Analyzing 6+ Unit Properties w/ Balloon and ARM Loans

[Rick L.]

I'm interested in possibly acquiring a 6 unit apartment building.  However, over the past couple of years I have only analyzed and purchased 2-4 family properties.  Running cashflow projections and pro-formas was straight forward since most of these properties could be conventionally financed using 15 or 30 yr fixed rate amortization schedules.

I'm curious how other's are evaluating larger multifamily properties using Balloon and ARM loans. For instance, is it your goal to achieve the same "rules of thumb" -ie, $100/door, Debt service coverage ration, cash on cash returns, ROI, gross rent multiplier, using Balloons/Arms?

I know Balloon & ARM loans are common with commercial multifamily's, but what investment highlights are you looking to achieve and how do you get there when analyzing?