If you are interested in investing in multi-family properties, such as an apartment building, quadruplex, or mobile home park. You are going to be very interested in learning more about multifamily financing.

If an investor has limited liquid assets, they need to seek financing to acquire properties. Even if individuals have cash-in-hand, they often prefer to finance the purchase instead of tying up their cash on one deal.

The benefits of owning real estate usually outweigh the cost of the mortgage, plus give a bit more capital flexibility. Regardless of your reasoning, if you’re in this industry, it’s good to know about multifamily financing.

Multifamily Financing Explained

Below, we will take a look at the terms/rates/loan limits, as well as the loan requirements.

Terms/Rates/Loan Limits

You will find that the terms, rates, and loan limits vary based on the lending institution and the financial product. For example, conventional multifamily mortgages have 15-to-30-year terms, while government-backed financing will have 5-to-35-year terms.

Short-term loans can have terms of 6 months to 3 years. The most popular term for short-term is 1 year.

Interest rates and loan limits fluctuate based on the current market and economic conditions at the time. Short-term loans usually have the highest rates, though they will vary by the creditworthiness of the borrower and the lender.

Loan Requirements

Approval requirements vary depending on the type of loan and the lender. However, some of the basic requirements are as follows:

• Required number of units in the property 

• Borrower credit score 

• Debt Credit Service Ratio 

• Current occupancy rate of property 

• Borrower’s experience in the field 

• Available cash to support principal and interest, as well as taxes and insurance 

• Owner occupancy for 1-to-4-unit properties  

Ready to Get Started?

Now that you know more about how multifamily financing works, it’s time to give Jasema Capital a call. At Jasema Capital we can help you analyze your current situation and get you started on finding the best multifamily financing for you. We are professionals in the field of finance and want to help their clients achieve their dreams.