Lining up Financing before the deal
Hello,
How does one go about learning lender requirements for apartment building financing, prior to getting an apartment building under contract? Is there a section, that I'm missing on BP, for commercial lenders?
Most Popular Reply
@Brian Plajer, when it comes to commercial financing, lenders require that the sponsor(s) have a net worth equal to the loan amount, and liquidity of at least 10% of the loan amount. They will also want to see your experience in commercial real estate, and will ask to see a PFS, SREO and Bio.
As far as how much you will need to put down, depends on the lender you go with. In commercial financing, lenders run the gamut, from local, regional and national banks, agency lenders, credit unions, life co's, CMBS, debt funds, etc. The leverage can range from around 60%-80%, and each type of lender has their own unique benefits, which you will need to identify based on your objectives. For example, rate, recourse vs non-recourse, flexible prepayment penalty vs YM/defeasance, etc.
It's important to identify your goals with the property, and then identify the right lender(s) who will meet your objectives.
I hope that helps.