Commercial Mortgage Broker

Cash on Cash Returns For Commercial Real Estate Investments

Cash on Cash Returns For Commercial Real Estate Investments

A cash on cash return calculation determines the amount of annual income an investor earns on a piece of real estate when compared to the amount of cash invested.

What Is Defeasance?

What Is Defeasance?

Defeasance is a strategy that permits repayment of a commercial property loan on a property, to facilitate sale or refinance.

The Importance of Debt Yield in Commercial Property Loans

The Importance of Debt Yield in Commercial Property Loans

Debt yield, is a measure of risk for commercial mortgage lenders. It takes into account the net operating income of a commercial property to determine how quickly the lender could recoup their funds in the event of default.

Balloon Notes & Refinancing (5/25s & 10/30s)

Balloon Notes & Refinancing (5/25s & 10/30s)

Balloon mortgages are common in commercial real estate. Set up as essentially two-step financial products, the borrower makes payments for a certain number of periods before a final payment to pay off the remainder of the loan.

DSCR: Debt Service Coverage Ratio In Commercial Property Loans

DSCR: Debt Service Coverage Ratio In Commercial Property Loans

Debt service coverage ratio or DSCR, is a comparison between net operating income and debt service on an annual basis and is generally one of the most important considerations when a commercial mortgage broker, lender or bank is underwriting a loan.

Understanding Replacement Reserves

Understanding Replacement Reserves

Replacement reserves is a budget line item used by commercial property underwriters to address periodic maintenance on systems that wear out faster than the building itself.

Lockouts in Commercial Real Estate

Lockouts in Commercial Real Estate

A lockout is a restriction within the commercial real estate loan to prevent prepayment of the loan. If the loan is paid early then the lender will not benefit from the anticipated yield of the loan. For this reason, some commercial real estate loans will have a lockout period, which would be the minimum number of years in which the borrower cannot pay off the entire loan.

FHLB: Federal Home Loan Banks in Commercial Real Estate

FHLB: Federal Home Loan Banks in Commercial Real Estate

An FHLB (sometimes referred to as an FHLBank) or Federal Home Loan Bank is a region based bank that is part of a federally backed group of banks who provide housing finance and community investment loans. There are 11 FHLBs in total that provide reliable liquidity to financial institutions that are members of the program in order to support community investment and housing finance in the country.

Defining Yield Maintenance In Commercial Mortgages

Defining Yield Maintenance In Commercial Mortgages

Yield maintenance is a prepayment penalty on an existing commercial mortgage. It acts as a guarantee for the commercial property lender who made the original commercial mortgage, anticipating a set return over the full term of the loan. Unlike other prepayment penalties, yield maintenance covers the entire cost of the original lending agreement, compensating the lender fully for the prepayment of the borrowed funds.