Financing an 8 Unit Apartment Building
An 8 unit apartment building recently came on the market in my town for 250k. The monthly rent totals $3600. I figure it would cashflow about $1500 a month. I ran it through the buy and hold calculator and the numbers are great, but I don't know if a few of my assumptions are off.
This would be a commercial loan. What kind of APR's should I expect? I used 20 years @ 5% with 25% down. Is that about right? This would leave me without much cash in reserves. Does a commercial loan require you to have a years worth of operating expenses in reserve? Do they count future rental income in that number?
I also assumed $300 a month for insurance. Does that sound right for an 8 unit apartment building? It is small, all units are 1 bed 1 bath.
Thank you!