Covid-19 Pandemic Affects Entire Commercial Real Estate Market

The pandemic changed the world in early 2020 as the virus affected every segment of the real estate market.  Social distancing and stay at home mandates had severe effects on real estate.  Retail properties, hotels and motels, and leisure properties in general were decimated, while essential retail, medical offices, and warehouse properties for e-commerce companies did exceedingly well.  Close to a half million people have died from the coronavirus so far, although deaths and hospitalizations have begun to slow down.  The health crisis has caused employers to lay off some workers and force others to work from home.  This has created a major demographic shift in the economy.  This economic uncertainty has caused some households to search for less expensive housing, while others needed larger spaces for work from home and online school.  Due to a reduction in commuting, more people left dense urban areas in favor secondary or tertiary locations.  Public transit levels remain well below pre-Covid levels as fewer people are commuting to work.  Higher unemployment levels and people working from home are causing more people to spend more time at home than ever.  One positive benefit that we are seeing is a surge in new small business start-ups from people working from home.

The economy was relatively healthy heading into 2020.  Corporate profits were high, and companies were sitting on a lot of cash.  Throughout this health crisis, the money supply has remained liquid as the federal government has injected large amounts of cash into the economy with various stimulus measures including the Paycheck Protection Program and the CARES Act.  In response to the coronavirus, the federal government also fast tracked several vaccines for emergency use.  These immunizations are providing a path forward for the economy in general and the real estate market in particular.  Although major uncertainty exists in the market in 2021, we remain hopeful that the real estate market will rebound in the near future.

Whether you are purchasing or refinancing, we have the right solutions available. We will entertain loan requests of all sizes, beginning at $1,000,000. Get started with a Free Loan Quote.

Covid-19 Lending Update: What’s Hot and What’s Not

The global Coronavirus pandemic has wreaked havoc on the nation’s economy and has severely impacted the commercial real estate market.  After more than six months, some states are trying to get back to normal, while others are experiencing a second wave of school and business closures.  Many commercial property owners have experienced serious hardship, and a devaluation of their properties, as a result of poor collections, due to tenants who are unable to pay their rent.  As a result, most commercial real estate lenders have either stopped lending or have tightened up their underwriting guidelines.  Here is a current lending update on various property types:

Apartment buildings – Multifamily loans

Most apartment lenders are still lending as people still need a place to live.  However, due to rent strikes, moratoriums on evictions, and tenants who can not afford to pay rent, lenders are lending conservatively.  Underwriters are lowering their loan to value ratios, increasing their debt service requirements, and collecting reserve accounts in order to protect against cashflow shortfalls.  Certain apartment sectors have been extremely hard hit, including the luxury market and student housing.  In the luxury market, many higher end rentals have suffered large rental declines as tenants are concerned about high rental costs.  In the student housing market, we are seeing extremely high vacancy rates as students are staying home for virtual classes and do not need to be on-campus while their schools are closed.


Even before Covid-19, the retail sector was in trouble due to the internet and online shopping.  Many large retailers declared bankruptcy as they could not compete against the likes of Amazon and other internet retailers.  The pandemic has made retail lending almost untouchable.  With abundant store closures due to the Coronavirus, people are not visiting local retailers to go shopping.  Stores that provide essential services, such as grocery stores and pharmacies are still financeable, as are some of the single tenant properties like Family Dollar and Dollar General.  Lenders who are still looking at retail deals are generally focused on these essential service businesses.  On the other hand, businesses like restaurants, clubs, and bars are finding it almost impossible to secure financing.

Hotels and Motels

This sector has been decimated by the pandemic.  Business and leisure travel are both at all-time lows and most hotels and motels are suffering huge declines in income.  Very few lenders are looking to make hospitality loans in this market.


Many employees are working from home and will probably continue for some time to come.  Companies are considering allowing “work from home” even after the pandemic.  This is causing many companies to reevaluate their need for office space, making lenders very concerned about lending in this sector.  Expect to see much more conservative lending for the foreseeable future.  One exception is medical office space.  Medical space is an essential service and the only growing market in this sector.


Lenders still have an appetite in this sector.  Lenders are considering loans for owner/user industrial companies that are able to grow and survive in this economic downturn, especially those companies active in essential services and production of essential supplies.  Also very active is the market for warehouse space for internet retailers who need warehouse and distribution centers for storage and distribution, such as Federal Express and Amazon.

Commercial mortgage lending is going through many changes right now.  It is important to get local, knowledgeable advice from a qualified commercial lender before proceeding.  Please feel free to visit for more information.

Covid-19 and the Commercial Real Estate Market

The Covid-19 pandemic has created havoc on Americans’ health and the health of their businesses. April 1st marked a major due date for rent payments for millions of businesses large and small, and reports from around the country indicate that many were facing great difficulty.

The President and state governors have been reporting daily on total Coronavirus cases and the current death toll, but there is no daily count of lost businesses. However, reports of unpaid April rent have greatly increased around the country, along with accounts of how landlords and tenants are trying to cope with the sudden collapse of a large portion of the American economy.

Most of all, they tell the story of the commercial real estate industry in turmoil, with businesses large and small feeling the pinch that some say could wreck the economy like the Great Recession of 2008. With many businesses shuttered, and homeowners out of work, landlords are having difficulty collecting rents and paying their mortgages and taxes.

There are several government and private business efforts starting up to help suddenly cash-starved businesses survive the pandemic, most notably the Paycheck Protection Program now available through the U.S. Small Business Administration.

That money, in the form of loans that many expect to turn into grants, is only beginning to be distributed, and 75% of each forgivable loan must go to payroll. That leaves only 25% at most to go to rent.  While helpful, this program will only provide a short-term solution to businesses and landlords.  Depending on the length and severity of shutdown, Congress will probably need to more to ensure the survival of small businesses and the economy in general.

The American commercial real estate market, like the economy it helps support, is a complicated mix of financial and business relationships that is now being tested like we have never seen before. Some businesses will fail, and others will find a way to survive. We will be watching the market very closely in the weeks and months ahead.  Please visit our website at for current information.

How to Invest in an Apartment Building

Stephen A. Sobin

As a commercial mortgage broker with almost 35 years of lending experience, I am often approached by first time investors who are looking to buy an apartment building as an investment.  These new investors want to understand the steps involved in locating and purchasing their first building.  The following guide should be followed:

Check Your Credit – go online to one of the free credit reporting sites on the internet and run your credit report and credit scores.  Lenders expect to see borrowers with a good credit rating.  If any negative items appear on your credit, make every effort to clear up these items in advance.  If you have experienced past problems, be ready to explain these problems in a well written letter of explanation.

Locate an Experienced and Competent Real Estate Agent – make sure you find a real estate agent that specializes in apartment buildings.  Most agents that sell homes for a living have no experience selling apartment properties.  As a first timer, you need an agent that can help you through the details, as a commercial investment is much different than buying a home.  The agent should understand which neighborhoods are on the rise and which neighborhoods to avoid.

Get Full Disclosure – it is crucial that you obtain complete financial records on the property.  Do not rely on verbal statements.  You need to verify all income by looking at the leases and all expenses by looking at actual bills.  Most sellers overstate the income and understate the expenses.  Do your homework carefully.

Visit the Property – do not consider making an offer until you inspect the interior and exterior of the property carefully.  Is the property in good repair?  Is there any deferred maintenance?  Are the units actually occupied or is there apparent vacancy?  Is the neighborhood relatively safe and free of crime?  Are there other buildings in the nearby area that are in disrepair or suffering from high vacancy?

Make a Legitimate Offer – don’t be fooled by a high asking price.  Calculate the gross income and subtract expenses to come up with a net operating income.  The NOI needs to be adequate to cover a proposed mortgage, as well as, return a profit to the owner.  If the numbers don’t work, keep shopping.

Engage an Experienced Commercial Mortgage Broker – a commercial mortgage broker specializes in financing investment properties and will understand all of the nuances of a commercial mortgage loan.  It is crucial that you find a broker who is competent and experienced.  As a first-time buyer, the advice you receive will be invaluable.  A good broker will make sure you offer a fair price and do not overpay.  He will understand the market and negotiate the best terms available for your particular needs.

Be Prepared to Move On – many investment opportunities are not fairly priced.  Do not make the mistake of falling in love with a property.  This is an investment and you need to remember that the goal is to make a profit.  If the property does not make sense, move on and keep shopping.  Your commercial mortgage broker will assist you in this regard.

Stephen A. Sobin is the President and Founder of Select Commercial Funding LLC, a leading nationwide commercial mortgage brokerage company. For more information, you may visit their website at

Are You Shopping for an Apartment Building Loan?

We specialize in apartment building financing on a nationwide basis.  We have a special program for loans of $1,000,000 to $5,000,000 that I’d like to discuss with you today.  These loans are available for purchase or refinance and allow for cash-out refinancing at the bk lawyers san diego.  Some of the features and benefits of our program include:

  • We offer fixed rate loans for 5, 7, and 10 year terms.
  • At the conclusion of this term, our loan converts to an adjustable. This eliminates the balloon payment.
  • We amortize our loans for a full 30 years.
  • Interest only loans are available for several years at the beginning of the loan term.
  • Loan to Value ratios up to a full 80% are considered
  • We offer Non-Recourse financing. No personal guarantee is required.
  • Easy stepdown pre-payment penalties and no yield maintenance formulas!
  • Simplified application and underwriting. We do not require tax returns!
  • Loans available nationwide. We lend in all markets, including rural areas.
  • Fast closings. Most loans close within 45 days from formal application
  • Free rate locks. We lock your rate for 35 business days from application at no additional cost.
  • Low 3rd party costs. We cap our third-party costs which can save you thousands of dollars.
  • Extremely competitive rates. Our rates are among the lowest available.
  • No cost and no obligation rate quotes. Apply simply and get pre-approved in 24 hours!

If you would like to discuss a loan scenario, please call me at 516-596-8537 or visit Select Commercial at today!

Uncomplicated Underwriting

Loan applications are put together in many different ways before they land on an underwriter’s desk. Some borrowers and originators submit a simple one-page request, while others submit reams and reams of paperwork upfront.

Neither approach is ideal: Commercial loan underwriters do not have the time to read through hundreds of pages of tax returns and other data when deciding whether to pursue an application. A one-page synopsis does not usually provide enough detail either.

Underwriters need a clear and concise package that can be read quickly and understood. There are some standards you can apply to create an effective loan application with information that is most likely to get the loan approved.

30 Years of Mortgage Lending Experience

I have been involved in mortgage lending for over 30 years. My company, Select Commercial, focuses on originating commercial mortgage loans for the owners and purchasers of commercial real estate nationwide. Our clients range from first time commercial property buyers to seasoned investors who come back repeatedly each time they purchase a new commercial property or need to refinance an existing commercial mortgage loan. We have successfully financed all types of properties, including apartments, retail, industrial/warehouse, and office buildings. We have special programs for small business owners who are looking to purchase or refinance their own business properties – many of these properties are single and special use properties that are often rejected at local banks – such as gas stations, restaurants, motels and more.

I thought I would write about some of our recent closings in order to share some examples with you:

  • We closed a $1,518,000 loan to allow our client to purchase a mobile home park/trailer park in Maryland. We offered the borrower a 75% LTV and gave him a 10 year loan and a 25 year amortization. The rate was fixed for 5 years at a time. The borrower’s local bank was not interested in a trailer park and did not like the remote location (it was in a small community). We liked the borrower’s qualifications and the property’s cash flow and approved this loan.
  • We had a client that owned a restaurant in a suburban Colorado location. He needed to refinance his loan to obtain a lower rate and take cash out to build a second location. We approved a $1,400,000 cash out refinance for a 25 year term. Our loan was a renewable 5 year fixed rate loan at a lower rate than his current loan (see that’s cleaning maids tx). Our borrower’s local banks were not interested in financing a restaurant. We did not have that restriction.
  • Another client of ours was the owner occupant of a pizzeria located in a small strip center in Brooklyn, New York. He was looking to take cash out of his property to buyout a family member who was retiring. We closed a loan of $1,050,000 with a 5 year adjustable rate and a 25 year term. Our rate was much lower than the local bank offered.
  • We closed a $1,116,000 loan for another one of our clients who was purchasing a 48 unit apartment building in Oklahoma City, Oklahoma. The borrower lived out of state, and the local banks did not want to lend to an out-of-state buyer. We made a loan at 75% LTV and offered a 7 year adjustable with a 25 year amortization.

These are just some recent examples of loans that Select Commercial closed for our clients. We would love the opportunity to help you purchase or refinance your next commercial real estate transaction. If you have a scenario you would like to discuss, please call me directly at 516-596-8537 or click here for a free loan quote.

Stephen Sobin

Announcing Our Best Apartment Building Loan Program Ever!

Select Commercial is pleased to announce a new program for the purchase or refinance of apartment buildings with the lowest rates and best terms we have ever offered!

Here are the features and benefits of these loans:

  • 5 year fixed rates as low as 3.05% today.
  • Nationwide lending. Metropolitan markets preferred.
  • Rates fixed for 5, 7, or 10 years.
  • Adjustable rate option after conclusion of initial fixed rate.
  • 30 year amortization.
  • Interest Only payments allowed.
  • Easy step-down prepayment penalties (no yield maintenance or defeasance).
  • Up to 80% LTV ratio.
  • As low as 1.20x debt service coverage ratio.
  • Many prepayment options to choose from.
  • Free rate lock for up to 90 days.
  • Loans from $1,000,000 and up.
  • Conventional multi-family (5+ units), including housing with tax abatements and Section 8 vouchers.
  • Loans for purchase or refinance.
  • Cash-Out refinances acceptable.
  • Non-Recourse
  • Tax escrows, Insurance escrows, and Replacement Reserves may be waived (subject to applicable guidelines).
  • Credit scores as low as 650 acceptable.
  • Very low application fees.

If you have a deal to discuss with us, please feel free to call us at 1-877-548-9454 or click here to complete an online inquiry.

How to Qualify for a Great Rate When Refinancing Your Apartment Building

When it comes to refinancing your Apartment Building the first thing you’ll want to know is how to qualify for the best rate. There may be things that have happened since you financed the building that could negatively affect your ability to refinance. Some of the factors that will be underwritten include: property value, loan-to-value ratio, debt-service-coverage ratio, borrower’s net worth, liquidity, and credit rating. If you are a good candidate for refinancing, your main goal will be to get the lowest rate and best terms possible.

While getting the best rate is very important there are other loan terms that need to be considered. For example: Is the rate fixed or adjustable? Your investment time horizon will help you answer that question. Are you considering selling the property?  If so, the prepayment penalty will be important. Are you looking for a recourse loan or a loan without a personal guarantee? If there are multiple investors involved, it might be best to try to secure a non-recourse loan. What are the fees and closing costs involved in closing? A lower rate might look attractive until you factor in the costs involved. Is your lender capable of closing your loan on the terms promised? Some apartment mortgage lenders do not deliver on their promises and change terms during the underwriting of your loan. Is your lender experienced with apartment lending in your area? You should choose a lender that specializes in apartment loans. These are just some of the issues you should address with the apartment lender you choose to handle your loan application.

 Here are some of the items lenders will consider when they analyze your apartment mortgage application:

  1. Property location – most lenders prefer large metropolitan or suburban areas and don’t consider loans in very rural areas. Loans in rural areas are often considered riskier for lenders as these properties are harder to rent. If your property is in a very rural location, make sure to discuss that with the lender upfront.
  2. Are the tenants signed to leases or are they month-to-month? Is the property subject to high turnover?       Are rental concessions necessary to keep the units filled? Lenders do not like apartments that have to fight to attract and keep tenants.
  3. How is the historical occupancy and cash flow?  Lenders like properties with constant positive cash flow and good occupancy history.  Major fluctuations in cash flow cause concern for lenders.       Lenders like to see occupancy at 90%+. If your property has lower or uneven occupancy, you will need to provide an adequate explanation.
  4. Is the property in good condition or does it need repairs and/or renovation?  A property in need of repairs could create a cash drain and affect the ability to pay the mortgage. Properties in need of work will often lose tenants when newer units come on the market. Make sure to complete major repairs which affect occupancy prior to applying for your loan.
  5. What are the loan to value and debt service coverage ratios?  Underwriters have guidelines which need to be addressed upfront. Most borrowers understand the LTV. The debt service ratio looks at the proposed mortgage payment in relation to the net income. Lenders use this calculation to make sure that adequate cash flow exists.
  6. What is the credit rating of the borrower?  We typically expect to see credit scores above 680.  Lower credit scores will require a solid explanation.
  7. What is net worth of the borrower?  Does the borrower have the ability to withstand a temporary setback?  Lenders like to see a borrower with reserves, or cash liquidity of typically 5-10% of the loan amount.
  8. Does the borrower have experience managing property apartment properties?  Most lenders will require that a borrower has prior experience owning or managing real estate.

These are some of the questions that a lender will ask when reviewing an apartment building loan application.

Another tip to getting the best rate and best terms is to consult a licensed and qualified commercial mortgage broker.  A competent commercial mortgage broker who deals with many different types of lenders has an advantage over going to a local bank. Apartment mortgage brokers represent not only local banks, but agency lenders, national commercial banks, insurance companies, Wall Street CMBS lenders, credit unions, and private lenders. A wide choice of lenders will increase the likelihood of obtaining the best rates and terms available in the market.

If you have a question about refinancing an apartment building or anything related to apartment mortgage lending, please don’t hesitate to contact me at 1-877-548-9454.

What are Investment Properties and How to Use an Investment Property Calculator

Investment properties include:

Apartment Buildings – apartment properties are a great way for small and large investors to obtain investment properties. In today’s economy, many people are choosing to rent rather than purchase a home. The market for apartment building purchases is very strong and many investors are choosing to buy apartment buildings as investment properties.

Commercial Buildings – other common investment properties include office buildings, retail centers, warehouse and industrial properties and many other types of income producing properties. Some of these investment properties might contain multiple tenants while others might be single tenant properties. Some examples include an anchored retail shopping center, a medical office property, or a single tenant chain drugstore or fast food restaurant. Regardless of the property type, they all share one thing in common: the rents received from the tenants provides both return on investment and potential appreciation in value.

Single Family Homes imp source – some investors choose to own multiple single family homes for rental purposes.  These investors often find that residential lenders have a maximum number of home loans that they will approve for one borrower.  It often makes sense to obtain one investment property loan to cover multiple investment properties.

Two to Four Unit Rental Homes – many home lenders will not lend on 2-4 unit rental homes that are owned by a partnership, corporation, LLC or trust.  An investment property lender understands these transactions and will be able to make an appropriate investment property loan.

How Much Can I Afford to Borrow?

An investment mortgage calculator is used to calculate the monthly payment on an investment property loan. The investment property calculator will require the following inputs: length of loan in years, loan amount and interest rate. The investment mortgage calculator will output the monthly payment to be paid. The monthly payment covers principal and interest only. Many lenders escrow for taxes, insurance and replacement reserves. If these escrows are required, you will need to add those amounts to the monthly payment in order to calculate the true monthly cost of your loan. Many borrowers find it helpful to use an investment mortgage calculator in advance of shopping for a property to get an idea as to what they can afford.

How to Shop for  an Investment Property

Before you begin shopping for an investment property, the first thing you should do is to obtain your credit scores. There are many sources on the Internet that will provide your credit scores for free. Lenders will base their credit decision partly on your credit score, so it is important to know up front if there any negative issues affecting your credit. The next thing you should do is to determine what type of property you would like to own. Would you rather own an apartment property or a commercial property? Would you prefer one tenant or multiple tenants? Next, you should determine your investment time horizon. Are you looking to own the property for a short-term before trading up, or are you looking to buy and hold for the long-term? The term of the loan that you request should match your investment time horizon.  After you determine the type of property that you are interested in, you should consult a competent realtor that specializes in those types of properties. Many residential brokers are not experienced when it comes to commercial real estate transactions. A commercial realtor will present several options for you to examine. It is important that you perform adequate due diligence and verify all of the income and expense projections which are presented to you. Once you have narrowed your decision down to one or two possible purchases, you should contact a competent investment mortgage lender that specializes in financing that type of property. Your mortgage lender will be able to help you analyze the investment property fundamentals and determine which investment property loan is appropriate for you. For more information please contact Select Commercial Funding LLC.