fixed rate mortgages for apartments

[Kenneth LaVoie]

I am looking for fixed rate mortgages under 6% fixed rate for 9 buildings totaling 17 units. I now have 5% / 20 yeaer/ 25% dp / 3 yeaer ARMs. I'd like to lock in, even if it means some closing costs. I keep hitting dead ends. People I talk to say there's almost no such thing as fixed rate for apartments while everyone on bp says don't settle for anything OTHER than fixed rate ... any pokes in the right direction would be well receieved!

[Bill Gulley]

Theroretically you could get a thirty year fixed rate on 16 units, 4 units in 4 buildings, since the definition of single family dwelling is a dwelling unit consisting of from one to four family living units. And no more than 4 non-owner occupied in any one complex.

A complex is consider in proximity to another unit, like in the same subdivision, it could be across the street or four units along the same street, even skipping an address along that street, this is an underwriting call.

If you have any one unit that has more than 4 dwelling units it is no longer considered "single family" it becomes multi-family and they are financed as a commercial loan.

Use to be that some uninsured lenders (non-banking lenders)like a pension fund would take certain commercial properties on long fixed rate terms, like 15 or 20 years, and they are usually large loan amounts, over 1M, but I believe these are as rare as dentures for a hen or a snipe.

Insured lenders can not assume an interest rate risk beyond 7 years and stay within prudent lending practices and remain balanced with the maturity distribution of other investments. Beyond seven years the interest rate risks become unmanagable for most banks. And, since the market accepts shorter term loans that will rollover to an adjustable rate, there is really no need for them to be offered by lenders.

Know too that there is no requirement for a lender to renew any loan at maturity. While they usually do for loans that have been paid as agreed, they don't have to rewrite the loan. For that reason, I suggest that investors take the longest term they can get and make significant reductions to principal now, because in 5 or 7 years, that lender could say no and you will have to refinance elsewhere. If your LTV has not moved much, financing could be harder to get down the road.