What Is The Biggest Factor In Calculating The Discount For A Private Commercial Mortgage Note
I get this question a good bit. While any one element of private commercial mortgage notes can significantly affect the price, what usually hurts (or helps) the price of a commercial mortgage note is the amortization period (assuming there is no balloon). The reason for this is what I call pure math. In other words, the more years out there are payments that are discounted to the current day, the worse the price and vice-versa. So a commercial mortgage amortized over 10 years will fetch a much better price (all other factors being the same) than a mortgage note amortized over 30 years. So if you are about to create a commercial mortgage note, set the amortization period as short as possible. If your buyer can’t handle a shorter amortization period, set a balloon date of no less than 5 years and no more than 7 years. If you want to sell a commercial mortgage note, we are a commercial mortgage buyer. Call us 7 days a week for a free no obligation quote at 1-877-655-5625. Ask for Ron.