Home / Case Study / Beyond the Appraisal: A Commercial Property’s Triumph with an Interest-Only Loan

60%
Loan to Value
$960,000
Total Loan

Ben
shrara
Beyond the Appraisal: A Commercial Property’s Triumph with an Interest-Only Loan
Case Study I DSCR
Switching to an interest-only loan and seeking fair valuations helped overcome refinancing challenges, boosting equity for a previously undervalued commercial property.

60%
Loan to Value
$960,000
Total Loan

Ben
Shrara
The Stats
$960,000
Total Loan Amount
7.625%
Interest Rate
60%
Loan To Value
1.758
DSCR
The Stats
$960,000
Total Loan
Amount
7.625%
Interest
Rate
60%
Loan To
Value
1.758
DSCR

Overview
Loan Program Used
DSCR
Closing Date
November 11th, 2024
Location
Passaic, NJ
Property Type
6 Unit Multi-family
Goals
Overcome appraisal and refinancing challenges to leverage the increased value of their commercial property.
Home / Case Study / Beyond the Appraisal: A Commercial Property’s Triumph with an Interest-Only Loan
3 min read
Project Summary
When a promising property upgrade hit appraisal roadblocks, rigid financial assessments, and a challenging property refinance, the investor found a powerful ally in Ben Shrara and Express Capital Financing.
Faced with a valuation that failed to mirror the property's true worth and complex refinancing challenges, Ben’s shift to an interest-only loan approach was nothing short of a game-changer. This savvy move, combined with a determined push for accurate market valuations, not only cleared the path for refinancing but also unlocked significant equity for the investor.

The Challenge
The client aimed to maximize the newly increased value of their property, following recent rent increases and property improvements. However, several significant obstacles emerged:
● An appraisal that did not reflect the property's updated value and income potential.
● A Comprehensive Development Analysis (CDA) that similarly undershot the financial metrics needed for loan approval.
● Inability to include garage unit rents in the Fair Market Rent (FMR) assessment, impacting the loan-to-value ratio.
● Extensive timelines for completing necessary Needs Condition Assessment (CNA), delaying the refinancing process.
● The existing debt service coverage failed to reflect the property's true financial vibrancy, making it difficult to secure favorable loan terms.
The Solution
With Ben Shrara's expert guidance, Express Capital Financing adopted a multi-faceted approach to navigate and overcome these hurdles:
● Switching the loan structure from a 30-year fixed to a 10-year interest-only term helped improve the property's debt service coverage, making the deal more palatable to lenders.
● Ben Shrara appealed both the initial appraisal and the CDA, advocating for a valuation that accurately reflected the property's true market value and income after the recent improvements and rent increases.
● Through meticulous analysis and negotiation, the team navigated the challenges of not being able to count additional rental income from garage units within the FMR calculation.
Ben's expertise was crucial in strategizing these adjustments and appeals, ensuring the client's needs and goals remained at the forefront of the refinancing endeavor.
Total Loan Amount: $960,000
Interest Rate: 7.625%
Loan To Value (LTV): 60%
DSCR: 1.758
Key Takeaways
Tackling valuation challenges and leveraging his deep understanding of commercial finance, Ben deftly engineered an interest-only refinance solution that rewarded our client with significant equity cash-out.
- Leverage Commercial Loan Expertise: Experience in the commercial sector is indispensable; it’s essential to engage with a lender adept at dealing with these complexities.
- Adaptive Financing Solutions: Loan programs should be tailored to overcome specific financial challenges, demonstrating the necessity for adaptability in loan structuring.
- Assertive Valuation Reassessment: Ensuring properties are appropriately valued is paramount; an expert lender should be ready to advocate vigorously for fair property evaluations.
- Embrace Interest-Only Benefits: Interest-only loans can substantially mitigate immediate financial burdens, offering investors increased flexibility and strategic advantages.
Transform Challenges into Opportunities with Our DSCR Loans
By embracing an interest-only loan approach and advocating for a fair valuation, significant equity was unlocked and refinancing hurdles were overcome—demonstrating the indispensable value of strategic financing solutions and experienced guidance.
For investors grappling with similar challenges, this case study underscores the potential for transformative outcomes when partnering with knowledgeable professionals like Ben Shrara and the team at Express Capital Financing. If unlocking the true value of your property and navigating the refinancing process with ease are your goals, contact us today and take the pivotal step toward securing your investment's future.
Featured Topics
Overview
Loan Program Used
DSCR
Closing Date
November 11th, 2024
Location
Passaic, NJ
Property Type
6 Unit Multi-family
Goals
Overcome appraisal and refinancing challenges to leverage the increased value of their commercial property.

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