Modesto Commercial Mortgages

At Select Commercial, we pride ourselves on 35+ years of experience helping clients in Modesto with their commercial mortgage needs. Our commitment to excellence has helped create our reputation as a top-tier broker in the area. If you're specifically interested in a Modesto multifamily loan, we have dedicated resources to guide you. For those seeking comprehensive rates on all loan products available across the 48 states, our comprehensive commercial mortgage rate page offers competitive rates for loans starting at $1,500,000.

Modesto Commercial Mortgage Rates - updated 07/19/24

Minimum Loan Size $1,500,000 Get Free Quote
Loan Product Rate* LTV
Multifamily 5.41% Up to 80%
Commercial Real Estate Loan 6.43% Up to 75%
Single Tenant Lease 6.23% Up to 75%
Business Real Estate Loan 6.33% Up to 90%
*Rates start as low as the rates stated here. Your rate, LTV, and amortization will be determined by underwriting.

Modesto Commercial Mortgage Benefits

CA commercial mortgage rates start as low as 5.41% (as of July 19th, 2024)
• A commercial mortgage broker with over 30 years of lending experience
• No upfront application or processing fees
• Simplified application process
• Up to 80% LTV on multi family , 75% on commercial (90% with SBA)
• Terms and amortizations up to 30 years
• Loans for purchase and refinance, including cash-out
• 24 hour written pre-approvals with no cost and no obligation

Our Reviews

Distress is currently low in the commercial real estate market. After Signature Bank and Silicon Valley Bank failed, there was widespread concern that other regional and local banks would fail due to the high levels of commercial real estate loans held in their portfolios. With the exception of some market sectors, most commercial mortgage portfolios have performed well. Usually, during times of market uncertainty, commercial real estate distress levels increase dramatically. Current levels of distress are low by historical standards. At the end of 2022, the level of commercial real estate assets under distress was only 1.2% of the total national sales volume. This number is important to watch as many loans face maturity and higher rates upon refinance in 2023.

MSCI, Inc. estimates the volume of loans maturing in 2023 at $400 billion. The Mortgage Bankers Association pegs the amount at over $700 billion. Many analysts predict that loan defaults will increase for two reasons: many of these maturing loans will need to be refinanced at higher rates (and may suffer cash flow problems) and there are fewer active lenders in the market due to the recent bank failures. Loan underwriting has tightened up as the result of global financial conditions and the average loan to value has been dropping on new originations. Many properties have been able keep pace with the market due to escalating rents and strong appreciation. Other properties, mainly in the office and retail sectors, have suffered due to higher vacancy factors and fixed long-term rental rates. Operating income growth has been strong in the multifamily and industrial markets, which represent about 35% of the maturities in 2023. Revenue growth in the office market has been flat for the past five years and vacancy rates have risen. This sector, which accounts for about 26% of 2023 maturities, is expected to see a significant increase in distress and defaults as many properties will not underwrite well enough to pay off existing loan balances.

In February 2023, Trepp Inc., a data analytics company, reported an increase of commercial mortgage-backed securities loans (CMBS loans) going into special servicing. They estimate the percentage of these loans at 5.2%. Many of these properties, including office buildings and retail centers, may be subject to distressed sales. In addition, many borrowers with adjustable-rate loans also face distress unless they hedged their risk with interest rate caps. These adjustable-rate borrowers are seeing current rates generate debt payments which exceed the net operating income of the property and an inability to raise rental rates to keep pace with the increases in debt service. Many of these borrowers will need to either sell the property in a distress sale or invest more capital into the property and refinance for lower loan amounts.

National, regional, and local banks hold more than half of the total amount of commercial real estate loans which will mature in 2023. So far, we have not seen distress levels high enough that would threaten the financial stability of these institutions. Most lenders are likely to extend impending maturity deadlines as opposed to foreclosing as foreclosure would cause losses. Many will employ other methods, including extensions and workouts, for the foreseeable future.

Most analysts agree that the problems encountered by Silicon Valley Bank and Signature Bank are not applicable to other small and local banks with commercial real estate portfolios. These two large bank failures were caused by much more specific situations. Silicon Valley Bank was too concentrated in the venture capital and technology sectors and did not diversify their lending. Signature Bank was too narrowly concentrated in the cryptocurrency sector, a market sector under intense scrutiny of federal regulators.

The commercial real estate market is very varied. There are many different sectors, geographic areas, and borrower types. Banks that lend to this market are able to diversify their risk by lending to a wide variety of borrowers and limiting their exposure to any one particular area or property type. Lenders who employ diversified lending practices and have conservative underwriting guidelines are likely to experience little or no distress or financial losses during this current market cycle.

Some commercial mortgage lenders lock rates at application, some lenders lock rates at commitment, while others lock rates prior to closing. We are currently in the midst of an increasing rate environment. Rates quoted at application may increase dramatically during the loan application progress, if not locked. It is very important to understand your lender’s procedure upfront to avoid potential confusion.

In order for a commercial mortgage lender to issue a firm loan approval, they will want to understand the financial condition of the borrower, as well as the fundamentals of the property. The borrower will be expected to supply his personal financial statement showing total net worth and liquidity. He will also need to provide a schedule of real estate owned demonstrating experience managing similar properties. Lastly, the borrower’s credit scores will needed. For the subject property, lenders will look closely at the current rent roll, operating statements showing income and expenses, copies of all leases, and other pertinent property information.

Commercial mortgage rates are determined by many different factors, including property type, location of the property, loan-to-value ratio, debt service coverage ratio, debt yield, borrower’s net worth, liquidity, credit rating and level of experience. Commercial mortgage lenders look at all of these factors to determine the riskiness of the loan before setting rates. Loans with the lowest risk profile will get the best commercial mortgage rates. As the potential risk increases, commercial mortgage rates usually increase.

Commercial mortgage loans are viewed differently by lenders than residential loans. Home loan lenders look strictly at the borrower’s income and credit in order to qualify. Commercial mortgage lenders look at the subject property’s rent roll, operating statements, and other factors to determine the cash flow or net income potential. Very strong (low risk) commercial mortgage loans might be priced lower than home loans, while weaker performing properties (higher risk) might be priced higher.

Most commercial mortgage loans today are fixed for 5, 7, or 10 years and come with a 25-30 year amortization schedule. Loans can be recourse (personal guarantee) or non-recourse (no personal guarantee). Commercial mortgage loans typically carry prepayment penalties, whereas residential home loans usually do not. Specific terms will be determined by your lender’s underwriting team after your application is reviewed.

Commercial mortgage lenders typically lend up to 75-80% on an apartment purchase (down payment of 20-25% necessary). On other types of commercial property, commercial mortgage lenders will typically lend up to 70-75% (down payment of 25-30% necessary). An exception is for owner occupied business real estate (such as a business owner buying his own property). Owner/users may qualify for up to 90% LTV financing.

Modesto Real Estate Loan CA Commercial Real Estate Loan

Select Commercial is a leading commercial real estate loan provider. We have excellent commercial real estate loan products and options available for owners and purchasers of commercial real estate. While we lend across the entire continental United States, we are able to give our best commercial mortgage rates and loan programs to certain areas that we feel are strong markets. Modesto is one of the cities that we consider to be a premium market and we actively look to originate good quality loans here for our clients. As an experienced commercial mortgage professional, with over 30 years of lending experience, we have many sources of capital to choose from when placing a commercial mortgage request with a lender. Having many lenders to choose from gives us advantages over any one individual source. Finding the lender that fits the needs of each client is what we do best. In the end, you get the best rate and terms available. If you are looking to obtain a commercial real estate loan, don't hesitate to contact us. There are many reasons why our customers like doing business with Select Commercial. We have a simplified application process and we do not charge any upfront application or processing fees. We typically offer 24-hour pre-approvals with no-cost and no-obligation. Our long term fixed rates are excellent, and we look to close within 45 days of application. Our staff is professional and knowledgeable, and we look forward to working with you on your next commercial mortgage transaction.

What is happening with Modesto Commercial Mortgage Loans in 2024?

As we begin the second quarter of 2024, the Modesto commercial real estate loan market is facing some obstacles and challenges. In the last couple of years, we saw rampant inflation and a corresponding rapid rise in rates initiated by the Federal Reserve. Higher commercial mortgage rates (and the resulting higher mortgage payments) caused many existing properties to experience cash flow problems, and many new sales to cancel due to cash flow. While inflation started to lessen at the end of 2022, the Federal Reserve still raised rates throughout 2023. Coming into 2024, many investors expected rates to decrease. However, the most recent inflation report gave bad news to investors. Inflation has not come down nearly enough and in response, the central bank has tempered expectations of rate reductions in 2024. This announcement has caused bond yields to increase. As we move into the middle portion of 2024, investors are starting to understand that bond yields and commercial mortgage rates may not come down this year as much as they had hoped.

In 2024, the commercial real estate market will again be most strongly affected by the increased rates caused by the action of the Federal Reserve. At the beginning of 2022, the rate on the 10-year treasury was 1.63%. At the start of 2023, this yield hit 3.84%. In the last week of April 2024, it had reached 4.70%. Since most commercial mortgage loans are priced off the 10-year treasury, experts are not hopeful that commercial mortgage rates will come down as expected in 2024. With increased rates, many properties will not support high leverage commercial mortgages due to insufficient cash flow. This will result in one of two options: sellers will be forced to lower asking prices, or sellers will continue to keep their properties off the market in 2024.

All this being said, there is some potential positive news for commercial mortgage loans in 2024. If the Federal Reserve is able to get the rate of inflation under control, we might see a drop in commercial mortgage rates towards the end of the year. Experts have stated that $929 billion, a record amount of CMBS loans, are set to mature in 2024. Even with higher commercial mortgage rates, these loans will need to be refinanced and this high level of activity is likely to generate activity in the capital markets.

Ultimately as we move into the middle of 2024, commercial mortgage rates are very volatile, and the market is expected to maintain its slow pace. We hope to see a leveling off effect later in the year and a resumption of activity later in 2024.

Commercial Real Estate Recent Closings

Modesto office commercial real estate loan Office Loan

Modesto Office Commercial Real Estate Insights: Q1 2023

Modesto, situated in the Central Valley of California, has been experiencing shifts in its office real estate dynamics in Q1 2023. The city's office spaces are adapting to the broader regional trends, catering to the evolving needs of businesses in a post-pandemic world.

Office Market Overview:

The demand for office spaces in Modesto has been influenced by the rise of hybrid work models and the increasing preference for remote working. While some businesses are downsizing their office footprints, others are seeking flexible spaces that can accommodate fluctuating workforce sizes.

Adapting to New Work Norms:

Office spaces in Modesto are undergoing transformations to cater to the new work norms. There is a focus on creating collaborative spaces, integrating technology for seamless remote work, and ensuring health and safety protocols are in place.

Future of Office Spaces:

With businesses reevaluating their office space needs, Modesto's office real estate market is poised for changes. The city is expected to see a mix of traditional office spaces and flexible workspaces catering to the diverse needs of businesses.

As businesses navigate the challenges and opportunities of a post-pandemic world, Modesto's office spaces are set to evolve, offering solutions that align with the changing work dynamics.

Modesto industrial commercial real estate loan Industrial Loan

Modesto Industrial Commercial Real Estate Insights: Q1 2023

Modesto, with its strategic location in the Central Valley, continues to be a focal point for industrial activities. The city's industrial real estate market in Q1 2023 is reflecting the broader trends of the region, catering to businesses ranging from manufacturing to logistics.

Industrial Market Overview:

The industrial sector in Modesto is seeing robust demand, driven by the city's connectivity and its role as a logistical hub. There is a growing demand for modern warehousing facilities, especially with the rise of e-commerce and the need for efficient distribution networks.

Emerging Industrial Trends:

Businesses are seeking industrial spaces equipped with the latest technology to streamline operations. There is also a trend towards sustainable and green industrial facilities, reflecting the broader push towards sustainability in the commercial real estate sector.

With its strategic advantages and the evolving needs of businesses, Modesto's industrial real estate market is set for steady growth in the coming years.

Modesto retail commercial real estate loan Retail Loan

Modesto Retail Commercial Real Estate Insights: Q1 2023

Modesto, with its diverse population and vibrant communities, offers a dynamic retail landscape. The city's retail spaces in Q1 2023 are adapting to changing consumer behaviors and preferences, offering a mix of local boutiques and major retail chains.

Retail Market Overview:

The retail sector in Modesto is undergoing transformations, with a focus on experiential retailing and integrating technology to enhance the shopping experience. There is a growing preference for omni-channel retailing, blending the physical and digital shopping experiences.

Future of Retail Spaces:

Retail spaces in Modesto are not just about shopping; they are about creating memorable experiences. With consumers seeking unique shopping experiences, the city's retail spaces are set to evolve, ensuring a vibrant retail environment.

The retail landscape in Modesto is reflecting the broader trends in the retail sector, with a focus on innovation, customer experience, and adaptability.

Modesto motel commercial real estate loan Hotel/Motel Loan

Modesto Hotel Commercial Real Estate Insights: Q1 2023

Modesto, located in the Central Valley, attracts both business and leisure travelers. The city's hotels in Q1 2023 are focusing on enhancing guest experiences, ensuring safety, and offering unique stays that cater to the diverse needs of travelers.

Hotel Market Overview:

Hotels in Modesto are integrating technology to offer personalized experiences to guests. There is a focus on health and safety protocols, ensuring that guests have a comfortable and safe stay. The city offers a range of accommodations, from luxury resorts to budget-friendly options.

Adapting to New Travel Norms:

With the changing dynamics of travel, hotels in Modesto are adapting to new norms. There is an emphasis on sustainability, local experiences, and wellness, reflecting the broader trends in the hospitality sector.

Modesto's hotel landscape is set to evolve, with a focus on guest experiences, adaptability, and innovation, ensuring that the city remains a preferred destination for travelers.

What areas of Modesto does Select Commercial provide financing?

Select Commercial provides commercial real estate loans throughout Modesto including but not limited to the areas below.

Airport, Bret Harte, Bystrom, Central Modesto, Coffee-Sylvan, Downtown, East Modesto, North Side, Northeast Modesto, Northwest Modesto, O. G. Southside, Riverdale Park, Robertson Road, Shackelford, South Side, West Side.