Purchasing or Refinancing a Multifamily Property? Check Out How Apartment Loans Help Financing an Apartment Building

Before exploring the financing options, let’s have a look at what’s count as an apartment building. Apartment building generally contains 5-7 units and each of them should have a kitchen, bathroom, and a sleeping/living area for sure. What does the ideal investor look like for an apartment building of 5+ units? 

The ideal investor should have enough cash or assets to put down 20-25% of the purchase price and at least another 10% of the total loan amount in assets or cash. If you are looking to buy an apartment building for the first time and you are planning to use hard money, equity or mezzanine debt, the deal might be too big for you. Instead of that going with a flexible apartment loan program is a way better choice. 

Understand What is Expected from You as Borrower to Get the Best Financing Terms

The days of walking into your local bank to get a military or commercial property loan are over. Not because the bank can’t finance them for you, but because there are simply too much options. Today privately handled and government backed agencies like Fannie Mae and Freddie Mac are offering non-recourse apartment loans with 10year of fixed-rate loans at nearly 4% to qualified borrowers. Whether you are a new borrower or are looking to refinance an existing loan, it’s important that you partner with a lender like ALB Commercial Capital to get you the best leverage and financing terms available.

Below is the standard documentation that you need to submit to obtain the most accurate quote whether you will be purchasing or refinancing a multifamily property.

Property Information:

•          Last year’s P&L
•          Trailing 12 month, Month-by-month P&L
•           Current rent roll
•          Stabilized and/or proper
•          Stabilizes budget/Pro Forma
•          Summary of Cap Ex (capital expenditure) to date
•          Property photos, address, description, unit-mix, age etc

Borrower Information:

•         Name of entity
•         Personal financial statement for each guarantor
•         Resume/Bio for each guarantor
•          Property management company info if not self-managed

If you are refinancing or financing an apartment building, we may also need some additional information including when you bought the property, how much you bought it for, how much you put down, your current loan terms, and the current occupancy. To get a better idea of the apartment loans’ process, check the details below: 

•          Apartment loan amount can gain maximum proceeds subject to the lesser of an 80% LTV and a DSCR no less than 1.25
•        10 years fixed
•          30 year amortization
•          4.3%-4.9% interest rate
•         9.5 years yield maintenance
•          Assumable for 1% fee
•          Non-recourse
•          About $15k application fee for third party reports with unused funds applied towards closing costs.
•          Refundable Good faith deposit of 2% at time of commitment and rate lack refunded about 30 days after closing

Although bank prescribed apartment loans cost more to originate than private agencies, however, in the end they offer better long term financing, interest rate risk protection and of course leverage. Are you ready to get started? Connect with one of the finest team of experienced apartment loan advisors at ALB Commercial Capital to explore your options for best rate apartment loans!