Commercial Real Estate Video Library

In this informative video series, Janover Ventures CEO Blake Janover explains the basics of commercial real estate finance, including the major types of commercial property loans, including CMBS, Fannie Mae, Freddie Mac, life company loans, HUD multifamily financing, and more. He also explains essential terms like DSCR and non-recourse loans, as well as important facts about borrower documentation and the commercial loan application process.

Learn About Your CRE Financing Options

Meet Janover Ventures

Janover Ventures is a highly-experienced, hands-on, capital markets advisory firm with nearly two decades of expertise sourcing debt for multifamily and commercial properties across the United States.

Multifamily and Commercial Financing Options

The days of walking into your local bank for a commercial loan are over. As Janover Ventures CEO Blake Janover explains, today's CRE lenders offer non-recourse, 10-40 year fixed rate debt with LTVs up to 80%.

Multifamily Loan Options

Multifamily borrowers have a lot of loan options; and, as Janover Ventures CEO Blake Janover explains, the most common choices include banks, life companies, CMBS lenders, Fannie Mae, and Freddie Mac.

CMBS, HUD Multifamily, Agency, and Mezzanine Debt

CMBS Loans

Looking for low-cost, non-recourse commercial real estate financing? CMBS loans may be an excellent choice. In addition to offering leverage up to 75% for commercial, industrial, and retail properties, CMBS financing is mainly asset based, and lenders may be willing to approve borrowers without a high net worth or top notch credit score.

Qualifying for Agency Debt

Fannie Mae and Freddie Mac multifamily loans offer extremely appealing terms and very low interest rates, but qualifying can be a challenge. Principals typically need a combined net worth greater than the loan amount, and liquidity greater than 10%. In addition, great credit is generally required.

Fannie Mae DUS Loans

Fannie Mae DUS loans are some of the most flexible agency multifamily loans on the market today. As Janover Ventures CEO Blake Janover explains, DUS loans allow lenders more options, as they carry more of the risk of the loan on their balance sheets.

 

Fannie Mae Small Balance Loans

Fannie Mae Small Balance Loans, which start at $1 million, are a highly effective way to finance multifamily properties, especially in secondary and tertiary markets. These loans offer 30-year fixed rate fully amortizing terms (just like residential mortgages) making them ideal for longer term investors.

Freddie Mac SBL/Optigo

The Freddie Mac SBL/Optigo program, which issues loans between $1 million - $7.5 million, is one of the most effective financing loan options for smaller multifamily properties, especially in major markets. The Freddie Mac SBL program recently went through a re-brand to become Freddie Mac Optigo.

HUD/FHA 223(f) Loans

HUD/FHA 223(f) loans are some of the best, highest-leverage multifamily loans on the market, for those who can wait through the lengthy closing process. HUD 223(f) loans permit up to 85% LTV, and have 35 years fixed and fully amortizing loan terms.

 

HUD 221(d)(4) Multifamily Construction Loans

HUD 221(d)(4) multifamily construction loans offer up to 85% LTC and up to 40-year fixed and fully amortizing terms with an up to 3-year interest only construction period. These loans, which can also be used for substantial rehabilitation. provide additional benefits for affordable properties.

Mezzanine Loans

Mezzanine loans and preferred equity are both effective ways to increase leverage for commercial real estate investors. Both mezzanine loans and preferred equity are second position loans, which means that they get paid after the first-position lender in the case of a loan default.

Commercial Real Estate Definitions and Metrics

Non Recourse Commercial Financing

Non recourse loans are based on collateral, meaning that a bank can't come after a borrower's personal assets if they default on their loan-- they can only repossess the property. However, non recourse loans are typically only available to well-qualified and experienced borrowers.

Multifamily and Commercial Loan Prepayment Penalties

When it comes to prepaying a multifamily and commercial real estate loan, different types of mortgages come with varying types of prepayment penalties. Some of these include defeasance, swap agreements, yield maintenance, step downs, and soft step downs.

Managing Your Commercial Real Estate Capital Stack

Managing your CRE capital stack is one of the most important parts of successfully investing in commercial real estate. In general, multi-tiered capital stacks are designed to increase leverage while keeping costs as low as possible.

 

DSCR: Debt Service Coverage Ratio for Commercial Loans

DSCR, or Debt Service Coverage Ratio, is metric that compares a property’s cash flow to its debt obligations. DSCR can be calculated by dividing a property's Net Operating Income (NOI) by its annual debt service. To be eligible for a permanent, fixed-rate loan, a property usually needs a minimum DSCR of 1.20x.

Commercial Loan Documentation and Application Fees

Multifamily and Commercial Loan Application Fees

Multifamily and commercial loan application fees typically cover third-party reports including environmental assessments, appraisals, and property capital needs assessments (PCNAs). Lender legal and lender processing fees also add to application costs.

Commercial Mortgage Documentation

In order to get an actionable quote for a commercial property loan, borrowers will need to provide documentation including a detailed rent roll, a first year P&L statement, and a PFS (personal financial statement).