Recent Loan terms for multi family buildings - LTV, interest only
I’m curious what recent loans look like for multi family homes?

How much LTV and rates were you able to secure? Did you get Interest only loans?
[{"id": "gbg0jya", "text": "I did a portfolio loan back in August with 2 quads, 2 duplexes and a SFH.  13 units total.\n\nLTV at 75%.  5 yr loan/25 yr am.  3.75% interest.\n\nI also had a COVID hardship rider on the loan which would let me drop to interest only if needed.", "replies": [{"id": "gbg14ib", "text": "Thanks! What do you mean portfolio loan? Was the RE title held as security or was it based on securities?\n\nAlso which bank if you don\u2019t mind me asking?", "replies": [{"id": "gbg1fgm", "text": "I used a small regional bank/wealth management house.\n\nA portfolio loan is a unique loan where there is a single mortgage for multiple properties.  I can sell a property out of the loan, as long as I pay it's share back to the loan (payoff the LTV against the asset).\n\nThe title situation is what I would call typical.  The properties themselves are collateral for the loan.\n\nThis was a refinance to put all of my properties into one loan, with a single bank.  So I already possessed these assets.", "replies": [{"id": "gbg1jhg", "text": "Was this an amortized loan or interest only?", "replies": [{"id": "gbg1ly4", "text": "Yes, amortized over 25 years.  Interest only was a rider I had added in case there were tenant issues with COVID.", "replies": [], "depth": 5}], "depth": 4}, {"id": "gbg6de0", "text": "Did you have a prior relationship with the lender? I\u2019ve looked for this type of thing before and none seem to want to do it. That\u2019s a great rate btw.", "replies": [{"id": "gbg6m9d", "text": "The loan officer was actually my neighbor for a few years.  We discussed doing something like this on and off for a bit.  I was waiting to hit a milestone on my end.\n\nEventually I realized that milestone was a few years away, and it was dumb to waste money on the more expensive existing mortgages than wait to hit said milestone.  (If this made any sense at all).\n\nBut this loan was my first interaction with this bank.  But my friend/neighbor did go to bat for me.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "gbg1m20", "text": "A portfolio loan means that the bank holds the paper on the loan, as opposed to selling the loan off. Can be used to put together typically nonconforming loans.", "replies": [{"id": "gbg1uol", "text": "You are absolutely correct.  I believe there are two \"known versions\" of a portfolio loan.\n\nMy reference is to this type:\nhttps://www.lendingone.com/portfolio-rental-loans", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "gd5nqfd", "text": "Seems about right, could also look at a 30 year amortization", "replies": [], "depth": 2}], "depth": 1}, {"id": "gbg8kzl", "text": "CMBS right now (4unit min) for 10yr term / all IO / ~67% LTV (really most shops price off of DY) is easily in the low to mid 3s spread so high 3s coupon", "replies": [{"id": "gblg2tg", "text": "Nice! Which broker do you use?", "replies": [{"id": "gbo5nto", "text": "None. I'm an originator at a bank. that's a pretty standard quote for us.", "replies": [{"id": "gcrx8ue", "text": "PM me your contact info. We are looking for additional CMBS sources. That 10 year IO quote is insane", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gbgc24p", "text": "From last month or so, none are agency:\n\n65% ltv construction minperm 6% on ~100units large regional bank\n70% ltv construction minperm 4.5% on same project as above market has had a lot of new deliveries lately but absorbtion has been fine large regional bank\n\n75% ltv 1.25 dscr construction minperm 3.5% small 5 unit mixed use building local bank\n\n85% ltv 1.2 dscr 4% refi of stabilized product for strong borrowers, statewide bank, have seen them refi this on several buildings we had construction pieces on\n\nI have found that if you are a strong borrower, a lot of suburban and semi rural banks are willing to lend for smaller deals, they are flush with deposits. Regional and national banks are pulling back on multifamily in my market despite it performing pretty well and never had the Covid issues nyc had. They have been willing to lend, but with lower ltv and higher rates. For reference, I work for a re fund by day and bite off a project or two every year for my wife and I to do.", "replies": [{"id": "gbgddyd", "text": "Will add, I have not seen any io from banks here outside of construction loans obviously", "replies": [{"id": "gbgktum", "text": "I\u2019ve got 10 year io on 65% ltv through agencies in the past month.", "replies": [{"id": "gbglbmp", "text": "Nice! I've seen it advertised recently just have not done it myself.\n\n I only do construction/rehab and usually have pretty complicated deals with tax incentives, credits, and a few tranches of debt, so none of the deals I am involved with are worth the headache of agency debt for construction. See a fair amount refi after a few years into it though.\n\nAlso should add that while I haven't done it myself, I am told insurance companies are still active and somewhat aggressive in multifamily right now, but I'm sure that is also market dependent.", "replies": [{"id": "gbmru8a", "text": "Yeah I hear what you\u2019re saying with dealing with agencies on construction. They ask a lot of questions. Life cos have definitely been active and aggressive. Their rates will be a tiny bit higher than agency but will get the deal done. I\u2019m a broker who\u2019s worked on deals similar to what you\u2019ve mentioned. If you ever wanted me to take a look at something shoot me a PM.", "replies": [], "depth": 5}], "depth": 4}, {"id": "gblg5uv", "text": "Nice! Which broker do you use? How does one get access to this?", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gbgchib", "text": "I'm closing on a 12-unit with a loan rate at 3.875 and 20 percent down. Amortized out 25 years with 5 year re-adjustment of the rate.\n\nSmall regional bank. Not interest only.", "replies": [{"id": "gcrx9tt", "text": "What bank?", "replies": [{"id": "gcsl0te", "text": "Royal Bank.   \n\n\n[https://www.rbcroyalbank.com/personal.html](https://www.rbcroyalbank.com/personal.html)", "replies": [{"id": "gcsuvbg", "text": "Awesome, we do a good deal of business with RBC. I thought your CMBS program was $25MM+? PM me", "replies": [{"id": "gctpotf", "text": "My what is what? $25MM? Most of my buildings cost around $250K, no MMs in sight.   \n\n\nI have NO idea what you're talking about. I'm just a small landlord trying to buy a few units in a popular, large Midwest City.   \n\n\nI do LOVE RBC though. Small town bank attitude in a big city.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gbin4jm", "text": "This question really depends on the prices of real estate in your market. I live in SoCal where cap rates for multi are regularly in the 4\u2019s. With this reality, LTV becomes an irrelevant metric. Lenders use DCR (NOI / debt service) and debt yield (NOI / loan amount) to size loans. Typical DCR requirements are 1.20x-1.25x and typical debt yield requirements are 7.50%-8.50%. Often times that equates to 55% LTV or less here. Rates are in the high 2% to low 3% for 10 years fixed. Interest only and tight DCRs work against each other (unless you go CMBS). This means that the higher the NOI is relative to debt service, the more willing lenders will be to offer I/O because the loan is \u201cpre-amortized.\u201d Lenders never use I/O debt service to size loans so even if they offer I/O, make sure you run your calculations off of P&amp;I.", "replies": [{"id": "gbkvxdj", "text": "Thanks. What is CMBS?", "replies": [], "depth": 2}], "depth": 1}, {"id": "gbtl71o", "text": "Seems like standard Freddie quote right now at 80% is 265 spread on a 10 year with 5 IO. I do business with someone who got fixed 80% 2.32 on a 12 year 7 year IO through FNMA. It\u2019s nuts but sure is helping valuations....\n\nAll are quotes for institutional borrowers on large loans, no idea what spreads look like for smaller / individual investors.", "replies": [{"id": "gbtlqeh", "text": "Wow - it's 80% LTV and 2.65% IO rate?? Which brokers have you contacted?", "replies": [{"id": "gbu35vc", "text": "That\u2019s what Freddie is generally quoting right now for institutional sponsors; doesn\u2019t really matter which broker you go thru for GSE it\u2019s all kind of the same, they\u2019re just conduits to get money from Freddie/ FNMA. \n\nMy caveat though is that this is for institutional sponsors I have no idea what you would get as an individual sponsor.\n\nAlso I\u2019m more blown away by the 12 year fixed at 2.3% for 80% LTC with 7 years I/o. That\u2019s mind blowing, the sponsors cost of capital is like 3.25% to hit promote hurdle", "replies": [{"id": "gbu3o71", "text": "Nice! What do you mean sponsors cost of capital?", "replies": [{"id": "gbu5myo", "text": "Blend of interest rate and equity preferred return", "replies": [], "depth": 5}], "depth": 4}, {"id": "gbu3orl", "text": "And is this for MFH?", "replies": [{"id": "gbu5l6c", "text": "Yea - large apartment complexes, both hard quotes I mentioned were for product in the southeast. I also just got a Houston quote at l260 a few weeks ago for a large apartment building.", "replies": [], "depth": 5}], "depth": 4}, {"id": "gbv5po5", "text": "Is the 80% LTV based on DSCR or on the value itself?", "replies": [{"id": "gbvmetk", "text": "Loan to cost - fully baked purchase price with all the fixings", "replies": [{"id": "gbwzoq2", "text": "Wow - so this doesn't take into account the DSCR?", "replies": [{"id": "gbxim0b", "text": "No. But figure at a rate that low your unstressed coverage is a+ even if you\u2019re buying down to like a 4 cap", "replies": [{"id": "gbxiwys", "text": "Does DSCR take into account P+I or just the I in the deal you mentioned?", "replies": [{"id": "gbxjhsg", "text": "Unstressed dsx is just NOI / interest with some adjustments to NOI. Stressed dsx is NOI / p+I, without pulling a loan doc I believe most stressed use a more agressive amo schedule than the actual loan calls for but I just woke up and haven\u2019t had to think about covenants in a while. That being said with spreads coupons at like 275 even on a constant of like 6 you\u2019re good at 80% as long as your buy yield is like 4.5 or better", "replies": [{"id": "gby116t", "text": "Thanks! What's buy yield? :)", "replies": [{"id": "gbyjvfa", "text": "NOI / total purchase cost", "replies": [], "depth": 11}], "depth": 10}, {"id": "gbyn5yl", "text": "Thanks. What do you mean constant of 6? Sorry for noob questions", "replies": [], "depth": 10}], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "gdc3dmq", "text": "265 spread -- do you mean you're getting 2.65% absolute interest on debt? Or is it 2.65% over some index like libor?", "replies": [], "depth": 2}], "depth": 1}, {"id": "gbwkofx", "text": "75% LTV 2.85% 10/30, in the range of 50-75 units", "replies": [], "depth": 1}, {"id": "gdebbtc", "text": "We offer construction 40 year fixed, low 3% interest rate, 85% loan to cost non recourse. Let me know if interested.", "replies": [], "depth": 1}]