Multifamily financing is a loan designed for purchasing or refinancing large commercial buildings that have no lower than five units or smaller buildings that have two units or more. Multifamily loans are a good option for both veteran and newbie real estate investors and professionals. Rates are usually around 4.5 percent to 12 percent and terms usually go up to 35 years.
If you’re in search of a permanent multifamily loan for rental units, below are five handy tips you should consider:
1. Apply as soon as possible.
Any decent loan officer and underwriter who know what they’re doing will always find ways to speed up the process, from the loan inquiry all the way to funding. It isn’t the case all the time, but usually, there are problems along the way that lead to delays. Underwriter backlogs are one example, and another is vague information provided by the borrower. Therefore, it’s always best to begin the process early.
2. There are lots of options.
We’re not going for a thorough discussion of the different multifamily mortgage alternatives available. The minimum requirement for low debt-service coverage ratio requirements is 1.25 and may grow from there. To get your low debt-service coverage ratio, just divide your NOI (net operating income) by the annual debt service obligation.