by Lisa Jansen
Vacancy rates are down; rents continue to rise, development in Reno is moving full steam ahead. It is a great time to invest in commercial real estate or refinance an existing loan, and one of the best kept secrets for commercial lending is One Nevada Credit Union.
Historically, credit unions have been well known as a great source of consumer credit. Since credit unions operate as not-for-profit financial institutions, they pass the savings on to their member-owners. To join a credit union, you have to meet certain requirements. One Nevada is open to all residents of Washoe, Clark, and Nye counties in Nevada plus family members of current members. Credit unions are growing in popularity because they offer the same financial products as banks, but they often have lower rates and fees.
One Nevada isn’t just a great resource for consumer credit, but also a great resource for commercial real estate loans. The credit union has a team of lending experts that specialize in refinancing existing loans and financing commercial property purchases.
At One Nevada, the commercial lending team is led by Sandy Thompson, Vice President of Business Lending. Thompson has been with One Nevada since October 2011 and has a lending career that spans more than 40 years. During his tenure, his team has successfully managed a commercial loan portfolio in excess of $120 million, while mitigating portfolio risk and minimizing losses during the great recession. He is a good resource for consumers and businesses looking to invest in commercial real estate and has been expanding the One Nevada portfolio in northern Nevada.
“One Nevada has been watching the northern Nevada commercial real estate market closely over the last few years. We feel confident that Reno is a good bet, so we are expanding our northern Nevada commercial loan portfolio. We’ve seen a lot of interest in commercial property acquisitions and an upswing in our refinancing activity,” said Thompson.
The credit union has been providing commercial real estate loans to its members at competitive rates since 2004. Loans range from $1 million to $5 million and One Nevada prides itself on offering quick responses to loan inquiries. One Nevada provides loans to purchase or to refinance most commercial property types, including office buildings, industrial properties, warehouse space, retail, multi-family units (A and B class), self-storage, mobile home parks, hotel and motel properties. At One Nevada, loans can be tailored to fit the members’ needs and all loan decisions are made locally. One Nevada’s entire lending process is transparent and interactive.
There are several reasons why people are refinancing commercial real estate loans right now. One of the main reasons is to avoid balloon payments. Unlike residential loans, most commercial real estate loans do not fully amortize over 30 years, so when the loan matures the property owner has to either pay off the loan or refinance the property.
Another reason to refinance is to lower the interest rate to reduce the mortgage payment and increase the cash flow from the property. In Reno, we are seeing rental rates and occupancy rates that have increased, making this an ideal time for investors to refinance so they can reduce their interest rate, and also pull some equity out of the property. It is common for investors to use the equity they pull out of the property to improve their property, to invest in other properties, or to improve the liquidity of their balance sheet.
Rates have remained very low for several years, and although the Federal Reserve has gradually increased their short-term rates, long-term interest rates have continued to remain at historically low levels, so now is still a good time to refinance. Most loans have a prepayment penalty that makes it unattractive to refinance before the loan matures, but in some cases, borrowers are willing to pay the penalties if the new loan payment is sufficiently lower to allow them to recoup the cost of the prepayment penalty over a few months. There are no prepayment penalties on One Nevada commercial real estate loans.
As a credit union, One Nevada is committed to helping serve commercial property owners and investors seeking new lending solutions. The best thing about working with a credit union is the excellent customer service you receive because they have competitive rates and a local team that knows your market. Learn more at onenevada.org.