All Forum Posts by: Darryl Dahlen

As stated, 25% down is the norm. The lender is going to look at the property's financials, condition, and location as well as your credit, income, assets, and experience. @Nancy Curran is right, commercial financing is a package deal, and for full-recourse loans, the lender is going to ensure that your personal guaranty means something.

I'm happy to refer a lender to you that has some flexibility. I don't know if they can help or not, but they're a non-bank lender who specializes in loans that aren't bankable with decent terms.
I'm fine with giving you their contact info and not getting involved on this one. PM me so I can send you my contact's contact nfo.

 I see my guidelines now state a higher loan amount of 5MM instead of 3MM for Freddie SBL. Great to hear that you are closing using this program and even better that we all learned something!

I feel the need to interject and offset some of the misleading facts in this thread. Since these threads can show up via searches I feel it's important that wrong information be corrected. No offense to the contributors for what I'm about to say.

Non-recourse financing can be had once you start borrowing 1MM or more, sometimes with lower loan amounts depending on the asset class and LTV. I do them all the time.

Also, Fannie Mae doesn't permit 10% down on their commercial product. 80% LTV is their max LTV and that's generally for Tier I markets. Most borrowers will experience 75% LTV on a Class C property in anything other than a Tier I market.

Freddie SBL caps out at 3MM, not starts. It's geared for properties in the 1-3MM range and has reduced barriers to entry, compared to the other agency products, with regards to liquidity, net worth, experience, etc.  

Again, no offense to the posters.

Your banker is being conservative. Providing everything meets a bank's standards, 25-30% down is the norm for multifamily properties.

Yes, you can buy an apartment building and potentially assume the current loan. The ability to do this varies from lender to lender and some will charge a 1% fee if they do allow it. The downside is may have to bring in more money if the owner has paid down the principal by a large amount as most lenders won't increase the loan amount. They'll give you the existing terms, but at the current balance. 

You will obviously have to meet the lender's qualifications.

It's good that your wife has good credit, but as I read it, you are part of the deal and will be underwritten as part of the loan. You're only saving grace, for conventional, financing, is that your wife currently own 100% of the property and she can personally qualify for a loan using her income and assets.

If you were to try and sell it to her or to refinance the property into her name only I believe most lenders would see what you are trying to do.

Bad credit and a BK combined with a cash-out request that will push the LTV make this a steep challenge with a conventional lender. Two years seasoning may fly with some lenders, but if your credit is less than 650 you now have two strikes for a loan that is full-recourse.

Are you seeking bankable terms or are you willing to sacrifice rate for the ability to close on a loan that gives you the cash while you fix your credit and season the BK.

If there are no other multifamily units nearby then that "could" make an appraisers job a bit more difficult as they will look at sales comps as one aspect of determining value. That being said, this is a 6-unit so it's hard to imagine that it would be hard to determine value as I've never seen a small multifamily be out of line for any geographical area. It could be an issue if this were a really large complex, but I can't see appraising a 6-unit causing too many issues.

There will also be an income approach valuation.

Everyone starts somewhere. Control what you can so you give yourself the best shot at success. In this case, that means getting comfortable with the numbers so you can understand the expenses/cash flow. Do your due diligence on the market and property so you can understand what expenses are on the horizon and were rents are going. 

Most importantly, set up your infrastructure by having a solid team who can help you make sound decisions. Find an established property management firm, a good accountant, and an experienced real estate attorney. They will be invaluable at keeping your mistakes to a minimum.