How to find multi family loans

Question

Hey everyone ! I’ve been investing for a little while but most of my deals have been commercial retail and some Mobile home parks and for the most part I’ve gotten commercial loans such as 20 year amort , 5 year fixed , 5% , somewhere around there . I’m looking for a 20-35 unit apartment complex ,  and would like to know how to get decent terms for multi family when we do go under contract , that can stretch to a 25 -30 year amort , maybe 7-10 year fixed , and lower rates around 3.5-4.25 and possibly non recourse . I meet loan requirements , net worth , experience , dcr will always be above 1.30 for any prospective property we look at . But not sure how to find those lenders . Any help would be grateful . Thanks again

Mike Bianchi · Answer

@Spencer Gray

Awesome , thanks for the elaborate  response Spencer . The local banks near me tend to give me the same response , 20 year amort and recourse , maybe I should check more banks .

If I were to go the broker path , Does it matter having a broker in the region ? Finding a fanny mae or Freddy Mac broker may be my best option in the beginning

Spencer Gray · Answer

@Mike Bianchi many Fannie and Freddie lenders will lend across the country so they don't have to be local.

Most local and regional banks will only be able to offer you portfolio loans or possibly CMBS, neither have the best terms.

Google "Fannie Mae Freddie Mac Multifamily Loans" - many of these lenders are aggressive for new business if you are a decent sponsor/operator.

Eric Johnson · Answer

Hi Mike,

Sounds like the other posters on this thread are on the right track. Navigating the commercial capital stack is tough, but you have some good advantages. You should be able to score a non-recourse in that territory of 3.5-4.25% (depending on numerous other factors).

Good luck!

Mike Bianchi · Answer

@Greg Dickerson

Great idea , thanks Greg !

I assume they are 45-60 day timeframe to close , if not longer  ? And they would be able to give you some sort of indication early on if the property or user qualify for the loan or not ? Of course after researching the requirements for a loan but for whatever reason they would object .

Greg Dickerson · Answer

Local and regional commercial banks are one option. You can also search on Freddie and Fannie websites for agency direct lenders

Spencer Gray · Answer

You are going to want to look into Fannie Mae or Freddie Mac small balance loans. These are loans more than $1M and offer all of the terms you described: 30 year am, non recourse, 5-12 year terms, fixed our floating rate in the 2.9-3.3% range currently, typically with some interest only,

You can go direct to lenders who have a market rate agency (Fannie/Freddie) license or a broker who can shop multiple lenders.

You could also consider HUD 223(f) loans which have a 35 year am schedule, 35 year term, rates currently around 2.2%, non re-course. HUD 223(f) does some drawbacks, however, such as high pre payment penalty, REAC inspections, HUD audits, and a surplus cash-flow calculation before distributions.