Industrial & Flex Buildings

Industrial & Flex Buildings Mortgages

Defining Warehouse Loan

This particular loan is a financing option that deals with the commercial financing exclusively available for industrial facilities. Several lenders may offer you different warehouse mortgages. You can use these loans for various reasons such as purchase, acquisition and development, refinance, and cash-out refinance. 

These loans cover a wide range of warehouses and industrial buildings, including: 

  • Light industrial warehouses

  • Cold storage warehouses

  • Railway warehouses

  • Retail warehouses

  • Wholesale distribution centers

Banks, private lenders, and credit unions are the traditional sources for warehouse mortgage financing options. On the other hand, as a borrower, you can always secure a mortgage to buy a warehouse by a down payment of as low as 10% down. You can also avail cash-out refinancing for expansion and may be at 100% LTC.

You can always acquire a warehouse mortgages quickly as long as you have a LTVs between 50% and 75%. You can also get a warehouse construction loans as long as you are planning to construct a new warehouse facility. 

Warehouse financing can be used for the following purposes:

  • Purchase

  • Refinance

  • Refinance to get cash out of the property

  • Acquisition and development

  • Construct or build one

  • Rehab and/or remodel

 

What are some common types of warehouse loans?

  • 75% LTV starting at low rates and closing in 5 days

  • SBA 7(a)

  • SBA 504

  • USDA B & I

  • 65% LTV, 3-year term, no credit score, no prepayment penalty

  • $80,000 to $20,000,000

  • Conventional financing up to 85% LTV

  • Stated income, light doc up to 75% LTV

  • Full documentation SBA up to 90% LTV

  • Bridge loan

  • Stabilized and non-stabilized properties

  • Funding in 5 to 7 days after LOI

  • 7-year term with 25-year amortization

  • Short term, equity only bridge loan

  • Construction loan

  • Rehab/remodel

  • Expansion

 

How do I get financing for an industrial building?

Private lenders, credit unions banks as well as other hard money lenders accept loan applications for industrial buildings such as warehouses. As a borrower, you may be required to submit full documentation of the property. Additionally, you will have to submit an appraisal done in order to obtain the lowest interest rate. 

If you wish your warehouse loan to close as soon as possible, it would be a great idea to consider low- o or no documentation loans. However, this will depend on the amount of equity you own in your property. Such loans require you to have an LTV that is typically within the range of between 55% and 65% and you can close such loan within two weeks. 

Warehouse mortgage financing is mostly likely to take the lien at first position. However, there are lenders who might offer it as second mortgage. This way, you can get capital that can be used to improve the property and use the loan for remodeling, and expansion of your projects.

Here is how it works:

  • Enter your client’s loan scenario into the lender search box above, for a list of lenders that can fund the mortgage. 

  • Click the Contact button within a lender listing to send them the particulars you searched, as well as your contact information. 

  • The lender will contact you to discuss the loan.

Are you the owner or a manager of a warehouse? Then it would be a great idea for you to t would be find a lender offering commercial loan broker to assist you. The lenders that you see in the Scotsman Guide’s search engines for lenders work directly in association with the mortgage brokers to fund loans for their clients.

What is a warehouse hard money loan?

These are the hard money loan option for warehouses. You can apply for this type of funding by non-banks and private lenders. You will receive amazing offers and benefits, such as getting fast funding minimum requirement to produce any documentation. Additionally, a hard money loan also offers flexibility to the borrower by accommodating non-conventional situations and bad credit score. 

This type of financing comes at cost i.e. higher interest rates compared to conventional loans. Other features include slightly lower LTVs and the loan will typically feature shorter repayment duration. A warehouse hard money lender will only work with a borrower with a FICO credit scores as low as 500. However, your lender may will willing to accept bank statements as a proof of your ability to make timely repayments against the loan instead of asking for your tax returns. 

A hard money loan is equity based financing option. You will get an LTV of between 50% and 65%. Use our search engine to find hard money lenders who can provide you the loan that you really need as per your circumstances. 

Which lenders offer financing for warehouses?

You can receive financing for a warehouse through numerous private lenders, banks, and non-banking entities. If you want some help, why not use our database for lender search. Here you will find all of the potential lenders who may be willing to offer you loans for industrial buildings.

Warehouse & Industrial Building Loans

To obtain an industrial commercial mortgage, you must acquire a financing option from a lender who is also interested in flex-space, warehouses, and manufacturing buildings. Your real estate can be an owner-occupied place or it can be an investment property.

 

 Eligible Property Types

  • Light industrial

  • warehouse and distribution facilities

  • “flex” buildings

  • storage facilities

  • research and development properties

  • Single tenant industrial properties with long-term leases will be considered

Warehouse Loan Parameters

Loan Term

Loan maturity is typically 5, 7 and 10 years. Lenders will consider other loan terms based on individual circumstances. However, it may range between 15 and 20 year when it comes to maturities.

Warehouse Loan Amortization

You will be able to avail up to a 30-year amortization. However, your interest only period may be available based on your individual circumstances. 

Debt Service Coverage Ratio (DSCR)

Your minimum DSCR depends upon property age, type, location, physical condition, as well as its competitive market position. Your minimum DSCR requirements are typically 1.20:1 for light warehouse, industrial, and distribution facilities. However, it changes to 1.25:1 for any flex buildings and properties used for research and development. 

Loan-to-Value Ratio

This can be up to 80% of your MAI appraised value as per USPAP and FIRREA guidelines. The maximum limit can be of 95% of your loan to acquisition cost. This depends on your property type. For a flex space the lender will consider LTV ratio with an upper cap of 80% of your property’s acquisition cost or appraised value (if applicable).

Loan Escrows

As a borrower you will be required to typically make a monthly contribution to an escrow account. This will be for you property insurance and real estate taxes. You will most likely also need to establish your monthly escrow reserve for capital replacement. This must be equal to or greater than of US$.15/square foot/ year. 

Other option is when your lender will base the decision either the engineering report or after receiving site inspection. In certain cases, the lender may waive or cap this amount. 

Reserves at Closing

The Borrower will establish a remediation/repair reserve at closing equal to 125% of required deferred maintenance repairs as indicated in the engineering records.

Here is the checklist for warehouse and industrial commercial loans:

  1. Current Rent Roll including:

    – Square Footage of units
    – Lease abstract details such as: Escalations, commencement & expirations, add-ons, description of tenant
    – Description of any added rent that the tenant is responsible for (In addition three years of historical data would be ideal)

  2. Complete Income/Expense Statements on the property including:
    – Annual property taxes
    – Insurance
    – Water/Sewer
    – Fuel
    – Electricity
    – Maintenance/Repairs
    – Management
    – CAM
    – Leasing commissions, tenant improvements

  3. Complete detailed physical description of the property, along with the site map, floor plan, and property survey.

  4. If acquisition, provide the copy of a fully executed contract of sale.(indicates the date).

  5. If refi, price originally paid for property, date of purchase and summary of current financing.

  6. Floor plan and photos of the property.

  7. Outlined recap of current financing (refinance only) including:
    – Current lender
    – Current principal balance
    – Current interest rate
    – Current monthly payment
    – Due date
    – Prepayment penalty information

  8. Personal info and resumes info on the management and the owner.

  9. Current personal financial statements (last three years)

  10. Current Business financial statements (last three years).

  11. Personal Tax Returns (last two years).

  12. Business Tax Return (last two years).

  13. Authorization to run a credit report.