Apartment And Multifamily Unit Financing

Apartment And Multifamily Unit Financing

By:


Over the past several years real estate has proved to be a popular avenue for people looking to make money. There are experts who see real opportunity on the horizon for real estate as investors with longer term goals move back into the market and shorter term investors leave the field. As we move through the present challenging economic climate, with the uncertain outlook for single family home prices and housing starts, owning an apartment or multifamily unit can actually lead to substantial income. The key, however, is lots of time, knowledge and up-front capital.

There are two levels of loans on offer for investing in apartment buildings. The first is for small buildings of no fewer than five units and requires a minimum borrowing amount of $500,000. The second is meant to finance larger units such as large apartment complexes, student housing and senior or assisted living facilities requiring $3,000,000 or more.

Most lenders seek to finance units that are in good condition and require little deferred maintenance since the latter save costs in the short term, but the failure to perform them in the long term can lead to a loss of value. Buildings in poor condition may jeopardize your loan or mean you'll have to agree to a much higher down payment.

There are numerous sources for apartment building financing. The web is full of lending sources such as Barclay Associates and Commercial Bank Multifamily Lending Group. Just use the key words "apartment building financing." However, there are several important questions that need to be asked and answered before you begin speaking to potential lenders:

* Is the prospective property at 95% capacity or fully leased?
* Do you intend to borrow more than 80% of the prospective property's current value?
* Do you intend to re-finance or do you plan to sell the property in the three years or so?
* Are you willing to accept a large prepayment penalty?
* Over the next three years, do you expect leasing activity in your prospective property, whether that of existing or new tenants, to increase the property's value by greater than 25% ?
* If the value of your prospective property looks to increase by more than 25% over the next three years will your current loan request be equal to 75% or less of the increased value?
* Are 50% of the building's leases due to expire during any of the next three years?
* Do you plan to install land infrastructure, gut the building or convert it from residential to commercial or other use.
* Is the property worth $10 million or more?

These questions can help you narrow down your search and find a lender that best suits your needs. The market for apartment building financing and multifamily property financing is in constant flux. Apartment and multifamily finance providers need to have a thorough knowledge and awareness of investment programs available to you and be ready to offer the best financing options for the potential investor.

About the Author:
Graham McKenzie is the content coordinator for a leading South African leading Homeloans and Bond Origination portal. For more information visit: http://homeloans-southafrica.co.za/



Article Originally Published On: http://www.articlesnatch.com


Tags: , , , , , , , , ,

|

Loading...
Related....
Videos...

Recent Finance Articles

Comments

Still can't find what you are looking for? Search for it!

Loading

Site Navigation:

Copyright 2005-2011 ArticleSnatch, LLC - All Rights Reserved.
Privacy Policy | Terms of Service.