Those of you who have bought 20+ unit multis, what were the terms?

10 Replies

down payment, loan terms, big bank or owner financing?

Just trying to see some real world examples of larger multi deals.

20-80 units would be considered mid-size apartments. 

Most deals that require a loan of 2M or more would be able to shop the loans with Fannie Mae, CMBS, life insurance, and banks. There are a lot of options here. Many of these are non-recourse and low interest rate.

There are some options for loans below 2M but the costs associated with them take some of the desirability away.

Most loans under 2M are done with banks.

There are many different configurations for rates, leverage, length of term, etc...  Expect an average of 20-25% down on decently performing properties.  5 year balloons with five year extension at going rates are common.  10 year balloons are possible to get but will come with higher interest rates.

Some lenders will allow for seller carryback on some portion of the loan.  I got a seller to give me 7% interest only on a 5 year term for 10% of the purchase price.  The lender in this case allowed for the second.  This particular property was a 1.2M deal.

I get a lot of loans on non-performing properties.  I have a great relationship with a bank and they will loan 75% of purchase price plus some money for rehab.  It takes a strong track record to get these types of loans though.

We own a 36 unit building + we frequently finance blocks of SFHs (10+ at a time) with local banks.  If you're buying a 20 unit building you will likely do business with a local bank.  Typical terms in MN:

25% down (75% LTV)

4.25% rate fixed for 5 years

25 yr amortization

I recently purchased an office building and shopped the loan to several banks, local, midsize, chase, wells fargo.  While down payment and interest rate were similar, all the other terms were quite different across the board. 

  •  Impounds for capex, tenant improvement, T&I. 
  • Loan fees - some banks charged origination fees, some didn't
  •  Various level of aggressiveness (one bank couldn't lend me the full loan amount that I needed, while others lent the full amount and offered more!.  
  • Various loan types - fannie/freddie, portfolio, market swap rates etc etc

If you use the typical terms Ian Colville mentioned to do your underwriting, I think you will be fine but just expect to tweak your underwriting based on what the banks respond with.

Make sure your team has the typical requirements: networth equal to the loan, liquidity equal to 12 month debt service or 10% of the loan, strong credit and experience with properties similar size to the deal. This all varies by the lender.

after 5yrs what kind of rates did your loans jump up to? Did you have to refinance? Do banks not do fixed rates for properties this big? 

I work with a lot of major real estate investment groups in maryland. I see some of them sell the property after 20yrs because the government stops its aid in money also. 

I'd like to see more comments here on this topic.... Looking at an 11 unit bldg potential purchase.

We closed a deal on 32 units:

70% bank    20yr am

20% seller    10yr am

10% me

I have a 12 year track record in rentals and it was still hard to get it done. Maybe not hard, but it took 3 months to get the loans with the bank done. Frustrating.

My most recent closing was assumable debt so, that gets bucketed in its own category.  

Last March closed on 62 units with financing through a local community bank.  

77% LTV

4.5%, Amortized over 20, 10 year term, resets after 5.

Let me know if there is any other info that I can help with.  


I closed on a 9 unit (7 residential and 2 commercial) last October. Sale price was $239k. Borrowed $198k from a local bank (northern West Virginia ) acting as primary lender with 20 yr, 4.99% for first 3 years as terms. Don't recall what it adjusts to. 

Also got $60k in owner financing with 10 yr amortization, 5 yr balloon at 5%. I didn't put any money down. Even borrowed $10k from my step dad to pay for appraisal, inspection and first year insurance, which has since been paid back. 

@Mike Wallace

Building Size - 32 Units 

Rate - 4.25% 

Term - amortized over 20 years reset after 3

LTV - 80%

Loan Process - ~3 months 

Market - Marietta GA

Hope that helps. 

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