Can I buy NNN property with 85% LTV?

I am looking at buying NNN property and wondering if there is any wany to get >75% LTV? Specifically, I am interested in retail national corp guarantee property (e.g., Dollar General, Walgreens, etc)
In Buying Property - Asked by Jeff W. - Jan 27, 2010
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Answer(s)

Boris A.
Broker/Agent
Houston, TX

Sure you can!
CB United Realtors of Houston TX

Jan 27, 2010
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Gregory G.
Broker/Agent
San Francisco, CA

Unfortunately, not at this time. We have several NNN listings for you to look at though.
Greg

Jan 27, 2010
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Andreas M.
Owner/Investor
San Francisco, CA

Who ever says you can't should not be in real estate. These are some of the best times to negotiate. When money is scarce, sellers get creative. The porblem though is that when a commercial property is making money, unless the seller is hurting elsewhere, they will not let go of a cash cow. However, you want a high cap rate property with a loan that is assumable and good credit - good luck; "The Greek"

Jan 28, 2010
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Chuck H.
Broker/Agent
Torrance, CA

Sure you can, depends on cap etc. I would call this guy Richard at RKM CAP at 310 536 8887
He does all our financing, he knows his stuff
Good luck

Jan 28, 2010
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scott s.
Owner/Investor
Temple City, CA

Ifs 1--the seller is desparate....if 2--there is an assumable loan.....if 3--the seller will carry a second or will finance for you or if 4--you dont mind horrific terms. There are a TON of properties out there but banks are either not lending or lending very judiciously. I have been in contract three times and each has fail due to no or bad financing. For a good property, they are demanding 40% down for decent terms....or 30% with worthless terms. Your best bet is to find a bank first then a property that they will lend on. Thats what I did....so Im in contract a fourth time....

Jan 28, 2010
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M M.
Owner/Investor
Newark, NJ

There are many lenders willing to lend to Walgreens properties for 85% LTV and higher. There are some lenders who will also roll closing costs into the loans on Walgreens properties There are also lenders who will do non-recourse on Walgreens. The leases have to be relatively new (guessing less than three years into them max) and have other perameters. The combination of the strong credit tenant and a newer building/newer lease make these properties attractive to many lenders.
Assumable loans are not really a necessity, but cap rates indeed play a role. DSCR need to be pretty high--approximately 1.25--so getting that approximate ratio on an loan of 85% LTV on a newer lease are going to be tougher to find. Crunch some numbers and see where your cap rate needs to be to get that DSCR with 85% LTV. There are many new WG properties on the market right now with cap rates between 7.5% and 7.8%. If those properties make your numbers work at 85% LTV, these are the ones to pursue. If not, you'll need a lower LTV.

Feb 2, 2010
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Tom C.
Broker/Agent
Brier, WA

Maria is correct. Lenders will determine their maximum loan amount by a ratio called the DSCR (debt service coverage ratio). So, you will need the required DSCR from a particular lender AND the terms of the proposed loan in order to find out the debt service (annual payment). Then you can compute the DSCR, as Maria suggests by using a market cap rate . Walgreen's are your best bet for maximum leverage such as the 85% you are seeking. I would talk to a lender AND a commercial broker who more or less specializes in Walgreen's and similar investment grade credit tenants .

Feb 22, 2010
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