Apartment lenders receive many inquiries for commercial property financing. Knowing how to prepare for a loan submission can greatly improve an investor’s opportunity to receive a loan commitment. Direct Apartment Lenders provides several tips for financing a multi-unit apartment building without tax returns from the buyer.

Buying a Multi-Unit Apartment Building

A lucrative earnings potential is often envisioned, when purchasing a rental property.

Used to create passive income and to build wealth, multi-unit apartments may also provide a variety of tax benefits for an investor (speak with an accountant for details).

 Ideally, the monthly income for a multi-unit apartment building will exceed the mortgage payment, taxes, maintenance costs and other monthly expenses.

 Properties that are in great condition, with competitive rental rates and a history of high occupancy rates could enable an investor to generate a tidy sum of money.

 However, with an investment toward property improvements and opportunities for the subject property to increase in value, an investor could become wealthier.

 Owning a multi-unit apartment building has several benefits that are superior to the ownership of a one-family rental property. 

For instance, a 10-unit apartment building that incurs a vacant unit would still have other paying tenants until the available unit was rented. Although, a vacant one-family property would not generate any income prior to acquiring a tenant.

Most investors are not able to buy a multi-unit apartment building without obtaining financing from a lender. Some investors who could purchase an apartment building outright, may prefer to preserve their capital, while leveraging property-based financing for a 30-year term.

Investors are encouraged to use a methodical approach toward obtaining a commercial property loan.  

Perform a Credit Check Online

 It is wise for an investor to have some insight about her personal credit record. After all, a free credit report may be obtained online via the Annual Credit Report website.

Before applying for a loan, there are many benefits for an investor to perform a personal credit check online. 

If several collections and past-due accounts are displayed on an investor’s credit report, it might impact a lender’s decision to fund a loan for a multi-unit apartment building. 

Recent derogatory items can detract from an applicant’s credit score and reduce his opportunity to obtain preferred financing terms.

Additionally, a personal credit review could reflect derogatory items that are erroneous.  

Resolving delinquent credit items prior to contacting a lender could enable a borrower to obtain more favorable loan approval terms.

Also, if an apartment lender inquires about an investor’s credit rating, an answer, such as fair, good or excellent may be given, with confidence.

Assemble a Folder of Assets

Multi-unit apartment building lenders are generally eager to approve highly qualified borrowers for financing.

Unlike the out-of-pocket funds that a buyer would need for an owner-occupied property, a purchase-money apartment loan generally requires a larger down payment from the buyer.

Knowing that a lender will probably require proof of funds for a borrower’s down payment and closing costs, it makes sense to have documentation. 

Making a folder that includes an investor’s personal and business bank statements, investment account statements or proof of other liquid assets that reflect the source of funds for the transaction might accelerate the approval time frame for an apartment loan.

Also, documenting details about other real estate owned, such as the market value, mortgage balance and the rent generated for each property may be important information for apartment lenders to consider.

Solid financials and demonstrated commercial property management experience are valuable attributes for an investor who wants to secure a loan for a multi-unit apartment building.

Obtain Details About the Apartment Building

Savvy investors will search beyond information that appears on commercial real estate listing services. With a solid personal credit rating and documented financial assets, certain details about a multi-unit apartment building may be very useful.

An apartment building that recently received a new roof is information that would eventually show up on an appraisal report. However, a real estate agent that fails to update the property listing for an apartment building that needs a major rehab, could also be withholding other valuable information, as well.

Inquire about the vacancy rate for properties that have been listed for extended time frames. A multi-unit apartment building that had three vacancies six months ago, might be fully rented today.   

In some cases, a confidentiality agreement may be needed to obtain specific details about an apartment building. Although, once the rapport is established with a property owner or a commercial real estate agent, an investor should inquire about any existing rental agreements and about the remaining lease terms.

Summary 

Financing for a multi-unit apartment building is attainable when the deal makes sense for a lender. 

Some investors receive poor guidance when speaking with mortgage brokers and with bankers who do not specialize in apartment lending.

Financing a commercial property with Direct Apartment Lenders is the ideal way to connect with a nationwide lending source.

Contact us today to inquire about non-bank apartment loans.