Multi-Family Real Estate Loans

[Justin Olson]

Hello. I'm currently researching how to get bank financing for multi-family properties. I'm referring to 5 units and up. I have a few questions if anyone has gone through this process before. I have other properties I could sell and some additional liquid assets for this project. I understand how to analyze the deal, it's the bank piece I'd like to understand better. I appreciate the insight!

-Would it be better to locate the property first, then secure financing? Or work with a commercial real estate agent, then financing, then property? This is different than traditional house hunting so I'm trying to better understand the process.

-What kind of interest rates have you typically seen? 

-Are parts of the loan negotiable? I mean down payment, interest rate, payment terms, closing costs? Or is it typically a set expectation? 

-I'm in Pensacola, Florida if that helps

Again, thank you in advance for your insight. 

[Matthew Irish-Jones]

@Justin Olson interestingly, everything is negotiable, even with banks.  However, its not usually negotiable when you are a first time client.  You need to prove you are an asset to the bank and are a sure thing to pay back loans, then you can get more flexibility.

5+ you will need a commercial lender. That is the first step in figuring out if you can invest in commercial RE or not. If the lender says they will not fund you, no need to find a Realtor. They will require personal financial data. Commercial loans don't provide a pre-approval, they will provide a term sheet when you find a property. You still need to go to them first and figure out what you will qualify for. Generally speaking you will need a local portfolio lender that takes on these smaller loans, most big banks wont' touch smaller LLC loans.