Purchasing a 5+ unit

[Cedric Zebaze]

Hey Bp!

In the future(5 years+),  partnership or myself, I would like to be qualified with a portfolio lender to finance a 5+ unit. 

What are the financials and track record requirements that lenders like to see?

What is the typical LTV?

I researched and it's seem commercial lenders are more lienet and focus on the deal but can be expensive.?

Which lenders can you recommend? 

About me:

• Income -$80k-$110k 
• Credit score 700 
• Liquidity: $30k 
• Currently have 1 rental, looking to close a duplex - fall 2019 . 

[Andrew Fernquist]

Hey Cedric,

A few of things that I've seen when talking with lenders on commercial multifamily deals (ie. 5+ units).

1) Generally LTV of 70-75% (ie. a downpayment of 25-30%, depending on lender)

2) Your credit score sadly won't matter too much. More weight is given to "Debt Coverage Ratio", which is basically your ability to cover the debt obligation with the revenue from the building.

3) Overall terms are also different than typical residential mortgage. Loans are typically amortized over 25 years, but a balloon payment would be due at 5, 7 or 10 years, depending on the lender/options they give you. Essentially, you'll either need to refinance or sell prior to those marks when the loan becomes due in full

4) No recommendations on lenders, other than to say get a few quotes in your area/where the property is located. You may need to shop around quite a bit to find the right fit.

Hope this helps!

Andrew