInterested to hear what you\u2019ve been seeing in the market recently given the forecasted rate increases and any slow down in deals. Also have you heard talks about industrial assets being over valued and potential correction on that side? \n\nWe haven\u2019t done much for office or retail since Covid so also curious what you\u2019ve been seeing for cap rates and leverage on power centers and grocery anchored centers.", "replies": [{"id": "hwzf770", "text": "We haven't really seen any slow down in deal flow. On the contrary, I think the Fed signaling rate increases has a lot of owners and developers a bit spooked. We've had a number of calls from clients the last month looking to lock in longer-term rates in spite of some hefty prepay penalties.\n\nWe haven't seen much in terms of retail, though a couple of deals did just hit my desk, so it'll be interesting to see how lenders respond to them. I'm guessing sub 60% LTV and minimum 1.45x DCR.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwz5kgb", "text": "I am curious where you think will happen in the market as interest rates might go up? Also any good resources for learning to underwrite deals and modeling.", "replies": [{"id": "hwzfkxv", "text": "Unfortunately, I don't have many resources for learning to UW / modeling. I pretty much learned on the job. Modeling is pretty easy once you get the hang of Excel.\n\nAs far as learning to UW, I think this is largely experience-based. You can practice UW deals, but until you take it to the market and get feedback, you really don't know how good your UW is.", "replies": [], "depth": 2}, {"id": "hwzwxjk", "text": "[adventuresincre.com](https://www.adventuresincre.com)", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwz740d", "text": "Is there still a 1:1 net worth requirement for loan sizing? How can you overcome this?", "replies": [{"id": "hwzh9tj", "text": "I'll say generally, yes, but it does depend on the loan size. Lenders may be willing to waive the requirement if the deal is conservative enough, but typically they will all require minimum NW and liquidity. \n\nThe best way to overcome this is to bring an equity partner or pay someone with a better balance sheet to act as the KP / carve-out guarantor.", "replies": [{"id": "hwzy6px", "text": "Got it. Thanks!", "replies": [], "depth": 3}], "depth": 2}, {"id": "hxjt2cu", "text": "I\u2019m a lender in the small business space I.e. under 3.5 million ish. No hard requirement on net worth to loan sizing, and I work for one of the largest banks in the US. Not as common in this space as you think. But again this is a bit of a smaller segment.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwz75te", "text": "How can someone new to commercial take advantage of the ins and outs of the commerical mortgage? Do I just send my deal to as many commercial mortgage brokers to see what type of financing is possible? Thanks for doing this. On another note, I hear mortgage brokers are still in sales. Don't  sell yourself short :)", "replies": [{"id": "hwzjvej", "text": "Don't send your deal to every commercial mortgage broker. Brokers often act as correspondents to lenders, so deals in the market have to come through that broker. Find a couple of good brokers that you can (reasonably) trust, and shop your deals to them. Ask them which lenders they want to represent and how they plan to get you the best terms.\n\nAlso, I can't stress this enough, be forthcoming with your broker. Tell them exactly what's important and in what order so they can identify the strongest lenders for your situation and negotiate on your behalf. Typically, priorities would be something like:  \n\n\n1. Loan Proceeds\n2. Interest Rate\n3. Prepayment flexibility\n4. Non-recourse\n5. Speed of execution\n6. Ownership Transfers (typically falls under estate planning)\n7. Flood insurance waivers\n8. Etc.\n\nAlso, ask how your broker is getting paid. Are there buy-ups included in the rate ? For example, are they quoting you a fee of 50 bps then building in another 50 bps of fee into the rate? Are they servicing the loan? I'm fortunate that I work in a culture where we typically charge minimum origination fees on all our deals, but I've seen people be real pigs where they are telling a Borrower they are charging X fee but in reality, they are realizing X + 2% on the backend.\n\nAnd as far as the sales side of things, frankly, I hated it. There's a certain amount of ass-kissing that has to take place and that is just not my personality. So many folks think that because they have a bigger bank account that somehow makes them superior, and I'd rather not have any interactions with those people if it can be avoided.\n\nSo like I said, sales just wasn't for me, and I'm good with that.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwz7n0n", "text": "How after 10-15 years are you still a senior analyst? How are you a senior analyst/VP? Those titles are completely separate. How are you still making pitch books and not trying to bring in clients or at least running the process? The amount of time you have in the industry and your title/responsibilities don\u2019t tie at all, something seems off.", "replies": [{"id": "hwzhgph", "text": "He told you, he sucks at sales", "replies": [], "depth": 2}, {"id": "hwzm39j", "text": "I'll answer your questions in order.\n\n1. As I mentioned, I tried the sales thing. It wasn't for me. I don't like going out and kissing asses and being expected to tell them it smells good. After a short stint working in sales and trying to build a book of business, I moved back to being an analyst. I'm not making as much, but I'm MUCH happier and have more time to spend with my family.\n2. I really could give two shits about my title. Titles in the finance world mean very little and in my opinion, those that are overly concerned with them have other issues going on. I was a Senior Analyst for a number of years and had the VP title added. My job didn't change, so it doesn't matter. It was more of an 'attaboy' from my MD.\n3. See question 1. I tried the sales thing and hated it. I was unhappy and chose to take a lower-paying position to reduce the stress in my life and spend more time with my family instead of kissing the asses of pretentious douchebags. I can watch movies, listen to music, or browse the interwebs (all things which I thoroughly enjoy) while underwriting deals and putting together pitch books. All that said, I do facilitate deals. I work with both Borrowers and Lenders to get deals signed up and closed. It's simply not my preference.\n4. I also mentioned that I dabble in data analytics (working on an MS in Data Science), so I work with our IT group, developers, and business analysts because none of them actually understand mortgage banking and where inefficiencies exist in our business.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwz8xox", "text": "OP= let me post an AMA in a new sub. \n\nAlso OP, imma disappear on y\u2019all. \ud83d\ude02", "replies": [{"id": "hwzcpga", "text": "I apologize :-)\n\nHad to feed the kids and read them their bedtime stories!", "replies": [{"id": "hwzz36i", "text": "Family first, no matter the career. Thank you for taking the time out of your day to write this up.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hwzfks0", "text": "What kind of data analytics work are you doing in python? Any examples? Is it worth learning?", "replies": [{"id": "hwzn30q", "text": "The short answer is yes, I would absolutely recommend learning python.\n\nPython is a fantastic general-purpose programming language. I've used it to scrape data from the internet that would have otherwise taking me days to aggregate. Working with very large data sets or hundreds of excel files is much easier and faster in Python than trying to use Excel's powerquery.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwzfzoy", "text": "I\u2019m very interested in the data analytics side. How do you use python in your role? Do you also use a bit of SQL?", "replies": [{"id": "hwznquk", "text": "I've used python scrape data, aggregate data from hundreds of excel files (faster and more efficient than powerquery), pull tables from engineering reports / appraisals to populate forms, and a bunch of other stuff. I created a program for our local analysts to use that pulls in assessment data from county websites and performs an analysis to underwrite an appropriate tax figure. There are a number of other side projects I have in the pipeline, but it's mostly to automate menial parts of my job so I have more time to dick around on the internet :-)", "replies": [{"id": "hwzptwy", "text": "Sounds awesome. Can I dm you? Want to learn a bit more.", "replies": [{"id": "hwzquop", "text": "Sure. I might not get back with you this evening. I should be doing some actual work right now...", "replies": [{"id": "hwzz0dx", "text": "No worries. I\u2019ll pm you later this week.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "hwzxejy", "text": "How do you scrape data from engineering reports and appraisals?", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hwzgde9", "text": "What would a lender want to see for their first large multi family purchase? I have experience with smaller rentals, but would like to buy say a 20 unit. At local market rates that is probably in the $3MM range. I assume we'd need a prop mgmt co lined up, and cash reserves of ??? Anything else? \n\nAnything to specifically ask the seller - we'd get a pro forma but I would assume those numbers are very optimistic or at minimum slightly inflated.", "replies": [{"id": "hwzwg3u", "text": "Generally you want minimum liquidity equal to 1 year of debt service and a net worth (excluding the asset being purchased) of the loan amount.\n\nProfessional management is expected.\n\nYou should be making your own pro forma.", "replies": [{"id": "hx1oxnd", "text": "Thanks!", "replies": [], "depth": 3}, {"id": "hx3yaop", "text": "Is PM necessary if it's 4 unit but cost is in the range of $2-3M? Will a lender be okay with self management?", "replies": [{"id": "hx3yhyg", "text": "I don\u2019t know anything about what is expected in the 1-4 unit space.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "hx10n47", "text": "$3m will put you in Freddie SBL range. Net worth above the loan amt and liquid assets 10%+ of the loan. And professional 3rd party management if the property can afford it. 20 units is a weird space because of the cusp on income and management. It's small so the quality and availability of managers changes. If you have investors or partners and can go bigger I'd be looking at 35-50+ units. But whatever makes you comfortable.\n\nGet historical financials..T12 income statement, a 2020 YTD and hopefully a 2019 YTD. Recent rent roll and an updated aging report showing delinquent tenants who haven't been written-off as bad debt or who are receiving Covid assistance. And yes sellers and their brokers are \"optimistic...\" but its a seller's market right now..there are plenty of buyers who know just enough to be dangerous trying to get their first 20 unit.", "replies": [{"id": "hx1oy7m", "text": "Thanks!", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hwzhyaz", "text": "You\u2019re not out at the MBA CREF conference in San Diego?!", "replies": [{"id": "hwzo1nv", "text": "Nope :-)\n\nAs you might have gleaned, I'm happier in front of my computer than schmoosing. Our company definitely has a significant presence there, and why do I have to sit through a shit load of boring meetings that could be an e-mail when someone else will do it for me and give me the info when they get back?", "replies": [], "depth": 2}, {"id": "hzt0xrh", "text": "I was!", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwzmura", "text": "Why is there a range as to how long you\u2019ve been in mortgage banking.", "replies": [{"id": "hwzofoo", "text": "To make it harder to pinpoint who I am :-)", "replies": [{"id": "hx0s09y", "text": "Ah", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hwznhv4", "text": "Hello, I\u2019m currently a residential loan officer, do you think there\u2019s more opportunity in CRE as a loan officer?", "replies": [{"id": "hwzp1ui", "text": "They're completely different beasts. Residential lending is focused almost entirely on the credit of the individual. CRE is much more asset-focused.\n\nAs to opportunity, I honestly don't know. Residential is much higher volume. There's a limitless supply of very small fish in the pond. Commercial is much lower volume and there are a limited number of much larger fish.", "replies": [{"id": "hwzpp1i", "text": "Thanks for the insight!", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hwzo3vh", "text": "Sometimes I see interesting multifamily deals in the ballpark of 25 units @ $2.5M, and I\u2019m not sure if commercial lenders would be comfortable with me as a deal sponsor. I would have a couple \u201cfriends &amp; family\u201d limited partners involved in a project like this. My net worth is around $1.5M. I currently own an 8-unit property with a partner. I also personally own and self-manage two triplexes and an SFH. We have professional management for the 8-unit. Do you have any general thoughts in my situation? \n\nThanks for doing this AMA!", "replies": [{"id": "hwzpc9r", "text": "You're probably better off at a credit union or bank. Institutional money is typically going to be after bigger deals.\n\nThat said, there are a few lenders that might dabble in something like this. Freddie Mac's SBL program might be a fit. Lenders like Stancorp or Ohio National might chase a smaller deal like this, but they will typically want some level of recourse.", "replies": [{"id": "hwzqz80", "text": "Thanks! I appreciate it.", "replies": [], "depth": 3}, {"id": "hx1e71e", "text": "Credit Unions have been diving into a lot of class B/C multifamily deals in my market at like 3.75% fixed for 5-10, sometimes up to 90% LTV.", "replies": [{"id": "hx3j06z", "text": "What are their requirements like in terms of net worth and liquidity?", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "hwzxjec", "text": "You want to talk to community and regional banks.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwzoqpl", "text": "What is your honest view/opinion of mortgage brokers (top shops / good teams) and what percent of your deals would you say come from them rather the directly from a client?", "replies": [{"id": "hwzqqwz", "text": "I work for a mortgage broker. Like any business, there are great brokers that do everything they can to take care of their clients, including cutting their own feeds, then there are the pigs that try to squeeze every last dime out of their clients.", "replies": [], "depth": 2}, {"id": "hzt13vx", "text": "I am a bridge lender in the $5-40MM space - 95% of good deals come from a capital advisor. Most sponsors unless you're very institutional should not be shopping their own debt.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwzqrh1", "text": "Any advice for a kid right out of college trying to get his foot in the door? I graduated with a BS in finance &amp; have been trying to get into CRE Finance as an analyst. \n\nI\u2019ve been taking CRE financial modeling courses online &amp; have done an analysis project for a real estate class I took in college. That seems to have been getting me some interviews but so far each time I\u2019m told the team wants someone with underwriting experience. \n\nI\u2019m considering grad school for a second shot at recruiting but would rather not spend that kind of money again lol", "replies": [{"id": "hx3ril4", "text": "Hey there, here\u2019s some advice from personal experience:\n\nI recently graduated from college and ended up with a job in CRE as an underwriting analyst. But, I was also having difficulty getting into the industry as my degree was in marketing. What I ended up doing was talking a lower job in a smaller company where I was able to demonstrate that I was more than capable of being an analyst. It\u2019s important that if you do this you make it clear in the interview that you would like to move up eventually to an analyst position. \n\nIf you\u2019re really trying to start as an analyst I would double down on networking. Having someone within the company to vouch for you goes really far with just educational experience. Hope this helps &amp; good luck!", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwzw3fv", "text": "How are you only a Senior Analyst / VP if you have 10-15 years of experience?", "replies": [{"id": "hx1ryuw", "text": "Please refer to my previous responses", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwzwz8c", "text": "I work for a bank on the CRE sales side of things and am always questioning if I should go back to the underwriting side of things. Sales is just not for me. I don\u2019t care enough lol", "replies": [], "depth": 1}, {"id": "hx087ne", "text": "Based on your mind and somewhat vast experience what would you say can make someone successful in CRE sales ? \n\nWhat personality traits (good/bad) would any person need getting their foot in the door ? \n\nI\u2019m always hearing different things across the board mentioning about CRE and the people who work in it.", "replies": [{"id": "hx1v8bw", "text": "First and foremost, you have to have the fundamentals down pat. You have to know the industry, what the market is doing, and how to UW deals.\n\nSecond, you have to be able to talk to people. Moreover, you have to really like getting in front of clients and lenders and being able to bull shit with them.\n\nBut that's coming from a guy who was terrible at it and hated it. Might want to talk to some folks that are actually successful in the role.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hx0g27o", "text": "Are you located in California? I am a mobile notary who specializes in loan signing. I would love to be your notary!", "replies": [{"id": "hx1usqt", "text": "Sorry, I am not.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hx1cq2k", "text": "Any tips for someone looking at their first 7 figure multi unit loan? \n\nI\u2019ve done residential real estate investing for years but I\u2019ve made it my goal to get my first \u201cbig\u201d building before turning 40. Looking at a 3 million dollar 34 unit building and I\u2019m quickly learning this is nothing like buying a 4 unit house.", "replies": [{"id": "hx1smg6", "text": "Reach out to your local mortgage bankers to see if they can help you. Might not be a bad idea to bring in a bigger partner with more experience in multifamily / bigger balance sheet. As I've said previously, this is more of a small balance type loan, so Freddie SBL might be a fit, or you might find a home with a Life Company that would chase smaller deals but would likely require recourse. I would also reach out to your local banks / credit unions.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hx1hlb4", "text": "How common are institutional construction-to-perm loans? I have been guided toward HUD 221(d)(4) as a potential program, but am choking on the labor cost tables. Do other lenders have similar programs or is this a unicorn?", "replies": [{"id": "hx1u3yc", "text": "In my experience, construction perm financing is somewhat of a unicorn. It might be more common in larger markets, but I haven't done much of it.\n\nPersonally, HUD loans are a pain in the ass and I hate working on them. That said, they offer really competitive terms if you can stomach the process. HUD 221(d)(4) is even more of a pain. Like you said, they'll require Davis-Bacon wages, which can be prohibitive, and they'll limit your distributions to twice a year.\n\nI also hate HUD deals because they are really tough off relationships. When we sign a deal up, we will deliver that deal. We've already vetted the deal with appraisers, so we know where the value will come out. HUD deals are much tougher, as I perceive there to be more appraisal risk there. Additionally, terms can change wildly from the time you put the deal under app and when you actually lock rate / get a commitment.\n\nTL;DR - HUD terms are great, but the process is very painful.", "replies": [{"id": "hx2et6s", "text": "What are the best alternatives for ground up development? Decouple construction financing from perm financing and just go through the whole (painful) process twice?", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hx24ewc", "text": "How do you see inflation impacting the CRE loan industry? \n\nAre you quoting fixed rates right now or is there too much risk with how fast rates are moving?\n\nThanks!", "replies": [], "depth": 1}, {"id": "hx2aas6", "text": "Hi Smocky im a Mortgage Broker, if you have any deals that you cant place please give me call", "replies": [], "depth": 1}, {"id": "hx2o8he", "text": "Do you believe all the sacrifices you did to get there were worth it ?", "replies": [], "depth": 1}, {"id": "hx4pzip", "text": "My dad recently sold his interest in a commercial warehouse and netted about $1.1MM.  He wants to invest it back into commercial real estate but doesn\u2019t have much experience.  The commercial warehouse interest was inherited.  \n\nFor $1.1MM, what is the amount of financing he could reasonably be looking at?  What would the lender be looking for in terms of putting together a deal?  I know these are very broad questions but we are both very green in terms of investing in commercial real estate.", "replies": [{"id": "hx4qkqt", "text": "How long ago did he sell it?? He can 1031 into a new CRE investment without paying cap gains tax.\n\nAnd honestly, if he's that green, it might be better to find a reputable partner to invest passively with.", "replies": [{"id": "hx4v7q6", "text": "It closed in early Sept.  we looked into it, but the structure of the ownership made it pretty much impossible.  \n\nThe building was owned by a C corporation, of which my dad was a 1/4 owner of. It was decided by a majority vote to sell the property and liquidate the company. So the building was sold, taxes were paid, and the remaining money was given to all the shareholders on a per share basis when the corp was dissolved.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]