Basic financing question -- what kind of fixed-rate is available out there?
Hello, obviously I am a newb.  I agreed to sell a vacation rental in a hot area of FL because the price just seems wild, but now I need to 1031 because of the gain.  But what I didn't realize is that you're not going to get 30, 20, or even 15 year fixed-rate financing with multifamily, mobile home parks, etc.  At least, my local bank is not doing anything fixed for longer than 7 years.  I'm concerned that rates will need to be a lot higher to tame inflation.  I really would rather not take any interest rate risk.  All of that said, is there long-term fixed rate financing available?  I think that based on my severe lack of knowledge here, it will probably be better to just pay my taxes and move on.  Way easier to make a 100k mistake in this kind of rushed situation.  I have 45 days from April 22nd to identify three targets, and I'm on reddit asking questions like this, so yeah, the situation is bleak.
[{"id": "i5dpzzr", "text": "It is going to be difficult to get that kind of term commitment in MF. I do have an idea for you to maybe save you some  money in the future if you are thinking long term holding and don't intend to cash out the equity in the future.  Ask your bank for double the time with a built-in repricing event at the end of seven years.   \n\nIf you hold it for that long you are going to have to refinance anyway, right? Why would you want to pay appraisal fees, possible condition report fees and environmental fees, and give the lender a chance to charge you another fee.  \n\nWe don't do more than 7 years at my employer, and unfortunately you are a handful of months late on the pricing. A lot of our deals are so much tighter now than late last year.", "replies": [{"id": "i5dwe1j", "text": "What about what stoweker is saying about the agencies?  I went to the FNMA site and they talk about long term fixed rate financing, 5-30 years. \n\nI know so little that I wasn't even aware that I'll be refinancing in a few years anyway.  Is this based on the assumption that I'll have accumulated enough equity that I'll want to pull some out? I was hoping to set this thing up and never refi or sell.  I'm a buy and hold person as often as possible. \n\nCould you please elaborate a little on what you said, \"double the time with a built-in repricing event at the end of seven years\"?", "replies": [{"id": "i5dzbp1", "text": "I am not familiar with FNMA programs. I have been in the C&amp;I lending and to a lesser extent CRE lending side for more than 20 years in Florida. I don't do underwriting anymore, but from time to time have helped underwrite when the underwriters get overwhelmed. The CRE underwriters have been very busy so I did a couple of $6MM +/- loans in February when they had a large pipeline.  \n\nThe thing about refinancing in CRE is that refinancing and cashing out puts money in your pocket that is tax free. This is something that a lot of investors do, they leverage that money for either more investments or to enjoy life.  \n\nWhen I said double the time, I meant you can talk to your lender and ask for a 14 year loan with a repricing event after the seventh year. The repricing clause will automatically change the rate of the loan to the then prevailing index rate plus the premium. A lot of these loans use the US Treasury rate as the index rate and the seven year rate is used a lot. The premium is the amount on top of the Treasury that the bank charges.   \n\nYou gain the peace of mind that you are not going to have to shop for a lender in seven years and pay fees. The lender avoids interest rate risk.", "replies": [{"id": "i5ipt7c", "text": "Thank you.  I was just talking with the banker and she said that 10 is the max she will go, but I could at least press her harder for 14.  This is great advice, much appreciated.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i5eavu8", "text": "Buy multiple 1 to 4 unit properties if needed, 30 year fixed rate conventional financing is still available.  It\u2019s the 5+ unit market, that has significantly inferior commercial financing. Best i could do years back on a 6-unit was 4.5% fixed for 5, with one 5 year fixed extension at then current interest rate, with floor of 4.5% interest, and 25 year amortization. I\u2019m now on year 6\u2026\u2026.so potential time bomb in 4-years.", "replies": [{"id": "i5efk8c", "text": "Great info, thank you. Maybe I need to just find 3-4 houses. Although others are saying not to, that a bigger deal is better. But not if it doesn't exist.", "replies": [{"id": "i5eji1x", "text": "I\u2019m not a large investor, if I wasn\u2019t looking at 3-4 units with conventional financing, I was looking at 5 to 8 units with inferior commercial financing. Due to this, 5+ units only seemed reasonable if metrics like GRM Gross rent multiplier, cost per sf, cap rate were at 10% better than 3-4 units. At the time I was buying in California, I was able to determine target GRM of 5+ units was a 10 GRM, 3-4 units was 11 GRM, 2 units was 12 GRM, Condos 13 GRM and SFR 14 GRM.  Obviously Condos and SFR dont cash flow as well as multi-units as 1 roof and 1 sewer line and 1 tenant, any large CAPX issue tends to decimate cash flow in a given year. However, appreciation tends to be higher on single-family homes than any other real estate asset,at least in California and easier to sell off if thats your strategy. Hopefully you find some of this useful in your analysis and search for upleg properties. Have at least two hungry real estate agents working for you, trying to get you deals.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i5flknj", "text": "What about a DST or investment as an LP in a syndicated deal?", "replies": [{"id": "i5ijxfj", "text": "My 1031 intermediary is actually pushing some NNN deals from a broker friend of his.  How does DST relate to NNN? Thanks", "replies": [], "depth": 2}], "depth": 1}, {"id": "i5gq5ho", "text": "I have a 66 unit multifamily you can be part of as a tic if you are interested. \n\nIn reality, there is a big difference today compared to 6 months ago. My local bank was about a 4.25% rate with a 5 year lock and 25 year amortization. Bridge debt that was 4.5% is getting closer to 6-7% or 2-3 year holds. It seems to be all over for rates depending on who if offering, because I think some right now are pricing in the rate increase expectations. I do know a lot of lenders will give you 25 year amortization though, so don\u2019t be overly shocked by that 5-7 year rate lock you were look at, pretty common, and most long term will be from agency.", "replies": [{"id": "i5ijkjs", "text": "Could you please send me some more details about the tic by private message?  I hear you on the expectations of higher rates being priced in.  Silly newb question, I know, but how do people generally access the agency loans?  I tried going to the Fannie Mae multifamily website, and they had a phone number to call, which I did, and left a voicemail.  I don't know how the pros do it but that's where I'm at.  Would love to get 15 year fixed rate.", "replies": [{"id": "i5im3wo", "text": "Find someone to partner with that can help \u201csponsor\u201d a deal with agency experience. Easiest way to get it to happen, but giving up some ownership to do so, likewise, not getting it will cost you also with rates and terms generally.", "replies": [{"id": "i5iq5yx", "text": "Useful information as I prepare for a call with my wife's ex boss who is a top 100 realtor in nyc.  He does a lot of investing as well as being an agent.  If anyone can help it'll be him. Thanks", "replies": [{"id": "i5itgrb", "text": "Depending on the amount you are working with, I know quite a few syndicators as well, so even if you don\u2019t have interest in what I have, I can connect you with others with property in various parts of the country.", "replies": [{"id": "i5ixupy", "text": "Great.  I messaged you back about connecting offline.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]