SO many questions on Fianncing Apartment Building

[Chanel Alexander]

Hi Guys, 

I am trying to learn more about Commercial Multi-Family Financing options.  Can someone point me in the right direction on where to get started. I am currently looking at purchasing a 19 unit apartment building..

For example, I am trying to figure out what the common lending terms are like: 

What is the min I would be able to put down (assuming in the 15-30% down range)?

What are the common loan terms for fixed mortgage? (25 year fixed or 30year fixed?)

What do lenders expect in terms of reserves? (Do they expect you to hold a certain percentage of reserves in account)

Typical closing time for Commercial loans.. ( I assume 45 days similar to Residential Mortgages)

If i am buying with a partner what is the underwriting process? Will banks look at both of our Credit histories? Does this change when buying with an LLC (any downfalls to this)

Any lenders that you guys work with?  Anyone care to share experiences of buying a apartment building. 

Thanks,

Chanel

[Hayden Harper]

@Chanel Alexander

What is the min I would be able to put down (assuming in the 15-30% down range)?

Usually for apartment purchases, you'll need to put about 25% down.  Depending on the cash-flow of the building, some lenders will go up to 80% loan-to-value but that's on a case-by-case basis.

What are the common loan terms for fixed mortgage? (25 year fixed or 30year fixed?)

For multi-family loans, you can usually get 3, 5, 7, 10, 15, and 30 year fixed rate programs, however, the most common I see is usually the 3, 5, and 7.

What do lenders expect in terms of reserves? (Do they expect you to hold a certain percentage of reserves in account)

Reserves really depend on the lender.  The most common is 6 to 12 months reserves.

Typical closing time for Commercial loans.. ( I assume 45 days similar to Residential Mortgages)

45 - 60 days usual turn times

If i am buying with a partner what is the underwriting process? Will banks look at both of our Credit histories? Does this change when buying with an LLC (any downfalls to this)

If you're both going on the loan, lenders will look at both tri-merged credit reports. If you're closing in an entity, you'll be the guarantor. The lender may ask for financials of the LLC / entity information.

Any lenders that you guys work with? Anyone care to share experiences of buying a apartment building.

Shoot me a direct message!