New to Real Estate · Western U.S. · Member since 2015 · 1 post · 0 votes
If someone with a $200K down payment and only SFR landlord/management experience wanted to get a loan to buy an apartment building, what type of loan would it be and what are the requirements to get the loan?
Matthew - The "agency" lenders (Fannie Mae and Freddie Mac) do require some multifamily experience for a few years to determine "lendability". However, I have heard others say that you can "show" experience by brining in a well experience property management company - however, I would not rely on that as a way to make sure you quality for a loan. The other avenue I would suggest is speaking with regional banks/credit unions about multifamily investing. They typically offer LTVs around 75%, slightly higher interest rates than agency loans, and 25 year amortization (instead of 30 year). However, they are more flexible with experience and often times even loan for renovation costs along the way - which can significantly reduce your out of pocket costs and increase your returns. I'm actually in the middle of securing a loan with a credit union, so if you want to chat, please feel free to reach out!
Matthew - The "agency" lenders (Fannie Mae and Freddie Mac) do require some multifamily experience for a few years to determine "lendability". However, I have heard others say that you can "show" experience by brining in a well experience property management company - however, I would not rely on that as a way to make sure you quality for a loan. The other avenue I would suggest is speaking with regional banks/credit unions about multifamily investing. They typically offer LTVs around 75%, slightly higher interest rates than agency loans, and 25 year amortization (instead of 30 year). However, they are more flexible with experience and often times even loan for renovation costs along the way - which can significantly reduce your out of pocket costs and increase your returns. I'm actually in the middle of securing a loan with a credit union, so if you want to chat, please feel free to reach out!
@Matthew B. What is an apartment building? A duplex? 20 units? If it is 1-4 units you can get a conventional mortgage. 5 or more units requires a commercial mortgage.
@Matthew B. What is an apartment building? A duplex? 20 units? If it is 1-4 units you can get a conventional mortgage. 5 or more units requires a commercial mortgage.
This ^ If it is 1-4 units you can get a 30 year residential mortgage, but anymore you must go through commercial leading. Most loans will be 10 years in length but amortization might be over 20+ years. You will still be expected to probably put 25% down on these types of properties too and will commercial lending they will probably want 3-5 years of taxes to show experiences with rental properties..
So with $200,000 you could look for properties safely around $700,000.00 in my opinion. This will allow you to include loan costs, needed repairs, and a small savings amount to start with for the property.