Published September 22, 2010
Do you have plenty of cash? Do you have any ideas what to do with it?
If you do have much, and you don’t know what to do with it, why not invest in real estate? More importantly, investing in an apartment or multifamily apartment is a top choice.
Some people think apartment financing is really difficult. But that is not always the case. All you need is a considerable amount of capital and a partner who’s good and experienced in property management. If you can lay these both on the table, apartment financing will not be difficult and tedious at all.
There’s a wide array of apartment financing options to choose from. But before you do choose your options, there are certain things you need to keep in mind.
Above everything else, you need to assess if your estimated monthly revenues from rental income of your apartments can suffice the apartment building loan that you have taken out. This is essentially important, as most new investors fail to look into this. Instead of considering their debt coverage ratio, investors simply look for the apartment loan with the best rates. What’s the use of looking at loan rates first if your rental income can’t pay for it at all?
Good interest rates are actually important. However, if the length of the loan is too short, your payments will be higher. In turn, you might have difficulty paying it with your rental incomes.
Thus, it’s always good to know and understand inflows of cash first before deciding on the amount of monthly debt or apartment building loan. After determining how much you’ll be earning from your rental income, then you choose the apartment building loan appropriate for that type or range of rental income.
Another thing to look into is the commercial lender’s required front equity in order for him to issue the apartment loan. A bank that wants to help you and your business will keep the front equity lower. But for those who are not planning to book your apartment loan, they’ll give you a much higher front equity amount. So, it’s best to look for another lender.
Another important thing to keep in mind while looking for apartment financing is to search around for lenders. Negotiate with them. Be straightforward. If some other lender is offering you a better apartment loan package, tell that to every new lender you negotiate with. To avoid losing to competitors, lenders will match the other lenders’ terms, or may even offer better terms.
If you keep the above-mentioned things in mind, you can easily get the apartment financing and choose the best apartment building loan terms for your apartment business! Just do your best, work harder, and you’ll surely be successful with your plans.
Apartment Loan Store is founded on the basic ideas of professional consultation and education. With these, investors can make informed decisions in their chosen marketplace. Apartment Loan Store helps investors attain their commercial real estate goals through multifamily lending.