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Commercial Loan Blog

Commercial vs. Residential Loans

Published January 28, 2012

Commercial loans have historically been made foremost to the property, whereas residential loans are made primarily to the borrower. For a commercial loan, the net operating income of the property is foremost in the commercial lender’s mind, then the condition and location of the property. However, since the recession started, the quality of the borrower is just as important as the merits of the property.

It is evidenced in the appraisals, that these two types of loans are quite different. On a commercial loan, the commercial lender orders an ... Read More

Why is Experience Required for an Apartment Loan?

Published January 21, 2012

Yes, they do call investing in an apartment complex a passive investment, inferring that all you have to do is wait for the tenants to pay the rents while you sip your pina colada in the shade. In reality, owning an apartment building successfully and owning a passive investment have very little in common. Officers processing multifamily loans know that the number one reason why business fails is because of poor management. They also know that the number one reason why apartment loans fail is because of poor management. In other words owning an apartment... Read More

Important Borrower Strengths, Part 2

Published January 19, 2012 

Last week we covered part one of “The Borrowers Strengths Are Most Important to Qualify for a Multifamily Loan.” In getting multifamily financing, we shared five strengths needed to get your apartment loan. They are being strong in credit scores, liquidity, net worth, income, and a lender may require that you have multifamily experience (ownership of a multifamily complex of 5 or more units) to get an apartment loan.

In part one, we highlighted the strength requirements of credit scores for apartment lending, including, as a general rule, a minimum... Read More

Important Borrower Strengths, Part 1

Published January 14, 2012

Prior to 2008, which we could refer to as the “good old days,” it was so much easier to qualify for a multifamily loan. Now don’t get discouraged, apartment loans are being done every day. It’s just that the loan standards for multifamily financing have become more demanding. And the key is that the borrower’s strengths are now as important, if not more important, than the required strengths for the property.

So it’s natural to ask, “What are the strengths a borrower needs to qualify for an apartment loan?” There are a number of apartment lending... Read More

Can I Qualify With Very Little to Put Down?

Published January 14, 2012 

Can I qualify for an apartment loan if I have very little to put down? Almost all multifamily loans require a minimum of 20% down plus closing costs to purchase an apartment complex. Even before the recession this was the requirement. On average, apartment lenders require 25% down for 'A'-quality permanent multifamily financing. Keep in mind that a lender will want you to have what is called "skin in the game," to approve you for apartment financing. In other words they want you to risk a good chunk of your precious cash, too. They view the risks of an... Read More

Apartment Financing on Rehab Deals

Published January 6, 2012 

What criteria is needed to qualify for apartment financing on rehab deals?

First of all, if you are looking for an apartment loan on a multifamily property that needs substantial rehab, you need to have experience with multifamily construction/rehab and experience with repositioning apartment buildings. Repositioning means getting the property in good condition and getting it leased up to where market occupancy is at so you will be able to qualify for permanent multifamily financing. In almost all cases, you will have to acquire the property with a... Read More

When Are Apartment Bridge Loans Necessary?

Published January 6, 2012 

A number of our clients have wondered when an apartment bridge loan is necessary.

First, it’s important to define what a bridge loan is, for those of you not familiar with bridge loan financing. A bridge loan is a short-term loan that helps you secure financing for a property when the property doesn’t qualify for permanent multifamily financing. The purpose of getting the bridge loan is to have time to improve the property in order that you qualify for permanent apartment financing.

A question may come up of why someone would want to get an... Read More

Pre-Qualify for an Apartment Loan

Published December 19, 2011 

An apartment building loan, also called a multifamily loan, is a commercial loan. Where a residential loan is made primarily to the quality of the borrower, a commercial loan is made to the quality of the income of the property, the quality of the property itself, and the quality of the borrower. So there are really three pre-qualifications for a loan on an apartment building.

THE THREE PRE-QUALIFICATIONS FOR AN APARTMENT BUILDING LOAN

1. The quality of the income of the property
If you take the gross rental income, including rents,... Read More

The Importance of Testimonials in Choosing a Lender, Part 2

Published March 9, 2011

In part one, we shared that it’s important to get testimonials from lenders of apartment loans. Testimonials can be a useful tool to help you establish trust. It’s not the only tool – certainly you need to do your due diligence in other ways. These include seeing if they have a Better Business Bureau rating, and doing an online search of their reputation.

In this post, we will encourage you to take it a step further in asking for testimonials from the apartment loan provider you talk with. We encourage you to ask to speak with at least a few of the... Read More

Things to Keep in Mind with Apartment Financing

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... Read More

Buying Property with a Multifamily Loan

Published September 22, 2010 

Investing in a luxurious living from Apartment Loan Store may be a fruitful approach for the long run. On the other hand, investing in any sort of property requires a massive amount of money, particularly if you are thinking of purchasing multifamily apartments. If you do not have an adequate amount of money to buy these apartments, you can apply for multifamily loans right at Apartment Loan Store. Before the loan application, it is always best to put some thought into it. Usually these loans are classified into two groups, namely the commercial... Read More

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