MultiFamily Lenders Needed

[Manny Del Val]

We are looking for lenders that specialize in Multifamily lending from 5 to 20 units. We are actively looking for deals and would like to start speaking to lenders before we have a deal under contract.

We like to know what the requirements are?

What is your Debt Coverage Ratio?

What is the LTV?

What are your rates and fees?

Just want to start the conversation so we are ready to go once our offers are accepted.

Any referrals will be greatly appreciated.

Thanks

[Alex Bekeza]

@Manny Del Val There are two main (and completely separate) ecosystems for 5 + multifamily. Small balance commercial vs. Agency Debt. The rates and terms will vary dramatically between the two (and so will the qualifying factors). Small balance commercial (under $1,000,000) tends to be much easier to qualify for, often offers 30 year terms, and can be a great way to get on the scoreboard to become eligible for agency debt on larger deals in the future. In general, MOST lenders will cap at 75% LTV, look for a 1.2 DSCR (with exceptions who are ok with slightly lower), and have closing costs totally around 3% of the loan amount (origination + misc. fees). Now more than ever, I'd recommend finding a mortgage broker who is familiar with many lenders who offer these types of loans because the pricing and guidelines have never been more volatile than in the last few months. With so much uncertainty in the market right now small balance commercial interest rates may give you a bit of sticker shock but just know that everyone is dealing with this right now and there are strategic ways to structure your loan to float this current environment. We've always done a lot of business in this space because borrowers are typically shocked to find that they can secure a 30 year fixed term on their 1st multifamily investment without even necessarily having to provide tax returns (typically better terms available with strong tax returns showing positive global cash flow). Let me know if you want me to connect you with a specialist. Many borrowers have other banks tell them no 1st time operators, no 30 year fixed terms, and no loans below $1,000,000 for that asset class until we get in touch with them.

Regarding the desire to get a firm grip on terms before going under contract my advice to you would be to have a sample deal ready to discuss. Try to obtain an OM, rent roll, and expenses on a sample deal on the market so that your loan originator has something live to walk through. (precise occupancy %, DSCR, ltv, loan amount, unit count, etc are all factors that may affect loan level pricing adjustments).