first time 5-plex financing
Hello,
We are under contracts for 500K 5-plex property in Louisville. This is our first time with above 4 -plex properties. I am looking for financing this deal through commercial mortgage lenders but with proper leads. Any suggestions on how to go about it?
#1 Creative Real Estate Financing Contributor
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#1 Creative Real Estate Financing Contributor
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@Shivi Thanapal do you feel you have the proper downpayment here? Is this a property that will need rehab?
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Yes, the downpayment is covered. Its not rehab- its fully leased as of today.
Quote from @Shivi Thanapal:
Hello,
We are under contracts for 500K 5-plex property in Louisville. This is our first time with above 4 -plex properties. I am looking for financing this deal through commercial mortgage lenders but with proper leads. Any suggestions on how to go about it?
Hi Shivi,
What terms were you looking for? Happy to connect.
@Shivi Thanapal you have options in the price point! When is your closing date? Do you have 30-days? The biggest thing is you'll want to ensure you have enough time for a commercial appraisal - these are much more extensive than 1-4 unit properties and cost 3-4x as much usually. They'll also need to be ordered by your lender (whomever you go with), so timeline is important!
1st question I always like to ask - have you approached local banks and credit unions? They will often offer the best terms, but expect the thorough underwrite (2-3 yrs personal and business tax returns, Debt Schedule, PFS, etc). If they say no, or can't meet your timelines, then looking at the secondary market lenders are gonna be your jam! Low-doc, asset based, and overall much easier mortgage process with faster turn times. The downside is rates are usually a little higher, but on the flip side too, you can also obtain 30-yr financing vs banks and credit unions who are often 25-yr ams, on 5-10 yr balloons. So even if higher rates, often times the 30-yr ams match up on cashflow vs the banks.
Let us know your timeline, who you've approached, and CONGRATS on your first Multifamily!
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Lender
- MACO Financial
- (414) 600-0123
- https://www.macofinancial.com/
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Thank you! The project value is $500 K (5 plex that is fully leased and producing good cash flow). We will put a downpayment of 125K (25% down). We are reaching out to banks such as bank of america (so thanks for the suggestion - good to know that that's one of the right tracks). Also working with few lenders/brokers..Have not zeroed in yet as we are looking for long term (30 year with good rates). We have about 45 days to close so we do have some time to shop around and find the best terms.
Thanks for the details! Some banks can close in 45-days (most are 45-75) so you might be okay there! Your in a great price point so your options should be plentiful in the secondary market space as well, these are all your non-bank type lenders who usually like to see a minimum value per door of 50k-$100k and loan amounts > $250k for best terms. Assuming credit is good too, the gates for lending options should be available to you!
-
Lender
- MACO Financial
- (414) 600-0123
- https://www.macofinancial.com/
- [email protected]
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#1 Personal Finance Contributor
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Quote from @Shivi Thanapal:
We will put a downpayment of 125K (25% d We are reaching out to banks such as bank of america
we are looking for long term (30 year with good rates). We have about 45 days to close so we do have some time to shop around and find the best terms.
Local banks/CUs to the property will probably be your best bet to fund a commercial deal. Big banks are worthless.
Commercial loans generally have 5/5/20 terms. 5yr adjustable, 5 yr callable, 20yr length. No 30 yr fixed.
And they'll need to review your financials every year. Fun, fun!
Quote from @Steve Vaughan:
Quote from @Shivi Thanapal:
We will put a downpayment of 125K (25% d We are reaching out to banks such as bank of america
we are looking for long term (30 year with good rates). We have about 45 days to close so we do have some time to shop around and find the best terms.
Local banks/CUs to the property will probably be your best bet to fund a commercial deal. Big banks are worthless.
Commercial loans generally have 5/5/20 terms. 5yr adjustable, 5 yr callable, 20yr length. No 30 yr fixed.
And they'll need to review your financials every year. Fun, fun!
You can do a 30 yr fixed fully amortizing commercial loan. Rates are higher though.