How to Secure a CMBS Loan
If you are a commercial real estate investor, you may want to consider Commercial Mortgage Backed Security (CMBS) loans the next time you want to purchase a property. These types of loans can offer several advantages in the way they are issued and paid back. It is a good idea to look into the specific terms of any loan you are considering very carefully to ensure that you do not misunderstand any aspect of the repayment requirements. However, this type of loan can be obtained if you have good credit and the property you want to purchase meets certain criteria.
Since CMBS loans are primarily investment vehicles, the property you want to buy must have a good, stable and positive cash flow. Investors are not usually very fond of the idea of losing money. Most do not even want to take a chance on a property that might make money someday. Investors are usually concerned with getting their money back plus some profit within a reasonable amount of time. Any property that is currently earning money each month is a good candidate for investment.
Another critical factor is the property location. If the property is located in an economically depressed area, it could mean that any current money it is earning could decrease over time. On the other hand, if the property is in a growing area, the chances are that increasing rents could bring investors more earnings over time. When the investors have a better chance of greater returns, then the chances for you receiving CMBS loans generally increase. For a better chance of receiving loans, you should seek out a property in a location that you can demonstrate is on the verge of an economic growth spurt. If the values in and around the area of your property are steadily increasing over time, it is a good indication that the property you are buying will increase in value as well.
The final factor in increasing your chances of getting CMBS loans is your level of management expertise. Property that is properly managed will usually earn more profit, and greater return for investors, than property that is poorly handled. If you lack direct management experience, you may need to hire a seasoned professional with credentials that bespeak of increasing property value. If you will be the property manager, make sure that you polish your skills and take every possible measure to increase the value of the property. Proving that you are able to make money for the investors in your loan is probably the best way of improving the odds for getting a Commercial Mortgage Backed Security loan.