Commercial Financing for 5+ Unit Residential

[Eric McAvoy]

Hey all! With this quarantine I've had a bit more free time on my hands and I've found myself reading more and more about smaller apartment buildings and wanted to reach out to see if anyone had some insights and tips for me! 

I've found a few in my area and I'm wondering what metrics do you use to value them, how does financial typically work for properties lets say 5-24 units, and what are some major things a newbie investor in this area of REI should know. I already own a triplex and a SFH as rentals so I've got some experience there, but I want to learn more and eventually branch out into the commercial side of things.

Thanks for all the help BP community!!

[Guifre Mora]

Originally posted by @Eric McAvoy:

Hey all! With this quarantine I've had a bit more free time on my hands and I've found myself reading more and more about smaller apartment buildings and wanted to reach out to see if anyone had some insights and tips for me! 

I've found a few in my area and I'm wondering what metrics do you use to value them, how does financial typically work for properties lets say 5-24 units, and what are some major things a newbie investor in this area of REI should know. I already own a triplex and a SFH as rentals so I've got some experience there, but I want to learn more and eventually branch out into the commercial side of things.

Thanks for all the help BP community!!

No different than a SFH or Triplex. Financing will require more down payment and reserves. Here are the key items to look into.

1. Rental Property Cash Flow Analysis
2. Monthly Operating Income
3. Net Operating Income (NOI)
4. Capitalization Rate and Valuation
5. Loan Information
6. KPI's
7. Cash Flow and ROI
8. Property P&L