Multi-Family Financing - Getting Started

[Nitin John Abraham]

I am looking at opportunities to buy multifamily properties (6-8 unit properties) in Indiana. I have never purchased multifamily properties before and i am looking for some advise on how to get started in shopping for financing for such properties.

Thanks!

[Neil Henderson]

If it's more than 4 units you'll be looking for a commercial lender, not a residential lender. The price of the property, and what the bank will finance, will be based on the income the property produces, the Net Operating Income (Gross revenue minus expenses) divided my the Cap rate. Be advised, you're playing in a very competitive pool these days as that asset class is in high demand.

I would start be talking to the smallest banks in whatever community you plan to invest in. Look for the banks with the fewest branches. Call them up, ask to speak to their loan department and ask them what their appetite is for smaller commercial apartment buildings in the 6-8 unit range.

Good luck.