Thinking about taking your real estate investing to the next level and investing in multifamily properties. Multifamily loans can help take your investment portfolio to a whole new level. There are numerous benefits to scaling up your portfolio into the multifamily arena . Multifamily properties provide more cash flow, are easier to manage and have huge large tax advantages. A larger investment in multifamily will require more funds, or so you think. Certain multifamily property investments can actually be purchased with less cash and in other situations for no money down. If you want to find out how, keep reading.
Being creative with your financing options are the first lesson to helping you acquire real wealth with any real estate business and investing into Multifamily real estate is no exception.
As with any financial investment it is important to research your options and consult with industry professionals to ensure that you have as much information as possible prior to executing your multifamily investment opportunity.
Purchasing multifamily investment properties typically have a hefty purchase price and down payment requirement causing some investors to look elsewhere. However, when managed properly these types of investments can offer stronger cash flow and returns than other investments. There is also a great way to invest in multifamily properties for those that don’t have a lot of cash including no money down.
Today private equity has matured into an investment vehicle not just for the 1-4 family investor but for multi-family apartment buildings as well. Private equity is one of the best ways to purchase a multifamily property with little or no money down. How do you do that??
Starting with the beginning investor, Cambridgehomeloan.com has been helping investors that started with small single family homes that were purchased for a few thousand dollars and have grown with them to now buying hi rises in Beverly Hills. It is possible for each and every one of you and we’re here to help.
To be successful in your pursuit of 100% financing it starts with purchasing the right type of property. A conventional multifamily property today can be purchased with a conventional bank loan or what’s known as an agency or government loan. Both of these loans require large down payments and full documentation. Typically as much as 25% down. They also require Bank statements, Tax returns, good credit scores and substantial personal financial statement. In the post Covid world all of the Ts need to be crossed and eyes need to be dotted. When starting out many investors just don’t have the perfect financial background to make these types of loans happen. Even more serious investors tend to be cash constrained as their portfolios grow and turn to private equity and higher leverage to provide the much needed capital.
If high leverage or 100% financing is what your after then look for properties that require a good deal of rehab. these properties are know as value add. Properties that have a value add component whether it be a construction component adding units, paint to refresh the look or increase the size or the number of units, a value add multifamily property can allow you to obtain the highest leverage for a real estate investment.
Just as with single family properties, the best financing available today for investment properties is with a lender like CambridgeHomeLoan.com,”CHL”. CHL has multiple private equity lines as well as correspondent funding lines that allow them to underwrite quickly and provide funding in just days allowing you to make offers and entice sellers by closing before most lenders can underwrite a property.
What information is required to obtain multifamily financing
Whether your looking for 100% financing or more conventional commercial financing the document requirements are pretty much the same.
1. Fill out an application for financing.
2. Put together and forward your due diligence
A. Personal Financial Statement
B. Two years tax returns
C. Last year P&L on the property
D. T12 or Past 12 months rent roll with start and expiration date
E. Proforma -Income and expense projection of how the property will do over the next 3 years
F. Bio – Investor experience or list of properties invested or disposed of in the past 3 months.
G. Contractor bio and experience. Many investment properties can be rehabbed with investor management if that is your preference.
If you need a FREE fillable template for any of these documents or when complete email to [email protected] or call 800-826-5077.
There are several types of loans for multifamily properties available on the market for those researching ways to finance their purchase with a loan. The interest rates on the following loans typically range between 3.0 and 12 percent and can be appropriate for investors looking to refinance their properties as well:
- Conventional Multifamily Mortgage: Most conventional lenders offer loans large enough to finance multifamily properties, usually for those between two and four units. (Anything larger would qualify as a commercial property.) Conventional mortgages are great for investors who desire a longer-term loan and can make a 15 to 25% percent down payment.
- Federal Financing or “Agnecy” Loans: There are multiple government agencies, such as the Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac multifamily loan programs. These loans are great for investors who do not have much for a down payment and are willing to live in one of the units.
- Portfolio Loan: Portfolio loans are loans that can be used to purchase, refinance or cash out multiple properties at once. A portfolio loan can also be used to refinance properties into a portfolio with a very low rate of interest.
- Short-term Financing “Bridge Loans”: Some investors might need a short-term loan, such as a hard money loan or private equity, for flexibility. For example, an investor may want to act quickly on a deal and finance it in the short-term until they can renovate it or increase occupancy until they can meet longer-term loan requirements. Short-term financing is typically associated with higher interest rates.
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