Multifamily financing enables real estate investors to refinance or purchase large apartment complexes or small multi-unit properties. These loans allow real estate investors to finance properties, including duplexes, condos, townhomes, and apartment buildings.

What You Should Know Before Investing in Multifamily Real Estate

Any person willing to purchase multifamily real estate should decide within the context of primary investment goals. Investment goals include personal risk tolerance, which influences the location and type of multifamily real estate. Individuals with higher risk tolerance can secure multifamily financing and invest in opportunistic deals.

Investors can manage the properties themselves or hire a third-party agent. The decision is often made based on the knowledge of the rental property. Self-managing stabilized and smaller properties is more straightforward than managing larger multifamily apartment complexes.

How to Apply

The application process for securing multifamily financing is similar to obtaining a small business loan. The differences arise depending on the kind of property investment. You must submit current lease agreements, management agreements, tax bills, and insurance policy declarations. Other documents you need include:

Property financials: Rent toll, utilities, recent operating statement, and service contract copies
Property details: Photos, address, age, number of units, and upgrades
Personal financials: Financial accounts with proof of reserves and income that may be needed for the loan

Multifamily Home Loans

There are multiple multifamily financing options for those seeking ways to finance a potential property with a loan. These loans are ideal for real estate investors who want to refinance their properties as well.

Short-term financing: Some real estate investors require short-term loans, including bridge loans or hard money loans, due to their flexible nature. An investor may be willing to act fast on a specific deal and can secure multifamily financing for renovation purposes. These loans are often associated with high-interest rates.
Conventional multifamily mortgage: Traditional lenders provide clients with large loans which cater to multifamily properties of up to four units. Any property more extensive than that qualifies to be commercial property. Conventional mortgages are ideal for real estate investors who can make a down payment of 20% and those who want longer-term loans.
Portfolio loans: Real estate investors utilize these kinds of loans when purchasing several properties at once. They are a long-term multifamily financing option and are ideal for individuals who need to purchase up to 10 properties.

There are several options to finance multifamily real estate projects. Contact an expert from Means Commercial Capital to learn more about multifamily financing.