is there a vacancy % factor that lenders will not lend beyond

[Terry Lao]

I own a 4plex, which is one of 23 buildings. I recently found out that there could be 30-35 units that are currently vacant out of a possible 92. This is a vacancy percentage of 33-38%. 

Would fannie mae or freddie mac look at the vacancy % and is there a upper limit cannot go beyond?

Terry

[Michael Le]

@Scott Skinger, to add a different perspective from Todd. My experience is that you don't need to go to a local bank to have no pre-payment penalty. I've received bridge loan term sheets from the same DUS lenders that ended up providing me the agency loans. The lenders will waive the penalty as long as you roll it into a Fannie/Freddie with them. So you could end up paying origination twice and there is the high interest rate, as Todd mentioned, but you do get interest only. Pontentially you could get 2-3 years IO on the bridge and then roll into another 2-3 years IO on your agency. Obviously you won't be paying down the principal but your cash flow will be better. If your plan is to increase value and sale after 5-6 years anyway then the principal pay down won't likely be a big part of your business plan.