All Forum Posts by: Tony Talamas

@Louis L. Keep detailed records of your renovation - how much was spent and on what. Lenders will want to see that, especially if you have not owned the property for long. It will demonstrate your actual cost basis and increase your chances of puling more capital out sooner than later if you can demonstrate you still have cash in the deal. This becomes less important as time goes on but is very important if you're trying to pull cash out within 18-36 months of a renovation.

@Brian Linton I'm happy to speak with you any time and answer all questions you have pertaining to financing. Feel free to call me any time. I've walked a lot of first timers through the process.

@Gigi Daniel What is your CapEx budget? Is it $200,000? Where is the money going? Is it going to cure deferred maintenance or to make cosmetic improvements?

Would you like to increase your response rate from multifamily & commercial real estate lenders?

Most lenders see dozens of requests each day, so clearing explaining what it is you want to accomplish and providing some good background will help lenders to quickly evaluate and seriously consider your request. Just as in any other role in any other business, you have to have a brief, concise overview to clearly convey to a lender a great summary of your transaction so that he/she can quickly give you feedback. While you don’t need to prepare a business plan, a solid 1-2 page summary of your request will increase the response rate from lenders and the quality of feedback.

Please check out my article, “8 Tips on How to Present a Multifamily Loan Request to your Lender or Broker for the Best Possible Outcome.” These tips are useful for first-time multifamily borrowers and for seasoned owner-operators wanting to establish new lender relationships.

The article can be found here:

Please email questions or comments to [email protected]

@Christian PodedwornyBoth Freddie Mac and Fannie Mae have small loan programs. The Freddie Mac Small Balance Loan Program, mentioned above is a great program that offers longer term fixed rate loans from $1 million to $6 million (up to $7.5 million for properties with 75 units or less). You can fix a rate for 5, 7 or 10 years on a 30-year amortization schedule. You can get up to 80% LTV on Top and Standard markets. Both programs are non-recourse.

PM me if you want more details. Also, I have written a short article with tips on how first-timers can prepare to present their loan request to lenders. PM me if you want to review it.

As for net worth and liquidity requirements, we require a net worth equal to the loan amount and post-closing liquidity equal to nine months of P&I payments. As @Chris Martin mentioned, this can be a combined net worth and post-closing liquidity between 2 or more sponsors.

@Andrew Johnson While a bio is always useful, especially when building a new lender relationship,  it's less necessary for an owner-operator with a track record, such as yourself, than a first-timer transitioning into multifamily loans $1 million plus

@Armando Payano @Andrew Johnson

Speak to your real estate experience – single-family rentals and multifamily properties owned and operated, past and present. Discuss each property and the number of units at each property that you have owned and operated – even if as a third-party. Mention properties sold as well. Discuss how you improved those properties – what did you pay for them? How much more did you invest? How did you improve rents, operations, and NOI? What are values today? You want to demonstrate a hands-on knowledge of real estate operations. Elaborate on all of you real estate experience as you would on a resume. One page maximum. This is a great way to have new lenders get to know you quickly.

To add to @Brian Burke comments, for loan amounts between $1 million and $6 million, Freddie Mac's Small Balance Loan (SBL) Program and Fannie Mae's Small Loan Program offer graduated (sometimes called step-down) prepayment structures, i.e 5-4-3-2-1. This means you pay 5% of UPB in year one, 4% in year two, and so on. The structures vary by loan term. You can also structure shorter options for a small premium. You still get non-recourse with these programs.

With respect to floating rate debt, you can look into the Fannie Mae 7-6 ARM, which offers a lower rate with an embedded interest cap, and an option to convert to a fixed rate.

Also, Freddie Mac SBL offers a 20-year Hybrid ARM with initial 5-, 7-, or 10-year fixed-rate periods, and a floating rate for the remaining term. This eliminates the balloon payment and thus the need to refinance; although you may want to depending on what rates do at that time - the point though is that there is no need to refinance unless you choose to do so after the fixed-rate period.

@Danny N.

This may qualify for a Freddie Mac Small Balance Loan, which offers a non-recourse loan fixed for either 5, 7 or 10 years with rates in the 4s. Amortization would be 30-years and this may qualify for LTV up to 80%. PM me if you want to learn more – I’m based in Houston.

As others have noted, we would look to property's cash flow to support the loan. As a sponsor, you need to have a net worth equal to the loan amount and a post-closing liquidity equal to nine months of P&I payments, which you appear to meet both tests

@Reg H. How many units? What's the asking price? What's the occupancy? I'm in Houston. Send me the P&L he shared with you. I can tell a lot from it. Has he provided you with a rent roll? Is this an off-market deal?