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60%

Loan to Value

$960,000

Total Loan

Express Capital Financing Loan Officer Ben Shara

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

Express Capital Financing Loan Officer Ben Shara

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

Express Capital Financing Loan Officer Ben Shara

Loan Officer

Ben Shrara

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.

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.

FixNFlip

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

Express Capital Financing Loan Officer Ben Shara

Need funding for your next DSCR?

Express Capital Financing Loan Officer Ben Shara

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.
“When dealing with commercial properties, it's crucial to work with a lender who knows the ropes. These deals aren't like handling smaller residential properties, but with the right expert, the process can be just as easy.”
Ben Shrara

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.

Express Capital Financing Loan Officer Ben Shara

Loan Officer

Ben Shrara

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