Financing question. Loan type?

5 Replies

Looking to finance 75% of $1,000,000 for a 12 unit apartment complex which grosses $110K, expenses are $40,000, so NOI $70,000 (not including debt service). I'd be purchasing as an LLC and am looking to have the property basically qualify itself, meaning I don't want my debt/income ratio to factor in (because I would not qualify based on high debt to income ratio), have great credit and own multiple apartments and houses with nice net worth, also I have 25% to put down. What types of financing could work here? Ideally, I'd like a long term arrangement, around no more than 5.5%

Have you talked with local banks/credit unions to find out if they think you are qualified? If they won't lend to you then you are left with getting a partner that will sign on a personal guarantee loan or get seller financing. You may also be able to wholesale the deal.

David,

Are you the sole owner of the LLC? There will need to be an entity able to withstand recourse liability, and if the LLC doesn't have another guarantor and/or collateral, then they're going to base your terms on your personal financials.

I would shop some local bank balance sheet lenders as well as credit unions. Institutional / CMBS is probably not the way to go here.

Those expense numbers look really low unless this is a newer, A/B class property. Most likely you're looking at a recourse loan with 20/25 year amortization. Just start talking to some local banks to get an idea of what the offerings and requirements are.

I would talk to at least 5 different lenders, but personally I would be sure to get at least 20 no's before I considered changing direction

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