What is the going interest rate for a 2nd mortgage?
I've been offered to provide funds for a 2nd mortgage on a single-tenant industrial/flex building - \~20,000 sf NNN 3 year lease.

2nd takes the LTV up to 80% (1st mortgage is 75% LTV).  Assuming good credit on the tenant and solid real estate, what would you think is an appropriate interest rate for a 3-year Interest only 2nd... (ie, my investment)?   1st mortgage is at 5%.  I look forward to hearing thoughts here!
[{"id": "imlhbbq", "text": "It depends\u2026. On so so many things\n\n\nBut I\u2019ve been quoted anywhere from 12%-15% on 2nds lately, with 2%-5% for fee (depending on mortgage size). Might be possible to do for cheaper, but when you consider what residential first mortgage rates are at, it sure puts it in perspective.", "replies": [{"id": "imlnm6j", "text": "Thanks for the context! Makes sense. Are others seeing the same?", "replies": [], "depth": 2}], "depth": 1}, {"id": "imlpt30", "text": "If you aren't willing and able to take out the first, your 2nd lien is unsecured and should be priced accordingly.", "replies": [{"id": "imlu0v8", "text": "What?", "replies": [{"id": "imlu6nd", "text": "What do you think a 2nd lien means?", "replies": [{"id": "imndy4g", "text": "Why would you say this is unsecured?", "replies": [{"id": "imng7sr", "text": "Because a 2nd doesn't get anything in a liquidation until the first is fully satisfied. You can't exercise any rights or remedies without consent of the senior (which you will not get). The first has a stalking horse bid that will wipe you out in foreclosure unless they are made whole, which in practice means YOU pay them in full to protect your lien.\n\nProviding a 5% slice into an 80% LTV and counting on your 2nd lien position to save you... I have a bridge and some bottom land to sell you.", "replies": [{"id": "imno2z1", "text": "I agree with all of what you said, but none of what you said suggests the 2nd is unsecured. You\u2019re just saying they may get wiped out which is true if it\u2019s secured or unsecured. \n\nI agree this seems like a bad investment, but I also don\u2019t have near enough information.", "replies": [{"id": "imns9u6", "text": "I call it unsecured because if you do not have the willingness or the ability (capital &amp; expertise) to protect your rights as a lender you will not have those rights &amp; remedies. Pretending there is some magic to being \"in 2nd lien position\" without understanding what that means &amp; what is necessary for you to exercise your rights &amp; remedies is a fools game.", "replies": [{"id": "imnuguj", "text": "The term \u201csecured\u201d in real estate lending is not really subjective. The answer to the original question depends on if there is a publicly recorded 2nd mortgage on the property (secured) or not (unsecured).", "replies": [{"id": "imnw8ni", "text": "So the 10th publicly recorded lien for a billion dollars is just as \"secured\" as the first publicly recorded lien for a hundred thousand?", "replies": [{"id": "imnxtzz", "text": "They both are secured by collateral, the real estate. The 10th is objectively in an inferior payment priority, but both liens are secured by real estate collateral.", "replies": [], "depth": 10}], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}, {"id": "imnpohb", "text": "I think you\u2019re using the word \u201csecured\u201d to mean \u201clikely to pay off\u201d when I\u2019m using \u201csecured\u201d in the legal sense, ie there is a publicly filed lien on the property so everyone knows you\u2019re a creditor.", "replies": [{"id": "imnuk5q", "text": "Then file a UCC and call yourself secured. Wrap yourself in the warm blanket of a publicly filed document and everyone knowing you're a creditor with zero rights and remedies against real estate.", "replies": [{"id": "imnxf1u", "text": "You\u2019re still doing it", "replies": [], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "imlvjam", "text": "No collateral on the second loan, higher risk requires a higher interest rate.", "replies": [{"id": "imne0n8", "text": "Why is there no collateral on the 2nd loan? Did I miss that?", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "immm9as", "text": "You realize a 2nd lien is secured right? That\u2019s the definition of \u201clien.\u201d In the event of default, each lien holder has a claim on the proceeds from a sale or right to possess pursuant to obligations to remaining lien holders.", "replies": [{"id": "imn7bqd", "text": "2nd lien gets seconds.\n\nOp said if you don't want 1st lien, then they are implying that most likely if shtf the 1st lien will consume all of the asset, leaving the 2nd lien with nothing secured.\n\nMy question to OOP is there are firms that specialize in 2nd lien and mezz, especially over 3-5 years, who can operate an asset in a worst case scenario - so why did these guys go to you instead of those firms?\n\nJust want to make sure you aren't the sucker at the table.", "replies": [{"id": "imngs60", "text": "1st lien isn\u2019t being offered. OP is asking for pricing guidance for a 2nd loan behind a 75% first. Where did the idea of it being unsecured come from? That obviously changes the risk profile and the answer to OPs question. \n\nIf you have a secured 2nd loan, and SHTF, then you typically have an ability to step in and solve the problem before your position is wiped out. Unless it\u2019s actually unsecured\u2026. Which was not stated in the original post. (If it\u2019s unsecured it shouldn\u2019t even be called a 2nd loan\u2026 it\u2019s a personal loan)", "replies": [], "depth": 4}], "depth": 3}, {"id": "imng0m6", "text": "You get it", "replies": [], "depth": 3}, {"id": "imnh5c6", "text": "Technically, so is the 3rd lien, and 4th lien, and 5th lien... proceeds from collateral tend to run out well before everyone's claims.\n\nBy all means, invest in 2nd liens in default and let us all know what your recovery is!", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "imlrj9d", "text": "6.75% to 11.9%.\n\nDefinitely depends on the scenario though.", "replies": [], "depth": 1}, {"id": "immficn", "text": "Are you actually placing a mortgage on the property or is it mezz or pref equity?\n\n5% is a very thin piece and 80% last dollar is high in todays environment. Does it cover at that leverage? I\u2019d think you\u2019re north of SOFR + 1000", "replies": [], "depth": 1}, {"id": "imnnev2", "text": "Seems lots of downside risk in this environment for a 5% slice as others have said. 3 year lease term, small balance of the loan (is it around $150k loan?), potentially high legal fees, will it safely DSCR combined and fully loaded? 5% rate at 75% ltv seems aggresive for a first. Have you seen a signed term sheet? If term is over 3 years, future TI/LC may be a concern for you.\n\nI'd be somewhere north of 10% at least and probably around 12% plus some entry/exit points and servicing fees. \n\nIf an actual 2nd, and they default on your piece, do you have the capacity to foreclose and payoff the senior loan to save your position?\n\nIf it's Mezzanine (or hard Pref) what do the docs look like in terms of and takeover rights, UCC liens and/or the intercreditor agreement? Do you have the capacity to takeover and run the deal if needed?", "replies": [], "depth": 1}]