NEW TO MULTI FAMILY PURCHASES

[Rasheed Hope]

Hi everyone, my company and our investors are interested in getting into Apt purchases. We have been involved in a few fix and flips and wholesale deals and have successfully managed properties but now it's time to expand our portfolio and resume. What are some lender requirements for commercial loans? And if anyone has any tips, pointers or references please let me know.

[Marty Johnston]

@Rasheed Hope, Congrats on your successful REI's thus far! It sounds like solid progression. As to your questions, I am a Loan Rep for a Commercial Real Estate Brokerage and can fill you in a little bit on the (typically) basic requirements from our lenders. There are so many different kinds of commercial loans out there so first, you need to find out what you're really looking, are you looking for apartments ready to go? Minimal rehab? large rehab? Commercial construction? what size units (approximate range). All of these things will play a factor into the type of loan, and also the rates and terms which you'll be able to acquire from a commercial lender.

A few things to consider that will impact your financing from a lender.

1) The deal itself. - As stated above, the type of deal will vary your rates and terms considerably. Whatever property you bring to the table will need to speak for itself in terms of "is this a good investment" from the lenders point of view - remember, you are also an investment to them. Keep in mind also, there is no 'one size fits all' when it comes to rates for commercial investments. Alot of time people ask, "What's your interest rate?" The answer is, "Well, what type of commercial is it? What's your PFS look like? What's the risk of the investment?" etc etc. All things play a factor in how any commercial lender will look at your deal.

2) Your FICO CAN and DOES make a difference... - Typically... Not always, again the hated answer, it depends. Yes there are some (maybe even many) commercial lenders out there who do not require high FICO's, however, that being said, it could certainly affect your rates. While a lender might look deeply into the deal itself, lenders also want to put trust in the borrower, they are after all, in charge of the lender's investment also. It's possible even for a commercial deal to look great on paper, and to end up being a complete failure due to mismanagement or an unseen disaster. Make no mistake, lenders know this. it's not entirely true what they say that commercial lenders only look at the itself.

3) Get your information together. - There is a lot of information required, especially from a first time commercial borrower from now being in a lenders data base. The initial basic information we require from any borrower is a Personal Financial Statement, a Tri-Merge credit report (must be tri-merge from all 3 bureaus), and an Executive Summary (or a loan submission form). Once we have these things, we be sure to vet everything out before we send your information to our lender pool.

4) BE HONEST- Believe it or not, I hear about more people 'bending the truth' on their forms or trying to make their deal out to be more glorious than it seems. Don't do this. Give full disclosure, or it will hurt you in the end. There really are lenders out there for every kind of borrower "issue" if you will, its simply knowing what problem your particular deal brings so we know which lenders to pass your deal on to. It's really a waste of your time, our time, and the lenders time if you submit wrong information, because it will be vetted out, and some lenders will disqualify you because you don't meet their particular criteria while others might work with you.

Hope this helps somewhat. These are some basics, and it really is straight forward. I could go on with more specifics if you want, just shoot me a PM and I'd be happy to talk with you!

Marty J