Commercial Mortgage Timing
“Getting The Right Commercial Mortgage Deal Can Be All About Timing”
Commercial mortgage financing, unlike residential mortgage financing, can be all about timing.
What I’m referring to is how the supply side of the commercial property financing market is constantly changing as lenders work to maintaining a balanced portfolio of commercial mortgage investments.
At certain times, there can be considerable supply and competition for a particular deal, while at other times it can be hard to find any lenders that are going to be interested in providing funding.
This relates primarily to the geography where the commercial real estate is located, the industry that generates the revenues to service debt as well as provide a resale market for the asset, and the lending and funding criteria of any specific commercial mortgage lender.
And because most commercial lenders will consider a wide spectrum of properties, there can be constant adjustments as to what can be funded, how it will be assessed, and the amount of financing a commercial mortgage lender will extend.
Let’s take the example of a hotel.
For any commercial property lender that will finance a going concern hotel, they will have predefined rules as to how much of their portfolio they are prepared to place into this sector.
If last month they place a business mortgage that filled up their available lending allocation for this property type, then next month a similar looking deal could come through the same lender’s door and not get funded.
Taking it one step further, a commercial lender may have quite a bit of hotel commercial mortgages in their portfolio and are willing to consider additional investments, provided that they are of a lower risk value to the lender than what they already have in place. To accomplish this, the lender may have more stringent requirements for future deals such as major flags only, national reservation systems, and so on.
For the business owner or property owner, there is no way to really know when the lending sign is out and when its not when it comes to commercial property financing.
Potential borrowers have a certain capital need at a certain time.
So when commercial property financing is required, the exercise is to quickly locate those lenders, at that particular time, that are going to be seriously interested in funding your requirements.
In many cases, this cannot be a popularity contest, loyalty exercise, or response to branding. Its about knocking on the doors of those lenders that are currently in a position to service your needs.
As a result of this ebb and flow of market supply from a funding point of view, this also means that there are better deals available at different points in time.
The more in tuned you are with the market, the easier it will be to align yourself with a lender that can meet your requirements.
This can also mean delaying a project until there is a positive adjustment in the supply side.
The good news is that the commercial mortgage market is vast in terms of lenders.
The challenge is to efficiently navigate the landscape to develop commercial mortgage options that are going to be acceptable to you.
About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel