Current Rates and Lending Appetites

For the Portland metro area, we are continuing to see steady interest from business owners looking to purchase properties for their use. Owner/user financing is still readily available and over the last 6-12 months we have seen interest rates fall to record lows. Current owner/user financing rates can be secured as low as 2.7% for 504 SBA loans, which require business owners to occupy at least 51% of the building. Conventional loan interest rates are ranging from the low-to-mid 3% range, depending on credit and loan term (ie. 5-10 years).

For investors looking to acquire a leased investment property, interest rates have a much wider range. This is due mainly to the type of lender, such as a credit union or traditional bank or life company, and the proposed loan-to-value range. The traditional banks are offering rates from the mid-to-high 3% range with loan to value ranging from 65-75%. Life insurance companies are actively lending in the low-to-mid 3% range, however they are requiring lower loan to value ranges in the 50-65% range.

There is some concern over the PPP loans slowing down the financing process for acquiring commercial real estate, and we will see how this plays out. Some lenders we talked with are not as concerned as the main rush for PPP loans came during the initial round at the start of COVID amidst widespread panic. Inventory for both investor properties and owner/user buildings remain low and we expect interest rates to remain low as well.