Published December 21, 2012
Apartment financing is definitely challenging for the average investor in today’s economy. Prior to the recession of 2008, apartment financing approvals were made first to the solidness of the apartment complex’s income, second to the quality of the property, and third to the borrower.
After the recession, the borrower became the most important of the three major qualifications. Today this is still the case. This is because so many apartment owners became financially insolvent as a result of the recession. Many had a business that was running at a loss, and they chose to use the cash flow from their apartment building to keep their business afloat. As a result, they went into default on their apartment mortgage. This caused them to have quite a bit of time before they could qualify for an apartment loan.
Most of the apartment building investors that went into default had one or more of the following traits: They had a net worth less than the amount of their apartment financing; they had very little liquidity (cash in the bank); their credit was of average quality; they lacked prior apartment building ownership;, and they owned an apartment complex out of the area they lived in – often out of state.
Therefore, today, for the average investor to qualify for apartment financing they need at a minimum the following qualifications:
• A net worth equal to the size of the loan they are applying for or greater.
• A minimum of 12 months or more of mortgage payments of the new loan in post-closing liquidity.
• Good credit – a credit score of 680 or higher.
• Experience owning at least one apartment complex of 5 units+.
• Live close to the apartment complex they need financing for, or have current successful experience owning an apartment building in the demographic area they need the loan in.
For more information on apartment financing, or to get pre-approved in one day for your apartment loan, call us at 866-811-951,5 or email your questions to:firstname.lastname@example.org
By Terry Painter, President