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Commercial Loan Blog

Published February 17, 2012

If you are considering buying a commercial property as an investment and obtaining commercial financing, why not choose a commercial property type that will give you a much greater chance for success and also be easier to finance?

Let’s get right to the point. Having been a top producer of commercial loans for over 14 years, I can tell you that there are two commercial properties at the top of this food chain for obtaining commercial financing. They are apartment buildings and self-storage (also called mini-storage) units.

Why?

... Read More

Published February 11, 2012

It is very important that you choose a good commercial loan broker to work with in acquiring an apartment loan.

Here is an example of what can happen when you choose an inexperienced commercial loan broker to help you with your apartment loan: You sign a purchase agreement – you have 60 days to close – and you need a loan source that will complete the apartment loan in 60 days. You are given a great rate by a loan broker; it is far below every other loan broker’s rate you have been given. You are assured by this loan broker that he can do the loan... Read More

Published February 11, 2012

If you have recently been turned down by your bank for a commercial real estate loan, don’t take it personally. Many banks today are simply not making commercial real estate loans to anyone. In most cases this is not because they do not have the money, but because they already have too much commercial real estate on their books, or because they want to play it safe and make less risky loans.

In September 2011, I brought two of my co-workers with me to meet with a group from Bank of America in San Francisco. They were interested in referring... Read More

Published February 4, 2012

The last two weeks, we covered part one through three of “The Borrowers Strengths are Most Important to Qualify for an Apartment Loan.” In getting an apartment loan, we covered strengths needed. They are being strong in credit scores, liquidity, net worth, and a lender may require that you have multifamily experience (ownership of a multifamily complex of five or more units) to get an apartment loan.

In the first part, one credit score requirement we covered is that as a general rule, your credit scores need to be 680 or higher. In part two, one... Read More

Published February 4, 2012

In 1933, in the aftermath of the Great Depression, President Franklin D. Roosevelt established, with Congress, The Home Owners Mortgage Act by selling government bonds to lenders. The purpose was to help remedy high foreclosure rates and to make it possible for more people to own their own homes. It was mandated that these loans had to be fixed for 20 to 25 years and be fully amortizing (term and amortization match). Eventually this was pushed up to 30 years, with the idea that most people would work for 30 years and then retire with a paid-off home.

... Read More

Published January 28, 2012

The last two weeks, we covered parts one and two of “The Borrowers Strengths Are Most Important to Qualify for an Apartment 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 getting an apartment loan, including, as... Read More

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

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

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

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

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

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