Rhode Island Commercial Mortgage Rates
At Select Commercial, we've built a solid reputation in the Rhode Island commercial mortgage sector, offering tailored solutions for a variety of commercial properties across the state, with loans starting at $1,500,000. As experts in commercial real estate financing, we also understand the increasing demand for Rhode Island apartment loans. Whether you're interested in multifamily units or exploring other commercial property options, our commercial mortgage rates page gives a detailed look at the best rates available across the 48 states. Discover the latest trends in Rhode Island commercial mortgage rates as we approach the close of 2024.
Rhode Island Commercial Mortgage Rates - updated 12/03/24
| Loans Over $1,500,000 | Get Free Quote | ||
|---|---|---|---|
| Loan Product | Rate* | LTV | |
| Multifamily | 5.39% | Up to 80% | |
| Commercial Real Estate Loan | 6.69% | Up to 75% | |
| Single Tenant Lease | 6.39% | Up to 75% | |
| Business Real Estate Loan | 6.59% | Up to 90% | |
Rhode Island Commercial Mortgage Benefits
RI commercial mortgage rates start as low as 5.39% (as of December 3rd, 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
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.
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. Rhode Island is one of the states 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.
Commercial Real Estate Recent Closings
What’s going on with commercial mortgage rates in Rhode Island as we near the end of 2024?
The Federal Reserve’s Federal Open Markets Committee cut the federal funds rate by 50 basis points at its September 18, 2024, meeting. This was the first rate cut since March 2020, when the Fed began a long series of rate hikes to curb the high rate of inflation. The Fed’s decision shows that they believe that inflation is under control and moving into the 2% range that the Fed has set as its goal. The Federal Reserve took this decisive action to prevent further declines in the labor market. The Fed has further hinted at further cuts at its two remaining meetings in 2024, followed by additional cuts in 2025. This rate cut, along with possible future rate cuts, may create positive investor demand for commercial real estate, and may provide aid for commercial mortgage customers, as well as consumers in general. We must caution, however, that the Federal Reserve cuts affect short term interest rates directly and long-term rates only indirectly. The Prime Rate, which is a short-term rate, dropped from 8.50% to 8.00% with the Fed’s recent action. However, most commercial mortgage rates are based on the 5-, 7-, or 10-year treasury rates, and not the Prime Rate. We have seen these treasury rates actually rise since the Fed took its action. On September 18th, the 10-year treasury was roughly 3.70%. Three weeks later, this rate had jumped to 4.03%. Investors are still concerned about future inflation and are adopting a wait and see attitude.How will inflation influence commercial mortgage loans in 2024?
2024 Insights Into Industrial Commercial Mortgage Loans
Industrial and warehouse properties have managed to maintain a balance between supply and demand due to their shorter development cycles. This sector continues to thrive, supported by the growth in brick-and-mortar retail and e-commerce, which now constitutes 15.6% of total retail sales. The trends of nearshoring and the need to replace outdated industrial buildings are expected to drive construction and demand in the latter half of 2024 and beyond. Although there was a significant drop in net absorption in the first quarter, rent growth remains the fastest in the commercial real estate market, with industrial rents up by 5.3% from the previous year. The sector benefits from robust e-commerce activity and resilient construction spending, maintaining a national vacancy rate around 5.5%. The digital transformation and demand for warehouse/flex spaces, especially cold storage, have fueled significant growth in this sector.
2024 Insights Into Retail Commercial Mortgage Loans
The retail sector has experienced steady performance, with entertainment venues, restaurants, and similar businesses maintaining stable revenues. However, an economic downturn could negatively impact consumer spending, affecting this sector. Demand for retail spaces fell below pre-pandemic levels in the first quarter, with net absorption decreasing by approximately 30 percentage points. Despite this, low vacancy rates, around 4%, and limited new supply have kept the market stable. As new construction deliveries diminish, market conditions could tighten, supporting rental rates and occupancy levels. The sector has shown resilience, benefiting from strong consumption and a lack of new construction, leading to a national vacancy rate of around 4%, the lowest in two decades.
2024 Insights Into Office Commercial Mortgage Loans
The office sector continues to face challenges with rising vacancies and declining demand. The national office vacancy rate reached 19.6% in Q4 2023, the highest on record. Despite the struggles, top-tier office buildings in prime locations continue to perform well. The shift towards hybrid work models and reduced office space requirements have increased vacancies, with leasing activity about 30 percentage points below pre-pandemic levels. While overall market demand for office space remains uncertain, some markets, especially in sunbelt cities, show strong demand and stable occupancy trends. The national occupancy rate has surpassed 50% for the first time since the pandemic, indicating potential stabilization.
2024 Insights Into Hotel and Motel Commercial Mortgage Loans
As 2024 begins, the hospitality sector shows signs of recovery. The hotel industry is nearing pre-pandemic occupancy levels, with rates only 0.6% below those levels. Average daily rates (ADR) and revenue per available room (RevPAR) have surpassed pre-pandemic figures. Although travel activity normalized after the post-pandemic surge, property values remain near all-time highs. In 2023, while occupancy remained flat, RevPAR rose by 2.4%, driven by luxury hotel demand. The easing of travel restrictions and increased business travel as office attendance rises contribute positively to this sector.
What areas of Rhode Island does Select Commercial provide financing?
Select Commercial provides commercial real estate loans throughout the state of Rhode Island including but not limited to the areas below.