Multifamily Financing and Depreciation

[Jordan Becker]

Hi, I'm a newbie trying to get into multifamily rentals with a partner, and have a couple of questions:

1) When you buy a small commercial multifamily property (say 50 doors or less), how much in liquid assets does a lender typically expect you to show, in addition to the down payment?  

2) I have been told that one should not buy an older apartment building because it has already depreciated most or all that it can depreciate. Is this true?  Is there an age limit for a property, beyond which you can no longer take depreciation on it, or where the amount of allowed depreciation diminishes?  

Thanks for any help!

[David Lilley]

@Jordan Becker depreciation starts when you buy the property and place it in service (start renting it). Straight line depreciation is over 27.5 years so, if you bought the property for $1,000,000 and this was also your cost basis, subtract land value from that and divide by 27.5.

Look up cost segregation and bonus depreciation.

Liquidity requirements are usually 9-12 months worth of debt service.