Originally posted by @Karen Schimpf:
@Marshall Zakarian The property you are looking to purchase, is the apartment located in the same town or area you live? If you live in the area, you can go to a local bank. Local banks can finance the smaller loan amounts. Local banks typically are 75% LTV, with a 5 year fixed, 20 year amortization. For a 25 year amortization, you and the deal has to be very strong.
If you do not live in the area that you are purchasing, than I suggest you reach out to a Commercial Mortgage broker. Commercial Mortgage Broker's have 75% LTV (maybe 80% LTV if you and the deal are strong) with a 5 year fixed with a 30 year amortization. If the deal loan amount is $1MM+
(there exceptions to the loan amount) than there are 7 year fixed and 10 year fixed with a 30 year amortization. Be aware that if the loan is fixed for x period, than the pre payment penalty will last as long as the fixed period.
Lastly, I noticed you did not mention the expenses. Expenses are critical in factoring if the deal is doable. The selling agent should be able to provide a P&L which will show the cost of RE Taxes, Insurance, Utilitities, Maintenance, repairs, cleaning, Management fees, advertising legal etc.
Hi Karen,
The property is located in my city and I took your advice and contacted the local banks. They suggested that they don't provide 20-25 year amortization and only 10-15 years which I'm not interested in.
I will be contacting a commercial mortgage broker this afternoon and see if they provide a better rate.
Lastly, the apartment building has a large lot next to that is currently being using for parking but usually is 3/4 vacant since its huge. I contacted the city to see I can rezone the lot and they said it can be rezoned. After purchasing the building, how can I take loan against the property and when to build more units next it?
THANK YOU
