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A Simple Explanation of Apartment Financing

Published September 17, 2010 

If you’re interested in property management, you better think of a good way to get started in this type of business.

If you don’t have a large sum of money, or you are not wealthy enough, you might as well go into apartment financing and search for the right commercial loan lender.

But before you go searching for a bank or commercial loan lender, you need to determine how long you are expecting to own an apartment building – whether you’re planning to go with long- or short-term investments. Knowing your exact investment plans can really affect the type of apartment financing you should get.

If you plan to own a property for a shorter term, many experts assert that an adjustable rate mortgage (ARM) is the best apartment financing method. From the name itself, you can see that an ARM is a loan with an interest rate that changes in time in accordance with an index. On the other hand, if you want to stay for a longer term in the property management business, it’s best to take on a fixed-rate mortgage. By doing so, you are guaranteed to have the same interest rate until the life of the mortgage is over. When interest rates were lower at the time you received the loan, the loan will lock you in at the best possible rate. Conversely, if the interest rates are higher at the time of the loan, you will be paying more.

Another thing to look into is the property’s estimated cost. Don't just accept the interest rates without making any inquiries. If the property is selling above $500,000, a direct selling source or investment company can give better interest rates. But if you’re planning on taking a smaller apartment building that sells below $500,000, your local bank can give you the best offers.

Those are just two of the things you need to consider. Whatever apartment financing method you choose, ensure that you understand all the details. Select a commercial loan lender who is well experienced and is willing to walk you through the whole process.

Apartment Loan Store is founded on the basic ideas of professional consultation and education. Through these ideas, investors can make informed decisions in their chosen market place. Apartment Loan Store helps investors attain their commercial real estate goals through multifamily lending.