If you’re planning to start an apartment building, the first thing you need to do is apply for a loan. Compared to a loan for a single family home, an apartment building loan requires different qualification requirements and underwriting. Lenders may also consider qualitative information about you, such as rental experience. Read on to learn how to apply for a loan for an apartment building. We hope this article has helped you get started!
Depending on your financial health and the size of your property, there are several different types of loan options available to apartment building owners. Banks, life insurance companies, and conduit lenders offer various options to investors. A life insurance policy may be an option for those who want long-term fixed-rate terms at low interest rates. Hard money loans are another option for those looking to start an apartment building, but they are notoriously high. However, they can be the only option for investors with bad credit or a lack of collateral. CMBS and bank loans can be layered with a mezzanine loan, which is a second-position loan. The latter is not ideal for first-time investors and should be avoided if possible.
While securing an apartment building loan requires a great deal of research, it’s essential to have a qualified mortgage broker on your side. These experts can help you find a loan with the best terms and pricing. Once you’ve chosen a lender, make sure to have the necessary documentation ready. Obtain financial statements for your apartment building that cover the past two years, the trailing 12-month P&L, and other financial data. Also, be prepared to supply electronic photos and narrative descriptions of your property. Lastly, you may have access to a marketing package for your property from a real estate agent.