Multifamily Financing

If you own a small multifamily property—now, more than ever—it’s good to be you. For the better part of a decade, a robust multifamily market has delivered low vacancies and higher rents. Post-recession, 2015 has been the strongest year for the rental market so far¹.

With apartment values up more than 120 percent since the end of 2009², lenders are sharpening their pencils to meet another growing demand: owners of small apartment communities looking to capture market improvements by refinancing.

Indeed, now is a great time for a mortgage reboot, especially if your loan was originated in more difficult economic times. Multifamily market growth is ongoing and rates are still near historic lows. Without the right preparation, though, you could find yourself short-changed.

Here are five tips to help you put the most cash in your pocket:

1. Aim for Accuracy.

Keeping accurate financial statements for your property is essential. If your records are spotty, it’s difficult for lenders to accurately size a loan, which could reduce the cash you take away from the deal. To get the most bang for your buck, make sure you have at least three years of historical annual operating financial statements and monthly rent rolls. If you made any capital improvements in the past, be sure you include explanations on your statements.

View entire article here in National Real Estate Investor

To find out more about our multifamily financing options click here or visit us at Liberty Realty Capital.

Real estate investors in most cases need at least 25% of the purchase price as a down payment and possibly 35%. But investors willing to occupy one unit of a duplex or similar small multifamily property can get Federal Housing Administration insured loans for as little as 3.5% down. FHA loans are also suitable for borrowers with lower credit scores, and people just getting started in real estate investing.

In November 2014, Scott Trench, a recent college graduate and operations manager for real estate investing social network BiggerPockets, bought a Denver duplex. He put 5% down, moved into one unit and rented out the other. Rental income covered $1,150 of the $1,500 mortgage. A roommate contributed $550 more.

Trench wasn’t just living rent- and mortgage-free. He was also getting started as a real estate investor. In March of this year, he moved out and rented the other side as well. “I’ve got a new set of tenants in there and collect roughly $2,500 per month, on a mortgage of $1,500 per month,” says Trench, who is now renting a place to live while contemplating his next move.

In addition to $1,000 a month income on an investment, he pegs at $20,000 including down payment, he gets tax write-offs, is paying off the mortgage and benefits from any price appreciation. “This is a stepping stone in my real estate portfolio,” Trench says. “It was my home, but it was really an investment property I worked on and lived in.”

What made Trench’s foray into real estate investing work is the Federal Housing Administration’s government-backed mortgage program. FHA will make multifamily loans to borrowers with far lower down payments than almost all other loan programs.

View entire article here on TheStreet.com

To find out more about multifamily financing visit Liberty Realty Capital Group here.

Tag: Multifamily Financing

5 Tips to Get the Most Cash Out of Your Small Apartment Property

1. Aim for Accuracy.

Use FHA Duplex Financing to Become a Real Estate Investor