Lending options on 6 unit apartment building

4 Replies

I have located a 6 unit apartment building I am interested in. I have no experience with multifamily properties. What funding options to aquire the property has any investors used and which are the best? For example 20% down and 5 year interest only or 20% down 30 year fixed. Thanks for your input.

I only buy multifamily and I'm a commercial lender so hopefully I can help! :-)

There are a ton of different ways to structure it.  

The standard deal is 5/20.  Meaning 5-year balloon and a 20-year amortization.  At some banks the loan matures after 5-years but at others the loan simply floats.

Note, you can get a lower rate if you are willing to do a 1/20 or a 3/20 deal.

80% LTV is required. However, if you have another property you could pledge that one as well...

Did that help?

Yes. It gives me direction of what i need to research. Thanks Jimmy.

I spoke to a lender about this a few months ago.  They wanted 25% down, minimum.  They would go as long as 20 year fixed, but the rate went up the longer the lock.  They offered a variety of terms with balloons and different amortization periods.

There's also JV or equity partnerships to consider, where either the lender accepts less of a downpayment in exchange for some of the profits, or you bring in a money partner to provide the downpayment to satisfy the lender.

If you have a good enough deal you can usually find someone willing to partner or lend. 

Good luck! 

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here