Commercial Loan Six-plex

[Aaron Vargas]

I'm looking at partnering with a few people to purchase a smaller Multifamily property (6-10 units) in Tampa with an LLC. I believe this would require a commercial loan. What is the range of typical loan terms for this type of acquisition - LTV, amortization, term, interest rate? I know this depends on a ton of factors but hoping to get a general idea so I can throw into a model to analyze the deal.

Thanks for your help.

[George Despotopoulos]

@Aaron Vargas if it's stabilized, meaning rent-ready (doesn't have to be fully occupied, just in leasable condition), you can get a 30 year fixed rate, with a 5 year prepayment penalty, from an investment property lender (non-bank, DSCR lender) at 75% LTV for 6-10 units-- 80% might be possible on a case by case basis. Rates for that will be around 5% - 5.875% (not beyond this), which is rather competitive for that asset class/type (MFR of 5-10 units). The rate will depend on credit scores, DSCR, loan amount, state, and LTV.

If you're looking to renovate, then it would be a bridge where you can finance 75%-85% of purchase price & 100% of rehab costs, capped @ 70-75% ARV. This is an interest-only loan where you make monthly IO payments. There's no prepayment penalty. Rates will heavily depend on your experience, credit score, the purchase price + rehab budget. I would assume 7.5% - 9.5%.