All Forum Posts by: Francis Louis Vogel Jr

Small apartment building owners employ a variety of investment strategies with their properties, and sometimes this requires refinancing every several years.

Owners may purchase properties with plans to renovate and then pull out some of the equity they've created. Others prefer shorter-term financing because they aren't sure how the economy will look many years down the road, and they'd like to maximize their profits. And still others may be dipping their toes into multifamily investing and learning as they go. There are many reasons to take out a 5-, 7-, or 10-year loan, just beware that short-term financing means you'll need to refinance more often.

Whether your timing is driven by a maturity deadline or a completion of renovations, you should start getting your ducks in order about three months before you plan to refinance your multifamily property.

Present a clear picture of your property and tenants

Lenders will be doing their own due diligence on you and your property once you get the ball rolling, but you can help the process go smoothly by being prepared. The first two items a lender will request are current and complete operating statements and rent rolls. They want to make sure the building is running efficiently, the history of what your units are renting for, and your average occupancy. Being able to provide legible, orderly copies of these items will start you off on the right foot with your lender.

Show how your investments have improved the property value

If you've completed any improvements to your property in the last several years, you'll want to show proof of those upgrades to your lender. Whether you've landscaped, added green enhancements, renovated kitchens, or added amenities, you may have increased the value of the property. It's important to note these changes on a schedule of improvements – they may be advantageous for your refinance terms.

Clear up any credit or servicing issues

Now is a great time to check on your personal credit to make sure there's nothing you need to address – including any concerns that may have arisen with your servicing team since your loan was originally put in place. You'll want to make sure you're in good shape to close on your new loan without being slowed down by old issues.

As jobs disappear and unemployment claims mount, it begs the question: What will happen to tenants and landlords when the moratorium lifts?

A lot of possible problems come from the fact that many people do not know what is legal and what isn't in the face of rapidly changing laws. For instance, the federal government and states have all passed eviction moratoriums of a sort, but they apply to different people and initially had different end dates.

The United States recorded 10 million first-time unemployment insurance applications in two weeks, shattering previous records from the financial crisis of 2008-2009. State and federal systems have been overwhelmed with applicants, causing technical delays. Money from the $2 trillion stimulus package will be a while in coming, but it will give people who make under $75,000 individually a $1,400 financial boost, as well as an extra $600 bump in their unemployment checks if they lost their jobs. Rent relief, in this case, means the government steps in to pay rent when people faced with an economic collapse cannot. 

Without rent relief, tenants who were recently fired could find themselves thousands of dollars in debt when the moratorium is eventually lifted — and with little standing between them and a 14-day eviction notice.