REALTOR® Magazine-Daily News-Lenders in Property Deals Demand More Cash

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Daily Real Estate News | October 1, 2003 | Lenders in Property Deals Demand More Cash Even in a lending environment characterized by some of the lowest interest rates in history, some investors must kick in larger amounts of cash to purchase commercial properties. The prices of office complexes, shopping malls, and apartment communities have been on the rise in certain markets; but lenders haven't been increasing the amounts they lend for these various assets, which widens the gap between a property's purchase price and the amount of money that a buyer can borrow. Buyers both large and small are being forced to secure additional financing via such outlets as secondary mortgages and partnerships with other investors or to just put up more cash themselves in order to buy commercial real estate. Timour Shafran, managing director of Capin & Associates Inc., comments, "When they're paying inflated prices, the bank is still only going to lend them just 75 percent of the purchase price or the appraised value, whichever is less."

Source: Wall Street Journal (10/01/03); Smith, Ray A.