Okay, suppose you're a commercial broker (you list and sell commercial-investment properties). An investor client calls you up and asks, "I like that strip center that you showed me yesterday, and I'm crunching some numbers. What are commercial mortgage rates today?"
C-Loans, Inc. has just built a very helpful new website at CommercialMortgageRates.co. (Please note that we chose not to pay the extra $20,000 for the dot-com extension. The extension is dot-co.) The entire site is devoted to commercial mortgage rates.
The page that you want is this one: Table of Current Commercial Mortgage Rates. I update these commercial loan rates on a regular basis, and right now we are in a period of faily stable interest rates. These rates will always be - if not precisely spot on - very close to the commercial loan rate that you or your client will pay.
You may find this suprising, but the commercial loan rates of most commercial banks are usually within 25 basis points of each other. You will seldom find Bank A quoting 4.75% and Bank B quoting 6.0%. A basis point is just a fancy way of saying 1/100th of one percent. Therefore 25 basis points is 25/100th's of one percent - or one-quarter of a percent (1/4%).
I recommend that you bookmark this particular table right now.
But you're not done. This helpful table only shows you the current commercial loan rates in the market. It doesn't tell you anything about the expected amortization of your new commercial loan, the term, or the prepayment penalty. Here is what you should quote your client:
Multifamily Loans:
Fixed rate, thirty-years fully-amortized, rate readjusted to market every 5 years, and a prepayment penalty of 3-2-1. In layman's language, 3-2-1 means 3% in year one, 2% in year two, and 1% in year three. The loan is open in years four and five. This prepayment penalty pattern repeats every five years. Open is just a fancy way of saying no prepayment penalty.
Commercial Loans:
Fixed rate, twenty-five years amortized, due in ten years, rate readjusted to market at the beginning of year 6, and a prepayment penalty of 3-2-1. In layman's language, 3-2-1 means 3% in year one, 2% in year two, and 1% in year three. The loan is open in years four and five. Open is just a fancy way of saying no prepayment penalty. This prepayment penalty pattern repeats in year six.
Conclusion:
You no longer have to track hundreds of commercial lenders to find the best commercial loan rate for your client. You've learned that most commercial real estate lenders have commercial loan rates that are within one-quarter of a percent of each other. All you need to do is bookmark this Table of Current Commercial Mortgage Rates.
Do you need a commercial loan right now?
"I am shocked - shocked I tell you - to learn that there is gambling going on in this establishment." - Louie the loveable French police captain in from the classic movie, Casablanca. I am shocked - shocked I tell you - to learn that ten commercial mortgage brokers got shafted today out of a commercial loan fee larger than $10,000." Next to my Practice course, this is the course that you simply must take. I got so sick of being screwed out of loan fees that I went to law school at age 35, with two kids in diapers, graduated with honors, passed the Bar on my first attempt, and then never practiced law. I make more money in the mortgage business.
