If you finance a multifamily syndication through Fannie Mae or Freddie Mac, you’re securing non-recourse debt with a fixed interest rate. But if you want to exit anytime sooner than the loan expiration date, you're going to pay a BIG penalty on the back end.
So, how might we leverage credit unions to avoid these big-ticket prepayment penalties? Are there other benefits to financing real estate deals through a credit union? What’s the downside?
Mark Ritter is CEO of Member Business Financial Services or MBFS, a business lending credit service organization owned by credit unions for credit unions and their members. An expert in credit unions and business lending, Mark is dedicated to helping commercial real estate investors secure the financing they need.
On this episode of Financial Freedom with Real Estate Investing, Mark joins cohost Garrett Lynch and me to explore the pros and cons of financing multifamily through a credit union versus traditional loans.
Mark describes the credit union philosophy of people helping people, discussing how real estate investors benefit from having a personal relationship with our lender.
Listen in for Mark’s advice on how to approach a credit union for a loan and learn about the flexible terms and low cost of capital available if you finance your next deal through an organization like MBFS!
What inspired Mark’s interest in working with credit unions
- Law passed allowing credit unions to do commercial lending
- ‘Best kept secret’ to access money for real estate investors
Why you should consider a credit union vs. a traditional loan
- Credit union = not-for-profit financial cooperative
- Run for benefit of members, local community
How Mark connects investors with credit unions through MBFS
- MBFS owned by credit unions for credit unions
- Access to 75+ credit unions, place with best to facilitate loan
The pros and cons of financing real estate deals with a credit union
- Full-recourse transactions
- No prepayment penalty
- Flexible terms
- Low cost of capital
What kind of loan products Mark offers at MBFS
- Multifamily, office, medical, retail and hotels
- Few ground-up construction projects
How you benefit from a credit union’s focus on relationships
- Holistic view of financials, want to see you succeed
- Spend time with projections to make win-win decisions
- Lender is accessible, responsive to calls/email
Mark’s advice on how to approach a credit union for a loan
- Be honest about issues and realistic with projections
- Stay organized and provide any information requested
- Find good fit for where you want to go financially
Where Mark sees interest rates going and its impact on lending
- Predict upwards of 2.5% this year
- Lending marketplaces need people and jobs
Connect with Mark Ritter
Email [email protected]