August 13, 2014
One of the questions you will be asked in inquiring about getting an apartment loan is how much experience you have in apartment complex ownership. For many types of situations involving multifamily loans, you are required to have experience in multifamily ownership. In some multifamily loan situations you are not required to have experience in multifamily ownership.
First, it’s important to know what the definition of “experience” is in multifamily property ownership. The definition is that you currently own one or more multifamily properties of 5 or more units. Anything under 5 units is considered residential property ownership and is not considered having experience in multifamily property ownership. Whether or not you currently own multifamily property also factors in as an important part of the definition.
Second, experience may not be required if you are acquiring an apartment complex that has a small number of units. It also depends on the lender whether you will be required to have experience. Also, it depends on other factors such as the quality of the property and the strength of your finances. In addition, if you live quite far from the property, you will most likely be required to have experience.
If you want to purchase a large apartment complex, for example 50 units as opposed to 6 units, you will probably need to have experience—and that experience will most likely need to be current ownership of a large apartment complex.
The larger the apartment complex, the more difficult and challenging it is to run. Someone without experience could lose the property because they don’t have previous experience—such as not knowing how to manage the property manager and not understanding the finances involved in running a larger multifamily property, etc. This is a good example of why lenders will often require experience.
Call or email me if you have questions concerning this article, apartment loans or other types of commercial loans. You can reach me at 214-695-7310 and email@example.com
Bruce Painter, Director of Marketing, Business Loan Store