Financing Gas Stations
Gas stations are special-use properties that most lenders are scared to touch. Some of their fears are irrational and simply come from being inexperienced with the property type. On the other hand, some of their fears are quite rational and are based on their difficulty of getting reliable valuation services. Our knowledge and experience helps lenders understand why they should lend on gas stations. That is invaluable for the dealer looking for a gas station loan.
Bridging the Borrower-Lender Gap
The world of finance and the world of petroleum retailing have their own languages. The reality is that most gas station dealers don't speak the lenders' language, and very, very few lenders speak the dealers' language. With our experience in both of those worlds, we act as a translator, helping the lender to understand the dealer's business and helping the dealer understand the issues the lender faces. When you skillfully bridge those two worlds, the odds of getting a loan done go way up.
Acting As A Firewall
Under the best circumstances, getting a loan for a commercial property is a stressful process. Trying to get a loan on a gas station, especially in the current economy, is incredibly challenging and stressful. Lenders have become highly sensitive to a wider variety of risks, some of which are real and some of which are not. Even so, perception is reality. When we serve as your mortgage broker, we insulate you from the stressful, ongoing interactions with lenders, allowing you to focus your time and energy on activities that are rewarding and fulfilling for you. Isn't that what life is all about?
Rates Are Staying Down...But For How Long?
In the third quarter of 2008, lenders were often quoting loan rates of 275 to 325 basis points over Federal Home Loan Bank (“FHLB”) index rates. On a five-year index rate, this yielded a loan rate in the range of 7.0 to 8.0 percent. As shown in the adjacent chart, FHLB rates were quite volatile over the fourth quarter of 2008, but then they dropped substantially and have remained low. However, the decline in the index rates has not translated into lower loan rates.
Instead, lenders have substantially increased their pricing spreads. Lenders are now quoting loan rates 400 to 450 basis points over the index rate. Net-net, the actual loan rates being booked are not materially different than six months ago. However, this is only because of the incredibly low index rates. If index rates rise and lenders hold firm on their risk pricing, as they are likely to do given economic conditions, the cost of borrowing will grow. If you have the right project and need a gas station loan, now is a great time to act.