Hello all, I am in the process of purchasing my first multifamily unit which consists of 8 2 bedroom apartments, in which are already rented out. The property is listed for 640,000 which is a bit overpriced so I offered 550,000. I have 30 percent of the purchase price but was looking to see if there are any lenders who would do 20 percent down like a typical single family investment property. If anyone knows a good place for first time commercial investors or who has good rates could you please point me in the right direction. Thanks
Get yourself a good quality commercial loan broker. A good one is worth their weight in gold and will help you get the best program for your situation.
I am not a loan broker, but if you message me I’d be happy to make a couple of recommendations.
@Ethen Royal Sounds like you've good a decent MF property here! You will find there are a lot of options in the market for this price point in the secondary-market lending / Bank-Alternate space. Most of these guys are going to cap at 75% LTV however outside of Bank-Type lenders, but banks will be full-doc loans, probably 45-60 day closes, and be capped at the usualy 5-yr balloon and 25-yr amortization (blah).
Probably the two biggest factors that will play a big role in your max leverage:
- Your MID-Credit Score (of the three bureaus)
- How well does the property debt service? (Most commercial lenders with the best terms like to see a 1.1 DSCR +). There are No DSCR lenders out there as well fo MF, but these programs have a spike in rate and often more conservative on LTV.
Is a 75% LTV, 30-yr Fixed a good option for you as well? Or are you only interested in a 20% DP?
I might echo @Brock Freeman !
We know a lender who will consider 80% LTV with no DSCR. But the rate will be hard money like. Just use it as bridge till you are able to do a rate and term refi in less than a year.
@Ethen Royal 75% LTV should be easy to get and as long as you're using professional 3rd party property management then your lack of experience should be fine too assuming everything else qualifies.
Whats the plan for the property? Raise rents? Capex?
Did you consider owner financing or installment sale?
Most multifamily lenders are looking at 70% LTV or better. Sometimes exceptions made be made with strong compensating factors. Such factors can be strong management experience or experienced property management company involved. Cross collateralization with equity in another property.
I am in a similar boat as you. I am working on closing my first property (5 unit MF). Just got an offer from a local credit union for 20% down, 30 yr amort with a very competitive rate (under 4%). I used Stacksource and will end up paying a 1% broker fee. Before going with a broker, I was in contact with a single lender and realized just how much work the process would be trying to go it on my own. I highly recommend using a commercial broker, and Stacksource was great.