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Multi Family and
Mixed Use projects are in high demand in
today's commercial mortgage market. Multi family
buildings are one of the hottest and most sought
after property types by lenders in this scarce market
of financial turmoil. The main reason for this is
because these property types in general produce good
solid income. Lenders like a safe loan and it doesn't
get much safer than a multi family property
that is generating solid rental income to cover the
debt service. Even with new vacancies the property can
generally debt service itself allowing for the owner
to have constant cash flow to cover his or her loan
from the lender. In addition if there is a default on
the loan the lender is able to quickly sell a multi
family property very quickly compared to other
property types since they are so hot right now.
Since the lenders
are so interested in these types of properties there
is therefore obviously more competition among them to
create flexible beneficial lending programs for the
investor buyers. This is always a great thing for a
buyer since they will have more choices and better
interest rates as a result.
Here are some
common eligible property types for commercial
multi-family and mixed use properties:
PROPERTY TYPES
-
Construction, Take-out, Acquisition
and Refinance of both garden-style and hi-rise
buildings
-
multifamily/condo properties
-
phased properties if phases can
stand on their own.
-
A, B & C properties in primary and
secondary markets.
-
Owner
occupied multi family and mixed use yield higher LTV's
and often better rates
-
Blanket
loans of several SFR in same geographic vicinity
We provide multi
family and mixed use loans nationwide and so any
market area is acceptable. There are many factors that
go into considering the attractiveness of a mixed use
or multi family property type. The good news is that
they are all easily quantified. There is very little
guess work involved when evaluating the strength of
the property itself. The only exception to this would
be a new construction or rehab type project, but in
this case it is quite easy to view the market
statistics of similar properties in the same area with
similar amenities, relative age, size, etc.
Lets take a closer
look at how a lender determines the strength of the
multi family property they are considering
financing for:
Multi Family NOI Factors
-
VACANCY FACTOR (A lender will
generally include a 5% vacancy factor even if the
property is 100% occupied. They normally only go lower
than 5% if the market calls for a lower occupancy in
general for the area.)
-
MANAGEMENT FEE (5% is the standard
management fee that a lender will allocate. Even if
you plan to owner occupy and self manage the property
a lender will still include a 5%. This is because if
you were to default and they had to take over the
property they need to ensure it can service itself
with this fee. It is only higher if the contract
states a higher percentage or the market calls for
it.)
-
DEBT
SERVICE COVERAGE RATION (conforming loans will require
a 1.2-1.25 DSCR for best rates and terms)
-
STANDARD EXPENSES (A lender expects to see the
standard multi family expenses included in the NOI
calculations. These include but are not limited to:
taxes, insurance, waste disposal, utilities, pest
control, advertising, etc.)
As we stated
earlier there are many programs to chose from for
financing of multi family or mixed use
properties. For the very best conforming terms it is
customer for at least 80% LTV with a DSCR (debt
service coverage ratio) of 1.20 minimum. The buyer
will have to show 2 years personal and business (if
appropriate) tax returns. This will get the buyer a
very low rate in the 6% range with a strong 30 year
fixed mortgage product. We realize that not all
borrowers are able to put 20% down on a property. Also
what if the property is not generating enough income
due to an abnormally high vacancy rate or rehab work
that needs to be done? What if the owner isn't able to
provide tax returns or can't prove any income at all
personally? For these and many other scenario's we
have programs to address these obstacles while still
providing favorable financing terms.
Here is a look at
some of the expanded guidelines for multi family
financing and mixed use property financing:
NON CONFORMING MULTI FAMILY / MIXED USE GUIDELINES
-
SMALL BALANCE LOANS FROM $100K-$3M
-
$3M-$200M LARGE BALANCE MULTI
FAMILY FINANCING
-
90% STATED INCOME STATED ASSET
PROGRAMS FOR PERFORMING PROPERTY TYPES (DSCR 1.2X or
higher)
-
97% FULL DOCUMENTATION (2 years
personal tax returns) LOANS FOR PERFORMING PROPERTY
TYPES
-
SHORT TERM BRIDGE FINANCING FOR NON
PERFORMING PROPERTIES
-
UP TO 90% LTV FINANCING ON FULL
DOCUMENT NON PERFORMING MULTI FAMILY PROPERTIES
-
UP TO 65% LTV FINANCING ON NON
PERFORMING NO DOC AND STATED INCOME MULTI FAMILY
PROPERTIES
-
ALL NON BRIDGE LOAN TERMS INCLUDE
CHOICE OF 3, 5, 7, 10, 15, OR 30 YEAR TERMS
-
BRIDGE LOAN TERMS FROM 6 MONTHS TO
2 YEARS
-
600 + BORROWER CREDIT REQUIRED FOR
ALL NON HARD MONEY PROGRAMS
-
HARD MONEY HAS NO MINIMUM CREDIT
REQUIREMENT FOR BORROWER
These are just a sample
of program guidelines available for non conforming
multi family and mixed use financing
projects. Many projects are case specific so we urge
you to apply online with details or call us today so
that we can go over your project with you in detail
and work together to find the best solution for you
situation. We have many experienced commercial
officers that are here to provide you with all of
their knowledge and financial networks in order to get
your purchase or refinance funded in a timely manner.
A typical multi
family purchase or refinance is completed in 30-45
days. It very rarely takes a full 45 days to complete
the transaction. Most are done in 30 days or less. If
you chose to utilize hard money programs the funding
timeline drops to anywhere from two days to two weeks.
In nearly all cases
the only upfront costs out of pocket is for the
appraisal. Appraisal fee's vary greatly and we always
allow the borrower to provide their own appraiser if
one has already been engaged. Most lenders prefer an
MAI appraisal but don't care which MAI appraiser
completes the appraisal. In some cases lenders will
require due diligence fees upon loan commitment to
cover the cost of their own underwriting and
processing expenses in preparing your multi family
loan for funding.
Now you can see why
we are the premier source for COMMERCIAL MULTI
FAMILY AND MIXED USE LOANS in the U.S. Our
commercial mortgage professionals
are prepared to put their years of experience and our
access to these commercial mortgage loans to work for
you!
Contact US today or
APPLY ONLINE for a same day response and let's
start working together to help your Commercial
Multi Family Mortgage project get funded as quickly as
possible!
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