Experienced commercial real estate borrowers know that property stabilization is a major factor lenders consider when deciding whether or not to approve a loan. They need to be able to determine that a property is fully leased and is experiencing an acceptable amount of tenant turnover.
For many property owners, meeting traditional lenders’ stabilization requirements presents a major challenge. This is especially true for investors who purchase a distressed property at below market value and then work to improve and re-tenant the building so they can refinance at a lower rate. Even if they are successful, it may be difficult to get a more attractive loan – that’s because banks typically need to see that a property has been stabilized for an extended period of time before they approve a loan request.
However, alternative lenders may relax those requirements to make it easier for successful, credit-worthy borrowers to get the financing they need. Here’s an example of how Commercial Direct’s team helped an investor in Florida.
An investor in Florida purchased a distressed retail property with the intention of making quick improvements and refinancing at a lower interest rate. All necessary improvements were completed in less than 24 months, at which point the investor sought to refinance the property. Unfortunately, traditional lenders argued that the property had not been stabilized for a long enough period of time.
Enter Commercial Direct. Our team was comfortable with the stabilization of the property and approved the investor’s refinance request. We even made it possible for them to get the loan without having to provide tax returns.
We offer a number of options for prospective borrowers, including light documentation loans for real estate investors and stated income solutions for owner-occupied transactions.
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