Requirements to get a loan for large multi family deals?

4 Replies

What is required to get a loan for a multi family deal such as a 12 unit apartment complex? As I have been researching and reading, I understand that lenders are looking for some experience and a track record. That said, what does that translate to in terms of specific requirements?

@Matt Ferch Private Lenders in this area definitely would like some experience. The specific property (location, etc) will play a factor. If you can do 25%-30% downpayment, property has strong cash flow, and you have assets you would have a good chance at getting financing. May require you to hire professional property mgmt co in lieu of experience.

@Matt Ferch Bigger Pockets does have an entire Multi-Family forum.  It might be a good idea to post this there too.  Might get some good responses there as well.  Just an idea.  Thanks!

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Originally posted by @Matt Ferch :

What is required to get a loan for a multi family deal such as a 12 unit apartment complex? As I have been researching and reading, I understand that lenders are looking for some experience and a track record. That said, what does that translate to in terms of specific requirements?

Hey Matt

The lender is going to ask you the same questions you should be asking of the Realtor.  They are going to want: 

  • Their application
  • Guarantor's credit
  • Operating Income Statement for the last two years and it should include the cost of all utilities.  
  • Leases.
  • Many want your taxes, some do not.
  • If it's a rehab loan, your scope of work and exit strategy
  • Cash for down payment (usually 25% minimum), closing costs and reserves if they need them

Stephanie

If you have the required credit score, experience, and the loan amount would meet the lender's minimum, then expect to put at least 20% - 25% down, the rate to be in the 10% - 13% range and the origination fee at 2% - 4% for a short-term (6 - 18 months) interest only bridge loan (bridge to sale or bridge to perm financing). 

Other requirements may be that the property cash-flows positively (The DSCR is above a 1.0, many have a 1.15+ requirement) and that all the units are residential.