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Multi-Family Commercial Loans

Why Invest in Multi-family Real Estate ?

By WARREN CASSELL JR. at Investopedia.


1. More Expensive, but a Lot Easier to Finance

In most cases, if not all, the cost to acquire an apartment building will be significantly higher than the cost to purchase a single-family home as an investment. A one-unit rental could cost an investor as little as $30,000 while the cost of a multi-family building can go well up in the millions.

At first sight, it might seem as though securing a loan for a single-family property would be a lot easier than trying to raise money for a million-dollar complex, but the truth is that a multi-family property is more likely to be approved by a bank for a loan than the average home.

That’s because multi-family real estate consistently generates a strong cash flow every month. This remains the case even if a property has a handful of vacancies or a couple of tenants who are late with their rent payments. If a tenant, for example, moves out of a single-family home, that property would become 100% vacant.

On the other hand, a ten unit property with one vacancy would only be 10% unoccupied. As a result, the likelihood of a foreclosure on an apartment building is not as high as a single-family rental. All of this equates to a less risky investment for a lending institution, and can also result in a more competitive interest rate for the landlord. 

2. Growing a Portfolio Takes Less Time

Multi-family real estate is also very suitable for property investors who wish to build a relatively large portfolio of rental units. Acquiring a 20 unit apartment building is a lot easier and much more time efficient than purchasing 20 different single-family homes. With the latter option, one would need to work back and forth with 20 different sellers, and conduct inspections on 20 houses that are each located at a different address. Additionally, in some cases, this route would also require an investor to open up 20 separate loans for each property. All of this headache could be avoided by simply purchasing one property with 20 units.

3. You're in a Position in which Property Management Makes Financial Sense

There are some real estate investors who do not enjoy the actual management of their properties, and instead, hire a property management company to handle the day-to-day operations of their rentals. A property manager is typically paid a percentage of the monthly income that a property generates, and their duties might include finding and screening tenants, collecting rent payments, handling evictions, and maintaining the property.

Many investors who own one or two single-family homes do not have the luxury of contracting an external manager because it would not be a financially sound decision due to their small portfolio. The amount of money that multi-family properties produce each month give their owners room to take advantage of property management services without the need to significantly cut into their margins.


FHA/HUD Affordable & Market-Rate Housing

FHA/HUD 223(f) - Acquisition and Refinancing of Multifamily Properties - Term Sheet

FHA/HUD 223(a)(7) - Refinancing of Properties with Existing HUD Insured Debt - Term Sheet

FHA/HUD 221(d)(4) - Construction or Substantial Rehabilitation of Multifamily Properties - Term Sheet


FHA/HUD 241(a) - Repairs, Additions, and Improvements to Multi-family Properties

LIHTC (4% and 9% Low Income Housing Tax Credit ) -  Construction and restoration of low-income, affordable, rental housing.

Commercial Mortgage-Backed Security Loans (CMBS)

Investment loans of $250,000 to $250 million are available to finance office, retail, industrial, self-storage, multifamily apartments and mixed use real estate as low as 3.95% rate up to 30 Yr Amortization. 

Bridge loans for commercial properties.

Bridge loans of $ 100,000 to $50 Million for commercial properties that are empty, in need of major repair or simply under-performing. A short-term bridge loan can help a property owner rehabilitate or update the building, maximizing ROI. Rates as low as 7.99% with up to 100% CAPEX loan. 

Multi-family Commercial Loan Texas
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