Refinancing for small apartment building

3 Replies

I have had no problem with refinancing my single family and 1-4 unit properties, but now I have an 8 unit that I've improved quite a bit and raised rents over the past 9 months and I don't qualify for the 1-4 unit loans anymore and I'm having a terrible time finding the right knowledgeable lenders that understand and offer the programs that I would  need to refinance this property.  Can anyone lend some advice on where I should look for this type of financing?   I have great equity and credit so why is this so difficult?

Hi @Kevin Q. - welcome to the world of commercial financing :)

A majority of my rental portfolio has commercial loans thru private capital groups so I am quite familiar. PM me and we can discuss details of your refi.

Hi @Kevin Q.

It really depends on what you are looking for with regards to recourse, LTV, LTC, prepayment structure, etc. I have found that once you know where to look, it can be even easier than residential financing since in many cases the lender is underwriting the asset instead of you personally. Have you reached out to local community banks and credit unions? That is a great place to start since 8 units is likely too small for the larger national banks.

Another place to look (and where I mostly focus on) is the Freddie Mac Small Balance Program. They are a podcast sponsor of BP and the program was created for small apartment buildings. The program has a loan minimum of $1MM which may or may not work for your property but worth a look. Feel free to PM me to discuss any questions you have! 

@Kevin Q. assuming this property doesn't have a value > $1 million a small commercial bank or credit union local to your area is going to be your best bet. You may be having trouble because you are not speaking to the right people at the bank. You are looking for a commercial loan and should be talking to a commercial loan specialist or vp. There are people like this in every local bank. Surprisingly some of the bigger banks will have no idea how to deal with you because the people that do these type of loans are not in the branch but in a central office. 

I have tons of small commercial loans but when I tried talking to someone at a regional bank with a branch in our county, none of the people in the bank including the branch manager had any idea how to deal with me. Forget the big name banks, way too much bureau"crazy" and they don't want to deal with small loan amounts anyway.

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