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varga197
174 Posts |
 Posted - 05/12/2008 : 1:37:15 PM
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What does an average commercial lender counts for vacancy, management, repairs?
I'm seeing big differences in what commercial lenders calculate with. One lender uses 10% vacancy factor, another one uses 5%. (these differences can affect DSCR greatly)
Same lender used for one deal 5% management and for another deal same area 7% management expenses..
Isn't there a universal number for
Repairs
Management
Vacancy
Reserves
?
Also, do they (and if so why) override the actual expenses sometimes? I seen deals where submitted actual rent rolls accounting for repairs, reserves, management...were overriden with lender's Pro Forma. Why would they use their prediction Vs. ACTUAL expenses?
Thank you.
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mortgagemessiah
8003 Posts |
Posted - 05/12/2008 : 1:38:38 PM
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| Depends on the type of property |
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Quicksilver
4526 Posts |
Posted - 05/12/2008 : 1:44:44 PM
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| 5-10% is norm, and even 15% sometimes. It depends, banks/investors will do so b/c regardless of the property full occupied its common to have some vacancy so they will want to make sure the occupied units/space etc can cover the debt. On expenses, again it depends, some will use averages/estimates off actual or go by actual expenses, I've seen some that may change a few things for various reasons (in their review they decided janitorial $ was above average, maintenance $ was to low etc). |
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swmsn
4205 Posts |
Posted - 05/12/2008 : 1:46:05 PM
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Usually there is a universal. The big boys down to the Lenders doing smaller loans.
5% Vacancy and 5% Mgmt. 2% less reserves from EGI.
rent roll and P&L checked against the Taxes P&L and rent roll, as well as the market rents in the appraisal.
As Steve mentioned property type some times throws this off. I think what you are experiencing is a Lender that is changing their guidelines and making them tighter. As the market has changed this has caused some ripples in Commercial and this Lender seems like they are feeling those. If it does not work with your Lender of choice move to another. |
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EMScommercial
5050 Posts |
Posted - 05/12/2008 : 1:50:18 PM
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It will depend on what the property is classified and the lender.
No standard rule of thumb.
Only ranges.
Sorry.
Pretty much case by case. |
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