What apartment financing can I expect

Question

Hello,

I have a few rental properties (condo's) and I'm looking at my first multi family property (apartment building, 32 units), What type of financing numbers are you seeing for apartment deals given the recent rate increases? I know there are a lot of variables but what should.I use for underwriting? thanks, Brian

Michael Jacobs · Answer

Brian

There are many options out there and I recommend taking a look at some of my posts about certain financing options and what to expect. Usually a non recourse loan, you can lock up for 6-7 percent with some origination fee. LTV usually 60-70 percent. My recommendation is to go with a fixed 5 year IO loan and pay a fee upfront on any pre payment penalty. This of course depends on your numbers.

If you would like to jump on a call with me for 30 minutes and ask me anything pertaining to real estate I charge 100 for half an hour. I can answer and help with lending, deal underwriting, scaling your real estate business, discuss a particular deal etc. There are almost no aspect of real estate that I have not been apart in my 10 years in the real estate business. I am so proud of helping so many people in this business and can happily call a few of those people who called me partners. Call me with any questions.

https://calendly.com/mystakepropertygroup/30-minute-meeting

Stephanie P. · Answer

@Brian Plajer

A full doc bank loan would be the least expensive, but certainly the most intrusive.  Not sure what the rates would be for those, but I just priced a DSCR loan for a 6 unit and at 75% loan to value, the rate was 9.75% on a 30 year fixed.  The borrower has a decent credit score, but not great.  Hope that gives you some idea.

Similar loan in August closed at 8.25% and it was in the 6's and 7's earlier in the year.

Stephanie P. · Answer

Lots of investors are getting caught thinking they can get rates in the 6's and as a result, their numbers don't work at the LTV they're looking for.  We're trying to get the word out.  Unfortunately, when the rates shoot up like this (certainly not a normal cycle), people get stuck; especially after rehabs.

Simmy Ahluwalia · Answer

If the 32 property is fully stabilized, no value add, and cash-flowing with high occupancy, then you can get 75-80% long-term debt.  An I/O period would be a good option, as you would cash-flow well, and give yourself 3-4 years to refinance, hopefully when the rates are more competitive.

Brian Plajer · Answer

@Stephanie P. yikes, certainly wish I had a few million lying around to avoid financing. I also hope brokers are educating sellers to factor current rates into their price

Juan Serano · Answer

heey

What apartment financing can I expect

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