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Another key factor in placing a loan is the property's current occupancy level. Lenders generally prefer a property near-or above-market occupancy levels. They may accept below-market occupancy if there is a reasonable explanation for it, along with a positive trend in collections over a period of time. Many lenders these days require multifamily and commercial properties to have at least 90-percent occupancy. Some commercial properties may allow for occupancies as low as 75 percent to 80 percent.
When working with commercial properties, be aware of the status of the properties' current occupants. Tenants whose leases are expiring within the next few years may be closely scrutinized, and lenders may require other commitments from the borrower upon closing. Borrowers should contact any tenants that have leases expiring within the next six months to one year to determine their interest in or intent on remaining at the property.
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Despite tightened underwriting, financing for commercial mortgage loans is still available. Every loan request is different and will require its own method of preparation. But brokers who have an idea of what to expect will be better prepared in their quest for commercial funding.
Whether it is a portfolio-mortgage-lender loan, a conventional bank loan or another financing source, the lending outlets that brokers need for multifamily and commercial deals are readily available. Positioning borrowers and their properties to best meet lenders' requirements can increase the likelihood of commercial-financing success.
Shaun Adler is senior commercial loan analyst at KC Capital, where he has worked for more than
three years. He has a background in commercial mortgage processing, analysis and originations. Before joining KC Capital, he worked with a national mortgage-servicing company as an account manager and loan counselor. He is a graduate of the University of Texas at Austin with a focus of studies in business and philosophy. Reach him at (512) 901-9131 or firstname.lastname@example.org.
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