what is the customary % down payment for CRE in NYC - for $10M and under deals?

For $10M and under deals, is a 5% down payment with signed contract about right? Is 10% totally out of line?
In Buying Property - Asked by Pascal B. - Jul 15, 2012
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Answer(s)

Rob B.
Chandler, AZ

Pascal....
I have to admit I don’t totally understand your question. It seems on one hand you are asking about a good faith deposit with the contract, and on the other hand the amount of “down payment” that will be required.
A 5% good faith deposit is likely to be the best you may expect. There are some restrictions on how much can be forfeited for non-performance after an acceptable due diligence period. (When the deposit will “go hard”.) You should let New York State laws dictate the maximum good faith deposit that may be forfeited if there is non-performance under the contract to purchase.
In these difficult times for capital, the lender will dictate what the "customary percentage of down payment" is going to be required. This will depend largely on the quality of the property, proven occupancy, debt service ratio, operating history, and strength of the buyer. It is my judgment that you may be looking anywhere from a 30% to 50% down payment with most of the underwriting that is currently being used.
Good luck Pascal.
Onward and Upward....
Rob Baird
rob@capratecommercial.com

Jul 15, 2012
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Rob M.
Lender/Mortgage Broker
Houston, TX

Do you mean $10,000.00 or $10,000,000.00? M is the equivalnt of 1,000 in finance making 10M=10,000. 10MM would be 10,000 x 1,000 or 10,000,000.00. This is a common mistake I see here on a regular basis. So, is it $10,000.00 or $10,000,000.00?

Jul 16, 2012
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RJ D.
Lender/Mortgage Broker
New York, NY

Not sure if you mean deposit or down payment. Deposit refers to good faith money, down payment refers to the buyers equity contribution.
Down payment is 25% minimum and up to 35% in some cases.
Contact me with any of your New York City Financing questions.
RJ Dillon
rdillon@jgcapitalllc.com

Jul 16, 2012
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M. Sean W.
Broker/Agent
Atlanta, GA

If one could define customary, you'd have your answer. Every transaction is different, so there is no way to accurately answer your question. I'd suggest that a range is what you are looking for, minimum 25% to over 40% for higher risk buyers.

Jul 17, 2012
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Jeff R.
Lender/Mortgage Broker
Birmingham, MI

It really depends on the property type its self.
On Multifamily min 20% down
On general use properties office, retail industrial 25% down minimum more likely 35%.
If your business will occupy the space expect 90% financing.
Good luck,
Jeff

Sep 13, 2012
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