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! 

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