Commercial Real Estate Refinance
Commercial Real Estate
Refinance — Done Right
Commercial real estate refinancing lets you replace a current property loan with a new one.
940+
Loans
854+
Clients
$4.5B+
Funded Loans
Overview
What Is Commercial Real Estate Refinance?
A refinance should make the property easier to hold or exit.
A lower interest rate is only a win if it simultaneously improves your monthly cash flow and reduces your total debt balance by the time the loan matures.
It Might Make Sense to Refinance If:
Your current loan is about to mature.
Your property has improved enough to qualify for a better structure.
Market interest rates have dropped.
You want to monetize equity through a cash-out.
Our Recent Closings
Industrial Property Acquisition
Honolulu, Hawaii | $1,875,000
Multifamily Portfolio Refinance
Brimingham, AL | $19,100,000
Multifamily Major Rehab Building
Westwego, Louisiana | $21,000,000
Typical Commercial Real Estate Refinance Options
Permanent Refinance
Permanent refinance replaces interim debt with long-term mortgage financing once the property has stable income
Bridge Refinance
It can help you refinance when the property is still in transition, such as when the lease-up is not yet complete.
A Rate-and-Term Refinance
It replaces the current loan with a new structure to adjust the rate or change the amortization period.
Hard Money Refinance
It allows you to access part of your equity in the property through a new loan.
What Determines Commercial Real Estate Refinance Terms?
Market Conditions
Treasury yields and lender capital costs can influence commercial mortgage pricing
Property Performance
Lenders review the property’s income history to see whether it can carry the new debt.
LTV
The lender may feel safer and lower the interest rate if you borrow less (say, 60% instead of 80%).
Your Creditworthiness as the Borrower
If you have a history of paying your bills on time and plenty of cash in the bank, it’s much easier to get approved.
Loan Type
A permanent refinance will usually price differently from a bridge refinance
DSCR
Lenders usually want the property to make at least $1.25 for every $1.00 of debt payment. If this ratio is too tight, they will reduce your loan amount or deny the application.
Why Choose Private Capital Investors for Commercial Real Estate Refinance?
Unlike traditional institutions that automatically disqualify loans due to temporary vacancies or minor credit fluctuations because they rely on rigid underwriting, we utilize a pragmatic asset-based approach.
We often close within 2 weeks.
We are direct lenders, so you won't have to wait weeks for a third-party approval.
We prioritize the intrinsic value of the real estate and the viability of your business plan, not credit scores and tax returns.
Eligible Commercial Properties
Retail Loans
Gas Station Loans
Dental Clinic Loans
Marina Loans
Self Storage Loans
Auto Dealership Loans
Day Care Center Loans
Car Wash Loans
How Does Commercial Real Estate Refinancing Affect Loan Costs?
Do note that the savings are not automatic.
To make the most out of your commercial real estate refinance, you need to compare the new loan against closing costs and any prepayment penalty on the existing mortgage.
Does the new loan extend the repayment period too far? You may end up paying more interest over the full hold period.
Monthly Payments
You can reduce your monthly debt service and free up some money when you get a lower rate or longer amortization.
Total interest paid
A better rate can reduce your borrowing cost over time, though a longer term may increase total interest. You must balance monthly savings against the total long-term cost. Extending a 20-year loan to a 30-year loan can actually make the property more expensive over time.
Investment returns
By reducing debt costs, a larger percentage of the rent goes directly into your pocket as profit, which immediately boosts your property’s ROI.
Balloon Payment Risk
Refinancing can move the payoff date several years into the future, so you’re not forced to sell in a bad market.
Frequently Asked Questions
What minimum DSCR do lenders require for commercial refinance?
For conventional deals, 1.25 is the target.
What loan-to-value ratio is allowed in CRE refinancing?
Up to 75% LTV for strong borrowers is the standard.
How do lenders determine the property value for CRE refinancing?
Lenders use formal commercial appraisals, which primarily convert the property’s NOI into a present value based on current market capitalization rates. The lender then validates this figure by comparing it against recent comparable sales and the replacement cost of the asset.
Are interest-only refinance options available?
Some commercial refinance structures may include an interest-only period.
How do prepayment penalties affect refinancing decisions?
Prepayment penalties can make refinancing less sensible even if the new loan has a lower rate. For example, if refinancing saves you $3,000 per month but the prepayment penalty and closing costs total $120,000, it would take 40 months to break even. If you plan to sell or refinance again before then, the deal may not be worth it.
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Want to learn more? Get in touch with us today.
Our experienced team is ready to assist with your financing needs.
Address:
2101 Cedar Springs Road Suite 1050 Dallas, TX 75201
Phone:
972-865-6205
Email:
info@privatecapitalinvestors.com