How to find a Commercial Multifamily Loan <$1M

Multi-Family and Apartment Investing
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How to find a Commercial Multifamily Loan <$1M

Mary Lopez
Member since 2021 · 12 posts · 6 votes

I'm looking to purchase my first 10-unit apartment building in Ohio.  I live in California, so I am not familiar with the local banks in Ohio.  I did reach out to 1 local bank which was recommended by the listing agent and they are currently not lending to out of state investors. When I did an online search for commercial multifamily lenders, most have a minimum lending requirement of $1M and I don't need that much.  How do I find a commercial multifamily loan that is willing to lend less than $1M?

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Collin Schulte
Member since 2020 · 3 posts · 5 votes
5y

@Alex Bekeza Would you mind sharing those wholesale nationwide providers/private companies? I am looking at a 24 unit multifamily that will end up being close to 700k. Thank you for the help!

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  • Alex BekezaBusiness Member
    Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    5y

    @Mary Lopez I'm also a California resident investing the mid west.  Multi family loans under $1,000,000 are certainly more difficult to obtain because they don't meet the minimums of most companies and most local banks aren't so welcoming to out of state investors.  However, I know of some great wholesale nationwide providers/private companies. They'll go as low as $250,000.  Rates will be a little higher (5%/6% range) but the cool thing is that you can often find these on 30 year fixed terms unlike the short term balloons the local bank would offer. 

    [email protected]818-606-8823
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  • Collin Schulte
    Member since 2020 · 3 posts · 5 votes
    5y

    @Alex Bekeza Would you mind sharing those wholesale nationwide providers/private companies? I am looking at a 24 unit multifamily that will end up being close to 700k. Thank you for the help!

    4Reply
  • Alex BekezaBusiness Member
    Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    5y

    @Collin Schulte I sent you a message. 

    [email protected]818-606-8823
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  • Christopher Warne
    Investor · Rochester, MN · Member since 2020 · 2 posts · 6 votes
    5y

    Currently reading Multifamily Millions and David Lindahl recommends using a mortgage broker. They typically charge 1% of the financed amount but should be able to find a lender to suit your needs and hopefully avoid situations where financing falls through at the last minute.

    3Reply
  • Eric Johnson
    Lender · Chicago, IL · Member since 2016 · 653 posts · 313 votes
    5y

    @Mary Lopez It definitely depends on your scenario and the details. You can still reasonably expect to find financing for those asset types. Is it prime? no. Does it get the deal done & a building in your name? Sure does.

    1Reply
  • Brianne Leichliter
    Rental Property Investor · Cincinnati, OH · Member since 2019 · 59 posts · 77 votes
    5y

    @Mary Lopez I invest in Cincinnati and have some contacts I can share with you for banks that provide commercial lending on multi-families.

    0Reply
  • Danny RandazzoPro Member
    Apartment Syndicator · Charleston, SC · Member since 2016 · 973 posts · 728 votes
    5y

    @Mary Lopez call 5-10 local community banks or credit unions where the property is located and you’ll find at least one that can work with you.

    2Reply
  • Mary Lopez
    OP
    Member since 2021 · 12 posts · 6 votes
    5y
    Thank you everyone for your suggestions! 
    0Reply
  • Chris McIntosh
    Member since 2021 · 1 post · 1 vote
    5y

    @Mary Lopez I helped a California buyer purchase a 70-unit multifamily in Columbus, OH last year so it can be done.

    1Reply
  • Zeke Liston
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    5y
    Originally posted by @Chris McIntosh:

    @Mary Lopez I helped a California buyer purchase a 70-unit multifamily in Columbus, OH last year so it can be done.

    I'm looking for 10+ units in Columbus as well, can you help me buy a 70 unit in Columbus? 

    3Reply
  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    5y

    @Mary Lopez

    You have to ask around to local commercial lenders or some of the larger Finance of America type lenders. Being out of state they’ll need strong balance sheets and probably be more conservative on underwriting.

    [email protected]614-363-2787
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  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    5y

    @Mary Lopez

    There are second tier lenders out there (non-banks) that will do small balance commercial.  Some will go down as low as $100,000.  

    0Reply
  • Mary Lopez
    OP
    Member since 2021 · 12 posts · 6 votes
    5y

    @Brianne Leichliter  I'd love to get those contacts!  Thanks!

    0Reply
  • Tom Murray
    Realtor · Coronado, CA · Member since 2013 · 43 posts · 39 votes
    5y

    @Mary Lopez - second on using a mortgage broker.  I tried for months to find a lender for MF (10+ unit) before connecting with a broker.  We used the broker Stacksource (found on BP resources) and they found us multiple lenders.  And I believe BP Pro's get a discount on Stacksource's fee.  Good luck!

    2Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    5y
    Originally posted by @Chris McIntosh:

    @Mary Lopez I helped a California buyer purchase a 70-unit multifamily in Columbus, OH last year so it can be done.

     I just purchased a 24 unit in Columbus, Ohio. Please help me purchase a 70 unit too!

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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  • Spencer Gray
    Syndication Expert and Investor · Indianapolis, IN · Member since 2016 · 591 posts · 808 votes
    5y

    @Mary Lopez I recommend most investors skip multifamily properties that don't qualify for agency (Fannie/Freddie) or HUD financing.

    Debt is going to make up 70%+ of your entire capital stack - it's critical to find the best loan/lender with the best terms possible. 

    Why pay 5%-6% on a 20-25 year am 5 year term when you can pay 2.25%-3.5% on a 30-35 year am 10-35 year term?

    I know this may not seem possible, and probably not the answer you were looking for, but it would be worth partnering with another active investor, bringing in a passive investor(s), or even waiting until you have enough capital to deploy into the right deal. 

    Most investors focus on what can they buy now with their available capital instead of simply what is the best investment for their capital without limitations. 

    3Reply
  • Brittny Kenaley
    Member since 2022 · 11 posts · 6 votes
    4y

    @Alex Bekeza would you mind sharing the info on these providers with me also? I'm based in Los Angeles and experiencing the same difficulties finding a lender for out of state commercial multi-family properties under $1M. Thank you!!

    1Reply
  • Chris Collins
    Multifamily Investor · Newport Beach, CA · Member since 2015 · 176 posts · 182 votes
    4y

    If you're looking in Ohio, I can recommend hitting up Kurt Weil.  kurt (at) zipfel (dot) com

    Feel free to tell him I sent you his way. It's been a little bit, but he's a solid guy who knows the markets and is local and can get you the right $ product. 

    0Reply
  • Account Closed
    Member since 2022 · 26 posts · 12 votes
    4y

    I understand that it is sometimes easier to have a broker do the work to find a lender, but the 1% + I always paid to brokers was a fairly significant cost. When I purchased my first large apartment building my real estate broker called 18 different banks until we found one that gave me the loan and I saved more than $20,000 by dealing directly with the bank and no loan broker.

    Then, as time went by, I got lazy and found what I thought was a terrific broker. I found several properties, made one phone call to a loan broker, paid the 1%+ and life was easy until my broker talked me into re-financing on every loan about every 3 years, or maybe, there was so me reason I had to re-finance. I can't remember, but it turned out that since I kept paying my broker 1%+ every time I re-financed my principal never decreased. The only person getting rich was my loan broker.

    Then, I dropped my broker and switched to dealing directly with Chase Bank. I stopped paying the 1%+ and my principal finally started to decrease, significantly.

    My suggestion is that you ask brokers for recommendations that are in the area where you are purchasing your property and keep calling banks and save thousands of dollars you can use to invest for your next purchase.

    1Reply
  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    4y

    @Mary Lopez

    You could use a DSCR commercial lender which will allow you to close in an LLC with 30yr fixed options and better rates than normal local commercial lenders.

    I can also send some referrals over for commercial lenders local here - many dont lend to out of state buyers.

    [email protected]614-363-2787
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    0Reply
  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    4y
    Originally posted by @Account Closed:

    I understand that it is sometimes easier to have a broker do the work to find a lender, but the 1% + I always paid to brokers was a fairly significant cost. When I purchased my first large apartment building my real estate broker called 18 different banks until we found one that gave me the loan and I saved more than $20,000 by dealing directly with the bank and no loan broker.

    Then, as time went by, I got lazy and found what I thought was a terrific broker. I found several properties, made one phone call to a loan broker, paid the 1%+ and life was easy until my broker talked me into re-financing on every loan about every 3 years, or maybe, there was so me reason I had to re-finance. I can't remember, but it turned out that since I kept paying my broker 1%+ every time I re-financed my principal never decreased. The only person getting rich was my loan broker.

    Then, I dropped my broker and switched to dealing directly with Chase Bank. I stopped paying the 1%+ and my principal finally started to decrease, significantly.

    My suggestion is that you ask brokers for recommendations that are in the area where you are purchasing your property and keep calling banks and save thousands of dollars you can use to invest for your next purchase.

    Two things: Your broker wasn't getting rich on a 1% commission and the 1% you paid to your broker didn't keep your principal from decreasing; it was probably the cash out he got you (and at a higher LTV than the bank would lend you I might add).

    Banks and brokers each have a place in the lending arena.

    Stephanie

    3Reply
  • Alex BekezaBusiness Member
    Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    4y

    @Brittny Kenaley Well my personal favorite would be ME! 

    I'm based in LA but do this more or less nationwide. 

    [email protected]818-606-8823
    Investor Property Loan5306 Reviews
    WebsiteView Page
    1Reply
  • Account Closed
    Member since 2022 · 26 posts · 12 votes
    4y
    Originally posted by @Stephanie P.:
    Originally posted by @Account Closed:

    I understand that it is sometimes easier to have a broker do the work to find a lender, but the 1% + I always paid to brokers was a fairly significant cost. When I purchased my first large apartment building my real estate broker called 18 different banks until we found one that gave me the loan and I saved more than $20,000 by dealing directly with the bank and no loan broker.

    Then, as time went by, I got lazy and found what I thought was a terrific broker. I found several properties, made one phone call to a loan broker, paid the 1%+ and life was easy until my broker talked me into re-financing on every loan about every 3 years, or maybe, there was so me reason I had to re-finance. I can't remember, but it turned out that since I kept paying my broker 1%+ every time I re-financed my principal never decreased. The only person getting rich was my loan broker.

    Then, I dropped my broker and switched to dealing directly with Chase Bank. I stopped paying the 1%+ and my principal finally started to decrease, significantly.

    My suggestion is that you ask brokers for recommendations that are in the area where you are purchasing your property and keep calling banks and save thousands of dollars you can use to invest for your next purchase.

    Two things: Your broker wasn't getting rich on a 1% commission and the 1% you paid to your broker didn't keep your principal from decreasing; it was probably the cash out he got you (and at a higher LTV than the bank would lend you I might add).

    Banks and brokers each have a place in the lending arena.

    Stephanie

    My broker got rich just from my investments and he was purchasing more multi-unit properties that myself. The average loan he did for myself was a little less than $2 million to a little more than $2 million. So, he made an average of about $20,000 per loan for pushing a pencil and a cheap paper. He did about 5 loans and about 6 re-finances within about 8 years made him about 11 x $20,000 = $220,000 for ink and paper while every time I did a re-finance the broker fee ate into my paying off my principal. I think it was my fault and my ignorance for allowing him to convince me to re-finance properties every 3 years and I think he re-finance 3 of my properties 2 times meaning he earned a $20,000 commission for each property 3 times, or he earned $60,000 for each property just for being my broker. After 3 loans my principal was the same after 10 years as it was when I purchased the properties.

    0Reply
  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    4y
    Originally posted by @Account Closed:
    Originally posted by @Stephanie P.:
    Originally posted by @Account Closed:

    I understand that it is sometimes easier to have a broker do the work to find a lender, but the 1% + I always paid to brokers was a fairly significant cost. When I purchased my first large apartment building my real estate broker called 18 different banks until we found one that gave me the loan and I saved more than $20,000 by dealing directly with the bank and no loan broker.

    Then, as time went by, I got lazy and found what I thought was a terrific broker. I found several properties, made one phone call to a loan broker, paid the 1%+ and life was easy until my broker talked me into re-financing on every loan about every 3 years, or maybe, there was so me reason I had to re-finance. I can't remember, but it turned out that since I kept paying my broker 1%+ every time I re-financed my principal never decreased. The only person getting rich was my loan broker.

    Then, I dropped my broker and switched to dealing directly with Chase Bank. I stopped paying the 1%+ and my principal finally started to decrease, significantly.

    My suggestion is that you ask brokers for recommendations that are in the area where you are purchasing your property and keep calling banks and save thousands of dollars you can use to invest for your next purchase.

    Two things: Your broker wasn't getting rich on a 1% commission and the 1% you paid to your broker didn't keep your principal from decreasing; it was probably the cash out he got you (and at a higher LTV than the bank would lend you I might add).

    Banks and brokers each have a place in the lending arena.

    Stephanie

    My broker got rich just from my investments and he was purchasing more multi-unit properties that myself. The average loan he did for myself was a little less than $2 million to a little more than $2 million. So, he made an average of about $20,000 per loan for pushing a pencil and a cheap paper. He did about 5 loans and about 6 re-finances within about 8 years made him about 11 x $20,000 = $220,000 for ink and paper while every time I did a re-finance the broker fee ate into my paying off my principal. I think it was my fault and my ignorance for allowing him to convince me to re-finance properties every 3 years and I think he re-finance 3 of my properties 2 times meaning he earned a $20,000 commission for each property 3 times, or he earned $60,000 for each property just for being my broker. After 3 loans my principal was the same after 10 years as it was when I purchased the properties.


    We have different definitions of rich, particularly over such a long period of time.  Not sure, from what you're writing, what the benefit to the borrower was in refinancing, but there had to be something; cash out and lower rate are two that come to mind.  In either instance, you were able to use the cash out for something and if you had left the interest rate alone, over time you would come out ahead (unless of course he put you into an interest only loan or something crazy).

    You're right that refinancing so many times can eat up your principal and since you were the one that signed the papers, it is your fault, but I stand by the assertion that no one got rich on one point.

    Stephanie

    0Reply
  • Brynn R.Pro Member
    Rental Property Investor · Rancho Palos Verdes, CA · Member since 2020 · 25 posts · 15 votes
    4y

    @Alex Bekeza will you DM me the contact you have on 30 year fixed rate commercial loans under 1M?

    1Reply
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