Liquidity: A Common Obstacle

Published April 1, 2013 

What keeps many experienced investors from qualifying for apartment loans?

This is a continuation of a recent post about the difficulty of qualifying for an apartment loan. Here I’m writing specifically to experienced multifamily investors who have not had apartment loans since the recession hit around 2008.

One point in the previous post was about experienced investors who do not possess enough liquidity to qualify for a high-quality apartment loan. This is such a big problem that I’m going to stress the importance of it.

This is not an occasional problem. In our company, we are seeing quite a few investors who have had one or more previous commercial loans with us who do not now qualify for a good-quality apartment loan—because they fall short in liquidity. Again, there are other reasons experienced investors are not qualifying for a quality commercial loan, but falling short of liquidity is a prevalent one.

One major cause of this problem: Many experienced real-estate investors are spreading themselves too thin financially in their real-estate investments. They feel they are doing a good job in acquiring as many properties as they can, but then they fall short of liquidity to get their next loan. This can be a serious problem if the investors cannot qualify for refinancing their own apartment loans. They can be in danger of losing their properties.

The remedy is to make sure to keep aside the required liquidity for your commercial loans. The other remedy is to find out from a qualified commercial mortgage company, well in advance, what the liquidity and other requirements are for an apartment loan in today’s challenging economy.

To find out the liquidity requirements for apartment loans, or for other questions on commercial loan needs, call us at 866-811-9515.

Bruce Painter, Marketing Director