Loan Process

[Rachel Trubisky]

my husband and I are new to the rental business. We found a multi-family unit that we feel would be a great investment. What do you think are the best options for getting a larger loan? 

This is a 21 unit and the manager lives on site. It's 100% occupied, in a good location for rentals and has been renovated some so it's in decent condition. 

Thanks!!

[Joel Owens]

1. A 21 unit is not generally a large loan

2. 100% occupied means nothing. Look for "tenant loyalty" meaning out of 21 units half have occupied more than a few years and pay on time with little issues.

3. Check how far below rents are from the current market.

4. Renovated some and in decent condition. ( looks can be deceiving ). Carpet and paint, counter tops, etc. is the cheap stuff to fix. You need to look at roofs, windows, plumbing for water and sewer including the main connecting at the street from the building or buildings, A/C, heater, water heater etc. Electrical, pre- 1974 lead based paint, asbestos.

The big expenses are what takes down your cash flow. You could think you were doing great and then this big capital cost item you didn't plan for happens  and all of your cash flow is sucked down for years trying to recover.

These are just a few items out of many, many more.