Highrise Investment Group provides commercial loans nationwide. It's in our domain. We are a real estate finance company that provides capital for commercial real estate and business owners. We provide debt and equity capital that includes preferred equity and mezzanine debt for commercial real estate loans, commercial bridge loans and commercial construction loans to include value added, distressed, and opportunistic transactions. Our financial products are structured creatively around the asset to help you achieve maximum ROI.
Highrise Investment Group understands the difficulty and frustration that comes with locating capital when you need it. We have spent years developing relationships and making connections with private sources of debt and equity. Do you know who will fund your project and at what cost it will be to you? We do. We know the private debt and equity sources that will fund your construction project and those that won't. We know who prefers to provide equity for a hotel and who doesn't.
Take advantage of our time spent getting to know debt and equity sources that have capital available at the lowest cost to you. Our firm provides commercial real estate loans for borrowers in unique and time-sensitive situations anywhere in the United States. Along the way, we guide you through the commercial real estate lending process to help you achieve your goals. Our focus is to provide you with timely, reliable, and customized solutions that are not accessible through traditional lenders.
Highrise Investment Group is backed by private banks, private funds and various institutions ready to execute a loan at a moments notice. We provide non-recourse and recourse capital at all stages of the investment cycle from development to lease-up through stabilization. Our main objective is to provide you with the best possible financing solution at the lowest cost of capital.
Highrise Investment Group also works with business owners by providing capital needed to help you take your business to the next level. Whether you are looking to purchase a business, expand a business, buy out a partner, purchase new equipment, buy or expand a franchise or need working capital, our business loans provide long repayment terms that reduce your monthly payments. This in turn increases your cash flow which will allow you to invest in or expand your business. You can visit our business loans page for more information.
When is a commercial loan needed?
A commercial loan is provided to an investor looking to purchase, refinance, renovate or develop a property such as a retail shopping center, office building, warehouse, multifamily apartment, hotel and other commercial real estate as an investment. These loans are different from your typical residential mortgage in that they are not backed by a government sponsored enterprise (GSE) such as Fannie Mae and Freddie Mac. Thus, commercial loans are not regulated like a residential mortgage. This lack of regulation creates a myriad of choices for someone seeking a commercial loan for a new investment.
This is where Highrise Investment Group rises to the occasion to help provide you with the capital your investment needs. Most commercial lenders are risk-averse and seek to mitigate risk through their lending guidelines. These guidelines can vary greatly from one capital source to another. Where one capital source might provide a loan with higher leverage but also higher interest, another capital source might provide a loan with lower interest but also less leverage. Highrise Investment Group’s primary goal is to provide you with a commercial loan that in the end gives you the best ROI.
Frequently asked questions
Here are a few frequently asked questions that come up in the search for a commercial loan. Read over the questions and explanations provided. Along with providing answers, they will possibly raise new questions you haven’t thought of.
- What are the typical repayment terms that I can expect?
It might be said that there are no typical repayment terms for a commercial loan. Terms can vary greatly from traditional banks to non-bank lenders. Depending on the purpose of the loan, the term can be anywhere from six months to 25 or 30 years. It can be an amortized loan or an interest only with a fixed or floating rate.
For a permanent commercial loan, you can expect a term set at 3, 5, 7 or 10 years amortized over 25 or 30 years. For a shorter loan or bridge loan, you can expect a term anywhere from 1 to 3 years and typically with interest only payments. When your commercial loan reaches its maturity date, you will be faced with either paying it off or refinancing into a new loan.
This is where thinking ahead can pay off in the long run. Interest rates on a commercial loan are typically based on a spread over the associated treasury or swap rate. This can vary among capital sources. One might like 2.0% over the 10 year treasury while another might like 2.4% over the 10 year treasury. The end result for you could be an interest rate of 3.99% or 4.39% with a 10 year treasury set at 1.99%.
You might be given the choice of a short term loan with a lower interest rate or a long term loan with a slightly higher interest rate locked in. Which direction would you go? It will all depend on why you need a commercial loan. On one hand, a low interest rate might be appealing, but is it the best choice? On the other hand, a slightly higher interest rate can possibly lock you in with a longer term commercial loan. Highrise Investment Group can help you work through this process and provide the best terms for your investment.
- How much will I be able to borrow?
This is a very broad question that involves a multitude of factors in determining your final loan offer. It can also depend on how much you are willing to pay for it. Some commercial lenders can provide a commercial loan with a higher leverage but also with a higher rate. A lender will want to mitigate risk with a higher rate or with a lower leverage for a short term. Your goal should be to encourage the risk with an exceptional track record of real estate investments, great credit management and a financial net worth that supports your commercial loan request.
The amount you will be able to borrow is impacted greatly by your real estate investment experience and your net worth / liquidity. You can expect a commercial loan to have a loan-to-value or LTV anywhere from 50% LTV to 85% or 90% LTV. Some first position commercial loans will only go up to 70% LTV. If you need a higher leveraged commercial loan, it is possible to have mezzanine debt or some form of equity added to achieve a higher leverage.
Your chances of getting the best commercial loan possible will be a result of how prepared you are and the depth of your commercial real estate experience. Review the documents needed for a commercial loan in the next section. It will help you be prepared and present your commercial loan request in its best light.
- What documentation is needed for a commercial loan request? Along with the list of items below, a traditional lender or bank will want to review your past three years of financial statements, past three years of personal and business tax returns and your recent personal and business bank statements. Most all lenders will want to see the list of items below at a minimum:
- Current personal financial statement (PFS), one for every guarantor owning 20% or more of the borrowing entity
- Business plan or executive summary of the project
- Current P&L statements on the borrowing entity
- Project specific documents - purchase agreements, construction budgets, use of funds etc.
- Articles of Incorporation or Organization, w/ Bylaws or Operating Agreement
- Current resume or bio of commercial real estate experience that supports your commercial loan request
You will have greater success with your commercial loan request when you are specific and thorough with the information you provide. Make sure to provide complete information. Present your information in a concise and easy to follow format as you highlight your experience and outline the details of your loan request. Leave no question unanswered. Specificity will get you funded, and your investment portfolio will grow as a result.
- How long is the process for getting a commercial loan? Depending on the source of capital and how quick it’s needed, the process can take anywhere from a couple of weeks up to 30 to 90 days or more. If you need the funding fast, there is the option to provide less documentation which takes less time but typically comes with a higher interest rate and more points added to the loan. This could be ideal if you plan to have a quick turn around with the property and sell it or refinance it in a short amount of time.
A traditional lender will typically be the best source for a commercial loan if you are looking for the best rate and term. The downside is a traditional lender comes with greater regulations, requires more documentation and takes longer to get your loan closed. This can be a better option if you are organized with your investing and have the luxury of time.
If time is of the essence for your particular funding scenario, a non-traditional lender will be your best choice. A non-traditional lender does not have the stringent regulations to follow like that of a traditional lender. As a result, fewer people are needed to approve the loan, less documentation is required and the funding process is shortened considerably.
The goal of Highrise Investment Group is to make the funding process for you as painless and simple as possible. Our capital is backed by private banks, private funds and various institutions. Through our lending relationships, we will work with you to provide a quick response, custom loan structuring and certainty of execution.
- What if I decide to sell my property early? Most commercial loans come with a pre-payment penalty. You need to be aware of this. If for example your loan is due in 10 years, there could be a pre-payment penalty if you decide to pay it off within 5 years. The penalty is typically applied using a graduated scale from 5 to 1 and can vary from lender to lender. On a 5 year pre-payment penalty, you might see the penalty written as 5-4-3-2-1. This means there is a penalty if the loan is paid off in each of the first five years. If it’s paid off in year three, the penalty will be 3% of the current loan balance. This penalty scale continues until you get to year six, and you have passed the penalty period.
For large commercial loans financed with a CMBS loan, a defeasance penalty is common. The main difference between defeasance and yield maintenance shown above is that in defeasance you would not have a cash penalty. Instead, you would be responsible for giving the lender a group of securities that give them the same cash flow as the payments on your current loan. This is not a penalty but a replacement of the collateral for your loan. Additionally, there is no 1% minimum penalty. You simply are responsible for buying the securities no matter what they cost. Under certain circumstances, you could buy the securities for a lower amount than the current note rate and actually make money by paying off the loan.
- What are the common costs associated with a commercial loan? Naturally your loan will have an interest rate that’s either fixed or floating. Most commercial loans also come with points ranging from 1 to 4 or more. One point is typically equal to 1% of the loan amount. These points can be applied either at the beginning of the loan, end of the loan or both. Here are some other costs that you might encounter before closing ever takes place:
- Appraisal fees
- Market and feasibility studies
- Engineer reports
- Environmental reports
- Inspection fees
- Surveyor’s fees
- Legal fees
- Commitment fee
Be mindful of your expectations for the future performance of your investment and how that will coincide with the payment plan you choose for your commercial loan. Plan for worst-case scenarios to ensure your loan payments will always be covered. The loan with the lowest interest rate is not always the best choice.
The best commercial loan for you is the one that fits your scenario in a timely manner and provides you with the best ROI. Whether you need a short-term or long-term loan, Highrise Investment Group will work with you to ensure you receive the capital you need when you need it. Call us today at 800-605-3238 or complete our online loan application to get started.