Buying an apartment with a 30 year loan

[Gregory Ballard]

Does anyone here have a story on how you bought an Apartment complex of 20+ units with a 30-year loan? I'd love to hear your story.

[Karen Schimpf]

@Gregory Ballard Loan amount is very important in what lending products are offered. If the loan amount is below $1MM, you most likely will get a 5 year fix with a 20 up to 30 year amortization.  There are 30 year fixed rate with a 30 year amortization.  Not not all lender's offer the 30 year fix, or if they do, it will have yield maintenance.  Yield maintenance can be nasty if you sell your property prior to the 30 years.  Many of the 5 year fix, 7 year fix and 10 year fix have a step down pre payment penalty.

Yield Maintenance is a prepayment penalty that, in the event the borrower pays off a loan before maturity, allows the lender to attain the same yield as if the borrower had made all scheduled mortgage payments until maturity.

If your loan amount is above $3MM (the numbers work best on $6MM), you might be able to get a FHA HUD loan. The FHA HUD rate can be fixed for 35 years or if there is construction/rehab it can be a 40 year fix. Like the single family FHA product, it will have insurance. HUD typically has a 10 year prepay but you can buy it down. Many do not use the HUD product for a purchase because the loan process is typically 4 months or more.